The Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, has rejected calls for the Federal Government to publish specific details of how it plans to spend funds drawn from its $5 billion financing facility with First Abu Dhabi Bank.
Oyedele said the transaction had been subjected to unnecessary scrutiny, insisting that the facility was approved by the National Assembly and structured primarily to help the government refinance more expensive debt.
He spoke on Wednesday during a media briefing in Abuja, where he addressed concerns surrounding the financing arrangement and the government’s borrowing plans.
The Federal Government recently drew about $1.5 billion, representing the first tranche of the $5 billion Total Return Swap facility arranged with First Abu Dhabi Bank.
The facility has attracted concerns from the International Monetary Fund and Fitch Ratings over transparency, sovereign debt risks and the implications of using derivative-based financing structures.
The $5 billion facility was approved by the National Assembly on March 31, 2026, with the initial drawdown expected to support the 2026 budget, infrastructure projects and the refinancing of existing debt obligations.
Responding to questions on whether the government would disclose how the funds would be spent, Oyedele said the government would continue to publish information on its use of public funds.
He, however, questioned why the First Abu Dhabi Bank facility was being singled out for special disclosure, compared with other sources of government financing.
Oyedele said the government had not hidden the transaction, noting that it had gone through the Federal Executive Council and was subsequently presented to the National Assembly for approval.
He dismissed suggestions that the financing arrangement was concluded without due process, arguing that parliamentary approval made the transaction sufficiently public.
According to the minister, the government would not draw the entire $5 billion at once because doing so could result in additional costs if the funds were not immediately deployed.
He explained that the facility was therefore being accessed in phases, allowing the government to minimise the cost of borrowing and align withdrawals with its financing needs.
Oyedele also explained that the First Abu Dhabi Bank arrangement differed from Nigeria’s traditional fixed-rate borrowing, such as Eurobonds, because it operates on flexible interest rates.
He said the flexible structure means Nigeria would pay more if interest rates rise but would benefit if rates decline, adding that the overall cost of the transaction was lower than that of the country’s existing debt portfolio.
The minister noted that some of Nigeria’s Eurobonds were issued when coupon rates were in double digits, while current yields had fallen to around seven to 7.5 per cent.
He said Nigeria could not automatically benefit from the lower market yields on its existing fixed-rate debt, making the new flexible financing arrangement potentially more advantageous.
Oyedele stressed that the primary objective of the facility was to refinance more expensive debt and reduce the government’s overall borrowing costs.
Under the arrangement, the Federal Government is required to pledge securities worth about 133 per cent of the amount drawn as collateral.
The IMF had warned that derivative financing structures such as Total Return Swaps could be difficult to track and value in real time, potentially making a country’s financial obligations less transparent.
Fitch Ratings also warned that the planned $5 billion arrangement could increase Nigeria’s sovereign debt risks and reduce transparency in public debt reporting.
Oyedele, however, said the government would provide further clarification on the transaction, adding that the Ministry of Finance and the Debt Management Office would soon publish frequently asked questions on their websites.
He said the publication would help address concerns and provide the public with more information about the financing structure.
Despite the criticism and attention from international media, Oyedele maintained that there was nothing unusual about the facility, insisting that the government had followed the required approval process.
He added that the government remained focused on using the financing arrangement to lower borrowing costs and improve the management of Nigeria’s public debt.
