IMF Warns Tinubu’s Gov’t Over Newly Approved $5bn Loan

The International Monetary Fund (IMF) has cautioned the administration of President Bola Ahmed Tinubu against proceeding with a proposed $5 billion borrowing arrangement with the First Abu Dhabi Bank of the United Arab Emirates under a Total Return Swap financing structure. 

The warning was issued on Tuesday by the IMF Resident Representative for Nigeria, Christian Ebeke, during the presentation of the Fund’s 2026 Article IV Consultation Report on Nigeria. 

Recall that the Senate had in April approved the Total Return Swap agreement, placing the country among African nations such as Senegal and Angola that have adopted similar borrowing arrangements. The loan, according to the government, is intended to address budget deficits and support ongoing debt financing obligations.

According to the IMF, this financing setup is opaque and could expose Nigeria to significant financial risks. 

Ebeke explained that such structures often lack transparency and may leave participating countries vulnerable to losses if the value of underlying assets declines or exchange rates move unfavourably. 

“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,” he said. 

He further warned that the arrangement could trigger additional liabilities under certain market conditions. 

“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 added that the Fund had limited information on the specific transaction but maintained its concerns. 

“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 stated.