The Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, has rejected calls for the Federal Government to provide a specific spending breakdown for funds obtained through a $5 billion financing arrangement with First Abu Dhabi Bank.
The government recently accessed about $1.5 billion, representing the first tranche of the $5 billion Total Return Swap facility arranged with the bank. The financing structure has attracted scrutiny from organisations including the International Monetary Fund and Fitch Ratings over its potential risks.
Speaking during a media briefing in Abuja on Wednesday, Oyedele said the transaction had received more attention than necessary, stressing that it was approved by the National Assembly and designed primarily to help the government refinance more expensive debt.
When asked whether the government would publish details of how the funds from the First Abu Dhabi Bank facility would be spent, the minister said public expenditure would be accounted for through the normal government reporting process.
Oyedele questioned why the Abu Dhabi facility was being singled out, noting that similar demands were not made concerning other sources of government financing, including World Bank loans, Eurobonds and Sukuk.
He also dismissed claims that the transaction was carried out secretly or without proper approval, insisting that it passed through the Federal Executive Council and was presented to the National Assembly.
According to him, the government deliberately decided to access the facility in stages rather than draw the entire amount at once. He explained that taking more money than required could result in additional costs if the funds were not immediately utilised.
Oyedele further explained that the financing arrangement differs from Nigeria’s conventional fixed-rate borrowing. He said the Abu Dhabi facility carries a flexible interest rate, meaning the government could pay more if market rates rise but benefit if rates decline.
The minister noted that some of Nigeria’s existing Eurobonds were issued when interest rates were in double digits, while current market yields have fallen to around 7 to 7.5 per cent. However, he said the country could not automatically benefit from lower market yields on already-issued fixed-rate debt.
Oyedele maintained that the overall cost of the First Abu Dhabi Bank facility is lower than the government’s existing debt portfolio.
He said the main purpose of accessing the facility was to refinance more expensive obligations and ultimately reduce the government’s borrowing costs.
“The objective is to use it to refinance expensive debt so you can save money,” the minister said.
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