Despite the Nigeria’s improved access to international capital markets, he International Monetary Fund(IMF) resident representative for Nigeria, Christian Ebeke, on Tuesday, 9 June, 2026 warned the country to tread carefully in pursuing a proposed $5bn Total Return Swap financing arrangement with First Abu Dhabi Bank, describing such structures as opaque and potentially risky.
The warning come weeks after the Senate approved the Federal Government’s request to raise up to $5 billion through a Total Return Swap arrangement with a Middle Eastern bank, widely reported to be First Abu Dhabi Bank.
Ebeke, handed down the warning on Tuesday, 9 June, 2026 during a virtual press briefing on the Fund’s 2026 Article IV Consultation Report on Nigeria.
Speaking on the proposed transaction, Ebeke said, “We say in the report, and our view is that the transaction and these types of structures carry risks. Usually, they are opaque. So, the terms are not always very transparent when we review these instruments across countries.”
According to Ebeke, beyond concerns over transparency, such financing arrangements could expose countries to additional financial risks if underlying assets lose value or exchange rates move adversely.
“They also carry risk, as we flag in the report, the margin calls in the case that the value of the asset drops or the currency depreciates,” he said.
According to him, Nigeria currently has alternative funding options that may be less complicated and more transparent.
“We think that Nigeria has market access. Nigeria can issue Eurobonds to finance the deficit. And we also think that there are other avenues for Nigeria to raise funds, including on concessional terms,” Ebeke added.
While noting that the Fund did not yet have detailed information on the proposed swap structure, he urged authorities to closely monitor the transaction’s potential risks.
“At this point, we don’t have any further information on the TRS. But our view is that it carries risk, and it’s important to monitor those risks very, very carefully,” he said.
The IMF’s caution formed part of a broader assessment in which the Fund acknowledged that economic reforms undertaken by the Nigerian government over the past three years had strengthened macroeconomic stability and improved the country’s ability to withstand external shocks.
