FG TO WITHHOLD DETAILS OF $5BN ABU DHABI LOAN — OYEDELE
Read Time:3 Minute, 55 Second
By:Tajudeen Aminat
The Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, has dismissed calls for the Federal Government to disclose details of how it intends to utilise funds obtained through its $5bn financing facility with First Abu Dhabi Bank.
Oyedele said the transaction had attracted excessive scrutiny despite being approved by the National Assembly and designed primarily to refinance more expensive existing debt.
He spoke on Wednesday during a media briefing in Abuja.
The Federal Government recently accessed about $1.5bn, representing the first tranche of the $5bn Total Return Swap facility arranged with First Abu Dhabi Bank. The transaction has attracted concerns from the International Monetary Fund and Fitch Ratings over its transparency and potential risks.
The $5bn facility was approved by the National Assembly on March 31, 2026. The initial drawdown was expected to support the 2026 budget, infrastructure projects and the refinancing of existing debt obligations.
Responding to questions about whether details of the transaction and its utilisation would be made public, Oyedele said the government would continue to provide information on public spending but questioned why the Abu Dhabi facility was being singled out.
“We will not publish how we are spending it. We will publish how we spend government money. There’s nothing special about that loan,” he said.
He added, “Nobody has asked us whether we’re going to publish the money we took from the World Bank, whether we publish the one from Eurobond, whether we publish the one from Sukuk. Why is this one special?”
Oyedele also rejected claims that the transaction was undertaken without proper approval, stressing that it had gone through the Federal Executive Council and the National Assembly.
“The loan was approved not only by FEC, it was taken to National Assembly because what some people are doing is they comparing with other countries where they did it under the table.
“What else can be more public than what you gave to the National Assembly?” he said.
The minister explained that the government was drawing the funds in phases to prevent unnecessary costs associated with taking money before it was needed.
“We’re assessing it in phases. You don’t want to take all the money at once because if you don’t spend it at once, you incur cost on the extra amount you’ve taken,” he said.
He noted that the financing structure differs from Nigeria’s conventional fixed-rate borrowing because the First Abu Dhabi Bank facility operates on a flexible interest-rate arrangement.
According to Oyedele, the structure could benefit Nigeria if interest rates decline, although the country would pay more if rates rise.
“You see, I can tell you our Eurobond, for example, they were raised when the coupon was double digits. Today, our yield is down to around seven, 7.5 per cent,” he said.
He said Nigeria could not fully benefit from the lower yield on its existing fixed-rate debt because of the terms under which those bonds were issued.
“This First Abu Dhabi Bank transaction is flexible rates. It means if rates go up, we pay more. If rates come down, we benefit more.
“There’s nothing that says we must always do one thing. And the all-in rate for this transaction is lower than our existing portfolio,” he said.
Oyedele maintained that the major objective of the facility was to refinance more expensive debt and reduce the government’s overall borrowing costs.
“So the objective is to use it to refinance expensive debt so you can save money,” he said.
Under the arrangement, the Federal Government is required to pledge securities valued at about 133 per cent of the amount drawn as collateral.
The financing structure has drawn scrutiny from the IMF and Fitch Ratings, particularly over transparency and the potential impact on Nigeria’s sovereign debt risks.
The IMF previously warned that derivative-based financing arrangements such as total return swaps could be difficult to monitor and value in real time, potentially making it harder to assess a country’s full financial obligations.
Fitch Ratings also raised concerns that Nigeria’s planned $5bn facility could increase sovereign debt risks and complicate transparency in public debt reporting.
Oyedele, however, said the government would publish frequently asked questions on the transaction to address concerns and provide further clarification.
“In the next few days, you will see on the website both the Ministry of Finance and DMO the frequently asked questions about this particular debt or bond, just so everybody can please themselves,” he said.
He maintained that there was “nothing special” about the facility despite the level of attention it has received from critics and international media.
Happy
0 %
Sad
0 %
Excited
0 %
Sleepy
0 %
Angry
0 %
Surprise
0 %
0
0