The West African nation, according to recent reports, has drawn $1.5 billion from the $5bn financing facility discussed earlier this year with the UAE.


This credit agreement, established with First Abu Dhabi Bank, the United Arab Emirates’ premier financial institution, constitutes the initial installment of a $5 billion Total Return Swap facility authorized by the National Assembly on the 31st of March, this year.


This move proceeds notwithstanding escalating apprehensions voiced by international financial organizations.


The proceeds from this transaction are intended to bolster the 2026 fiscal budget, fund critical infrastructure projects, and restructure existing debt liabilities.


Following the legislative approval of the loan in April, Nigerian lawmakers characterized the terms as competitive, as seen on Bloomberg.


The initial tranche of the indebtedness is scheduled to be priced at 395 basis points above the Secured Overnight Financing Rate (SOFR), with subsequent tranches priced at SOFR plus 400 basis points.


The loan arrangement further exposes the country to the lender, which had already disbursed loans totaling around $1.2 billion to assist with the construction of a portion of a new expressway.


Nigeria will provide 133.3% of the loan’s collateral in assets denominated in its local currency.


Christian Ebeke, the IMF’s mission chief for Nigeria, said instruments such as Total Return Swaps (TRS) often lack transparency, making it harder for stakeholders to evaluate their terms and long-term fiscal implications.


“Our view is that transactions in 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,” Ebeke told reporters following the Fund’s latest Article IV consultation.


Parts of the deal “could give rise to political constraints on monetary or exchange rate policy,” the IMF stated.


According to the most recent information available on the Debt Management Office’s website, Nigeria’s external debt was $51.9 billion as of December 31.