IMF Urges Caution on Nigeria’s $5B Swap Deal with Abu Dhabi Bank

The IMF has warned that Nigeria’s proposed $5 billion derivatives arrangement with First Abu Dhabi Bank may carry significant risks due to its complex and opaque terms. In its latest Article IV consultation, the Fund praised recent economic reforms—such as exchange rate liberalisation and subsidy removal—that have restored investor confidence, lowered risk premiums, and boosted foreign reserves to their highest level in 17 years. The IMF recommended that Nigeria consider more transparent funding options, including Eurobond issuances or concessional loans, to refinance expensive debt and finance critical infrastructure projects. It also cautioned that reliance on short-term portfolio inflows and structured financing could expose the economy to rollover and external funding risks, even as many Nigerians continue to face poverty and food insecurity.

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