Global credit rating agency Fitch Ratings has cautioned that Nigeria’s proposed $5 billion total return swap financing arrangement could expose the country to additional debt-management and liquidity risks, despite the potential short-term benefits the deal may offer.
The agency said the financing structure, while capable of providing the government with immediate access to funds and easing fiscal pressures, may also create new vulnerabilities by increasing refinancing obligations and complicating debt management.
Fitch noted that the arrangement could heighten liquidity risks if market conditions deteriorate or if the government faces challenges meeting its repayment commitments, potentially placing further strain on Nigeria’s public finances.
The warning comes as authorities continue to explore alternative financing options to support economic reforms, infrastructure development and budgetary needs amid persistent fiscal pressures.
