The Federal Government will not publish details of how funds drawn from its $5 billion financing facility with First Abu Dhabi Bank (FAB) will be spent, Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, has said.
Gatekeepers News reports that Oyedele made this known on Wednesday during a media briefing in Abuja while responding to questions about the government’s borrowing plans and the controversial FAB financing arrangement.
The minister said there was no reason to treat the facility differently from other sources of government financing, noting that the transaction had undergone the required approval processes, including consideration by the National Assembly.
“We will not publish how we are spending it. We will publish how we spend government money. There’s nothing special about that loan,” Oyedele said.
“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?”
The $5 billion FAB facility forms part of a wider $6 billion external borrowing package approved by the National Assembly in March. The government has since accessed about $1.5 billion as the first tranche of the facility.
The arrangement has attracted public scrutiny because it is structured as a total return swap (TRS), rather than a conventional sovereign loan.
Oyedele said the transaction was approved by the Federal Executive Council before being presented to the National Assembly for consideration.
“The loan was approved not only by the FEC, it was taken to the National Assembly because what some people are doing is comparing it with other countries where they did it under the table,” he said.
“What can be more public than what you gave to the National Assembly?”
FG to Draw $5bn FAB Facility in Phases
Oyedele also disclosed that the government would access the $5 billion facility in phases instead of drawing the entire amount at once.
“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 costs on the extra amount you’ve taken,” he said.
According to him, the phased drawdown is designed to ensure efficient management of the facility and minimise the cost of government borrowing.
The minister explained that the FAB arrangement also differs from Nigeria’s traditional fixed-rate borrowing, including bonds and Eurobonds.
“You need to understand the transaction. You know, there’s always a textbook analysis, and there’s a real life of what you’re doing,” Oyedele said.
“We’re used to raising bonds on fixed interest rates. I can tell you our Eurobonds, for example, were raised when the coupon was double digits. Today, our yield is down to around seven, seven and a half percent.”
He said Nigeria could not directly benefit from falling market yields on existing fixed-rate debt because the government remained obligated to pay the agreed coupon.
“This First Abu Dhabi Bank transaction is at a flexible rate. It means if rates go up, we pay more. If rates come down, we benefit more,” he said.
Oyedele acknowledged that the floating-rate structure could expose the government to increased financing costs if interest rates rise.
However, he said the government expects the facility to reduce overall borrowing costs by using it to refinance more expensive debt.
“So the objective is to use it to refinance expensive debt so you can save money,” the minister said.
FG to Publish FAQs on FAB Facility
Oyedele said the Ministry of Finance and the Debt Management Office would publish frequently asked questions about the transaction to provide additional information on the facility.
He reiterated the government’s commitment to transparency but maintained that there would be no separate public breakdown showing how proceeds from the FAB facility would be spent.
“We are transparent. Information is available,” he said.
The minister’s comments come amid continued scrutiny of Nigeria’s borrowing strategy and the structure of the FAB financing arrangement.
The International Monetary Fund had previously advised Nigeria to consider more transparent financing options, including conventional Eurobonds and concessional loans, while warning of potential fiscal risks associated with complex financing structures.
