The Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Taiwo Oyedele, has explained why the Federal Government is drawing funds from its $5 billion financing arrangement with First Abu Dhabi Bank (FAB) in phases, saying the approach will help reduce borrowing costs and improve debt management.
Speaking with journalists after the Federal Executive Council (FEC) meeting in Abuja, Oyedele confirmed that the government has already accessed the first $1.5 billion under the facility.
According to him, the loan was intentionally structured to allow the government draw only the amount it needs at any given time, rather than taking the entire sum at once and paying interest on unused funds.
“The loan is meant to be a drawdown in tranches. If you take the entire $5 billion at once, you start paying interest even when you are not using all the money. This arrangement makes us more efficient in managing the cost of borrowing,” Oyedele said.
He added that the financing package had already received approval from the National Assembly and would be used to refinance expensive debts, fund infrastructure projects and support the implementation of the national budget.
“The approval for that loan went to the National Assembly, so everybody is aware of it. It’s for refinancing expensive debts, financing infrastructure, as well as budget implementation,” he stated.
Oyedele noted that there was nothing unusual about the phased drawdown, describing it as a standard financing arrangement that helps the government manage its debt obligations more efficiently.
His comments mark the first official confirmation that Nigeria has accessed the initial $1.5 billion from the $5 billion facility with First Abu Dhabi Bank, following reports that the government had begun drawing on the loan through a Total Return Swap arrangement.
