IMF Warns Nigeria Over Risks in $5 Billion Swap Deal With UAE Lender

The International Monetary Fund has warned Nigeria about significant risks linked to a planned $5 billion financing arrangement with First Abu Dhabi Bank, the largest lender in the United Arab Emirates.

Premium Times and Nairametrics reported that the deal is structured as a derivative transaction rather than a conventional loan, a feature the IMF said raises concerns over opacity and potential fiscal risk.

The IMF cautioned that such complex financing structures could expose Nigeria to hidden costs and strain the country’s debt and foreign exchange reserves. The warning comes as Nigeria seeks external financing to support its budget and shore up foreign reserves.

Reuters also carried the story, confirming that the IMF’s latest assessment flagged the derivatives arrangement with the UAE bank as a potential risk to fiscal transparency. Business Insider Africa reported that the IMF urged the Nigerian government to pursue more transparent borrowing frameworks.

The warning is separate from the IMF’s broader Article IV assessment of Nigeria’s economy, which the Fund released around the same time. While the Article IV report acknowledged reform progress, this specific advisory on the swap deal highlights the IMF’s concern over non-traditional financing methods.

Sources: Premium Times, Nairametrics, Reuters, Business Insider Africa