The Federal Government has said it will not release a specific breakdown of how funds obtained through its $5 billion financing facility with First Abu Dhabi Bank will be spent.
Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, made this known during a media briefing in Abuja, while responding to questions surrounding the government’s borrowing strategy and the structure of the facility.
Oyedele said there was no reason to treat the First Abu Dhabi Bank financing differently from other sources of government funding, including loans obtained from international institutions and proceeds from Eurobonds and Sukuk.
He explained that the transaction had already gone through the necessary approval processes, including consideration and approval by the National Assembly.
According to the minister, the government would disclose how public funds are generally spent but would not provide a separate spending plan specifically for the FAB facility.
The $5 billion financing is part of a broader $6 billion external borrowing package approved by the National Assembly in March. The government has so far accessed about $1.5 billion as the first tranche of the FAB facility.
The arrangement has attracted public attention because it is structured as a total return swap rather than a conventional sovereign loan.
Oyedele defended the transaction, stressing that it was subjected to government approval before being presented to the National Assembly.
He argued that the involvement of the legislature demonstrated that the arrangement was not conducted secretly.
The minister also disclosed that the government would not draw the entire $5 billion at once. Instead, the facility would be accessed in phases based on the government’s financing needs.
He explained that taking the full amount before it was needed could result in unnecessary financing costs on funds that had not yet been deployed.
Oyedele said the phased approach was designed to make the borrowing more efficient and reduce the overall cost to the government.
He further explained that the FAB arrangement differs from Nigeria’s conventional fixed-rate borrowing.
According to him, many of Nigeria’s existing bonds and Eurobonds were issued at fixed interest rates, meaning the country continues to pay the agreed rates even when market yields decline.
The FAB facility, on the other hand, operates at a flexible rate. Oyedele said this means Nigeria could pay more if interest rates rise but could also benefit when rates fall.
He acknowledged that the floating-rate structure carries the risk of increased costs if interest rates move upward. However, he maintained that the government expects the facility to help reduce borrowing costs by refinancing more expensive existing debt.
Oyedele said the government’s objective was to use the financing arrangement strategically rather than simply increase the country’s debt burden.
He also announced plans for the Ministry of Finance and the Debt Management Office to publish frequently asked questions about the transaction to provide additional information to the public.
The minister maintained that the government remained committed to transparency but reiterated that there would be no separate disclosure detailing how every dollar from the FAB facility would be allocated.
The development comes amid continued debate over Nigeria’s borrowing strategy and concerns about the structure and risks associated with the First Abu Dhabi Bank arrangement.
The International Monetary Fund has previously urged Nigeria to consider more transparent financing options, including conventional Eurobonds and concessional loans, while warning about potential fiscal risks associated with complex financing structures.
