The International Monetary Fund (IMF) has advised Nigeria to exercise caution over its proposed plan to raise up to $5 billion through a derivatives-based financing arrangement with First Abu Dhabi Bank, warning that such deals often come with transparency and financial risks.
According to the IMF’s mission chief for Nigeria, Christian Ebeke, these financing structures can be difficult to assess due to their complex terms and limited transparency.
Nigeria plans to secure the funds through a Total Return Swap (TRS) agreement, a proposal already approved by the Senate and intended to refinance costly debt while supporting infrastructure projects.
While acknowledging Nigeria’s recent economic reforms and improved investor confidence, the IMF suggested the country could explore more conventional funding options such as Eurobonds, concessional loans, or other traditional borrowing channels.
The Fund noted that reforms introduced since 2023, including foreign exchange adjustments and tighter economic policies, have helped strengthen investor confidence, improve market access, and boost external reserves.
However, it warned that reliance on short-term foreign investments and complex financing instruments could expose the economy to additional risks.
Despite signs of macroeconomic improvement, the IMF added that many Nigerians are yet to feel the benefits, with poverty and food insecurity remaining major concerns.
