Nigeria draws $1.5 bn from UAE loan facility despite IMF warnings

Nigeria has drawn $1.5 bn, the first tranche of a $5 bn Total Return Swap financing arrangement with First Abu Dhabi Bank of the United Arab Emirates. The facility, approved by Nigeria’s National Assembly on 31 March, is intended to fund the 2026 fiscal budget, support critical infrastructure projects and refinance existing debt.

The International Monetary Fund warned that such derivative structures are often opaque, can be hard to value in real time and may impose political constraints on monetary or exchange‑rate policy. Fitch Ratings also highlighted the risk of hidden liabilities, noting that Nigeria must pledge about 133 % of any amount drawn as collateral in naira‑denominated bonds. Despite these concerns, the Nigerian government proceeded, citing high borrowing costs in international markets and the need for dollar liquidity.

The loan proceeds are expected to boost budget implementation, improve foreign‑exchange liquidity and support infrastructure development while reducing reliance on traditional Eurobond issuance.