IMF Warns Tinubu Government Against $5bn UAE Borrowing Deal

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

According to the IMF, the proposed financing arrangement lacks transparency and could expose Nigeria to significant financial risks.

Ebeke explained that such financing structures are often opaque 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 create 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.

The IMF official noted that the Fund had limited information regarding the specific transaction but maintained its concerns over the potential risks associated with the financing structure.

“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.

Nigeria’s Senate approved the Total Return Swap agreement in April 2026, placing the country among African nations such as Senegal and Angola that have adopted similar borrowing arrangements.

The IMF’s warning comes amid ongoing efforts by the Federal Government to secure external financing to support fiscal operations and economic reforms.