The International Monetary Fund (IMF) has cautioned President Bola Ahmed Tinubu’s administration against proceeding with the proposed $5 billion borrowing arrangement with the First Abu Dhabi Bank of the United Arab Emirates under a Total Return Swap (TRS) financing structure.
Delivering the warning during the presentation of the IMF’s 2026 Article IV Consultation Report on Nigeria, Resident Representative Christian Ebeke described the arrangement as “opaque” and potentially risky.
He explained that TRS structures often lack transparency and could expose Nigeria to losses if asset values decline or exchange rates depreciate.
“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,” Ebeke noted, stressing that the Fund had limited information on the transaction but remained concerned.
Nigeria’s Senate approved the TRS deal in April 2026, joining countries such as Senegal and Angola that have adopted similar borrowing frameworks.
However, the IMF warned that such deals could trigger additional liabilities under unfavorable market conditions and urged close monitoring of the risks.
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