The Federal Government has confirmed drawing the first $1.5 billion from its $5 billion financing arrangement with First Abu Dhabi Bank (FAB), describing the phased disbursement as a strategy to reduce borrowing costs and improve debt management.
Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, disclosed this while speaking with journalists after the Federal Executive Council (FEC) meeting in Abuja on Monday.
Oyedele said the financing facility, which had earlier received approval from the National Assembly, is intended to refinance expensive debts, fund critical infrastructure projects and support budget implementation.
He explained that the government deliberately structured the loan to be accessed in tranches rather than drawing the entire amount at once, noting that the arrangement would prevent the country from paying interest on funds that had not yet been utilised.
According to the minister, borrowing only the amount required at a particular time would significantly lower financing costs while improving the efficiency of public debt management.
“The loan is meant to be drawn down in tranches. If you need $5 billion and take everything at once, you begin paying interest immediately, even when you are not spending all the money.
”This structure allows us to borrow only what we need at any given time,” he said.
Oyedele added that there was no need for separate announcements each time funds are accessed under the facility, stressing that the arrangement is similar to other government borrowing programmes already approved by the legislature.
His comments represented the first official confirmation that Nigeria has begun utilising the financing package.
Last week, Bloomberg reported that Nigeria had accessed approximately $1.5 billion through a Total Return Swap arrangement with First Abu Dhabi Bank over the previous two weeks, marking the first drawdown under the broader $5 billion financing agreement.
The Federal Government has maintained that the facility would play a key role in strengthening fiscal management by refinancing high-cost debt, supporting infrastructure development and financing priority expenditures contained in the national budget.
