The IMF functions as a global debt enforcer rather than a development partner
A new report by ActionAid International has placed the International Monetary Fund at the center of a long-standing moral tension in global finance: the suspicion that the rules of fiscal discipline are written differently depending on who must follow them. While wealthy nations receive encouragement to invest in their public workforces, African countries already spending below global averages on teachers, nurses, and doctors are urged to spend less still. Against this backdrop, Nigeria moves toward a $5 billion derivative-based financing deal whose structural opacity may obscure the true weight of its obligations from the very citizens those obligations will one day burden.
- A three-year study across eleven countries reveals the IMF consistently advises low-income nations to cut public services while recommending wealthy countries expand the same investments.
- Nigeria spends just 1.9% of GDP on public workers — less than one-eighth of the UK's allocation — yet still faces pressure to restrain that spending further.
- A proposed $5 billion Total Return Swap with First Abu Dhabi Bank has drawn warnings from Fitch and the IMF itself, who flag that derivative structures can hide the true scale of sovereign debt.
- The deal's collateral arrangement — pledging $6.67 billion in naira bonds for hard-currency liquidity — may complicate future debt restructuring negotiations in ways not visible in standard reporting.
- Civil society groups are demanding that public sector workers be reframed as development investments rather than fiscal liabilities, challenging the foundational logic of IMF austerity prescriptions.
The International Monetary Fund stands accused this week of operating by two distinct sets of rules — one for wealthy nations, another for the poor. A report examining IMF policy advice across eleven countries between 2022 and 2025, titled "Still Cooking with a Failed Recipe," found a consistent pattern: rich countries are encouraged to expand public investment while low-income nations are pressured to cut spending on teachers, nurses, and doctors.
The numbers are difficult to dismiss. The United Kingdom allocates 15.9 percent of GDP to its public workforce and receives IMF recommendations to invest further. Nigeria, spending just 1.9 percent of GDP on public workers, faces pressure to restrain even that. Across Africa, nations spend an average of 7.6 percent of their budgets on public service wages — already below the global average of nine percent — and still the Fund advises restraint. ActionAid's secretary-general Arthur Larok described the IMF as functioning more like a "global debt enforcer" than a development partner, one that consistently asks the poorest countries to prioritize foreign creditors over their own populations.
The critique lands at a fraught moment for Nigeria specifically. Rating agency Fitch has warned that Nigeria's proposed $5 billion financing deal with First Abu Dhabi Bank — structured as a Total Return Swap — carries risks that conventional debt reporting may not surface. Approved by Nigeria's National Assembly under President Tinubu's external borrowing program, the arrangement would secure hard-currency funding by pledging roughly $6.67 billion in naira-denominated bonds as collateral, with the facility maturing in 2032.
While such derivative instruments can provide liquidity when market access is limited, Fitch and the IMF have both flagged that their contractual terms are often only partially disclosed. That opacity makes it genuinely difficult to assess the true scale of Nigeria's borrowing obligations — or to negotiate restructuring should conditions deteriorate. The convergence of inequitable policy advice and structurally obscured debt raises a question that reaches far beyond Nigeria: when the terms of sovereign borrowing are hidden and the rules governing them are unequal, what meaningful recourse remains for the citizens who will ultimately bear the cost?
The International Monetary Fund stands accused of operating by two sets of rules—one for wealthy nations, another for the poor. A sweeping report released this week examined IMF policy advice across eleven countries between 2022 and 2025, and what it found was stark: the Fund encourages rich countries to spend freely on public services while pressuring low-income nations to slash spending on teachers, nurses, and doctors.
The disparity is measurable and damning. The United Kingdom devotes 15.9 percent of its gross domestic product to its public workforce and receives IMF recommendations to expand that investment further. Nigeria, by contrast, spends just 1.9 percent of GDP on public workers—less than one-eighth of the UK figure—yet faces IMF pressure to restrain spending even more. Nepal, at 2.5 percent, faces similar constraints. Across Africa, nations spend an average of 7.6 percent of their budgets on public service wages, below the global average of nine percent, and still the IMF advises them to freeze or reduce those outlays.
The report, titled "Still Cooking with a Failed Recipe," was conducted by ActionAid International, Education International, and the Tax and Education Alliance. It examined IMF guidance on social spending, public services, debt, taxation, and gender equality. What emerged was a pattern: fiscal measures recommended to African countries—Ghana, Kenya, Malawi, Senegal, Nigeria, Uganda, Zambia, Zimbabwe—consistently resulted in reduced spending on services meant to protect vulnerable populations. Arthur Larok, ActionAid's secretary-general, framed the contradiction plainly: the IMF functions as a "global debt enforcer rather than a global development partner," forcing lower-income nations to squeeze public workers and prioritize foreign creditors over education and healthcare.
Roos Saalbrink, ActionAid's Global Lead on Economic Justice, reframed the entire debate. Teachers, nurses, and doctors should be understood as priority investments, not expenditure burdens. The current approach, she suggested, misses the reality that many developing countries are already operating at minimal public service capacity.
This critique arrives as Nigeria faces a separate but related warning about its own borrowing strategy. The rating agency Fitch has cautioned that Nigeria's proposed $5 billion financing arrangement with First Abu Dhabi Bank—structured as a Total Return Swap—carries hidden risks that conventional debt reporting may not capture. The deal, approved by Nigeria's National Assembly as part of President Bola Tinubu's external borrowing program, would allow the country to obtain hard-currency funding by pledging approximately $6.67 billion in naira-denominated bonds as collateral. The facility is set to mature in 2032.
Total Return Swaps are derivative instruments that can provide liquidity even when market access is constrained, and they may reduce borrowing costs compared to conventional issuance. But Fitch's concern is structural: such arrangements often involve contractual terms that are only partially disclosed. This opacity makes it difficult to assess the true scale and conditions of sovereign borrowing. The IMF itself had already raised similar alarms, warning that the derivatives-based structure could expose Nigeria to significant fiscal, liquidity, and refinancing risks despite the appeal of lower-cost hard-currency funding.
The timing is revealing. As the IMF faces accusations of applying austerity selectively—tightening the screws on poor countries while loosening them for rich ones—Nigeria is about to enter a financing arrangement whose true terms may remain obscured from public view. The combination raises a question that extends beyond Nigeria: if transparency in debt reporting is already compromised, and if the policy advice driving those debts is itself inequitable, what recourse do citizens have to understand or challenge the decisions being made in their name?
Citas Notables
The IMF's recipe book is completely outdated. By forcing lower-income nations to squeeze public workers, cut social spending and prioritise foreign creditors over education and healthcare, the IMF is functioning as a global debt enforcer rather than a global development partner.— Arthur Larok, ActionAid Secretary-General
Frontline workers such as teachers, nurses and doctors should be viewed as priority investments rather than expenditure burdens.— Roos Saalbrink, ActionAid International's Global Lead on Economic Justice
La Conversación del Hearth Otra perspectiva de la historia
Why does the IMF give different advice to different countries? Is it intentional?
The report suggests it's not accidental. When you look at the pattern—wealthy nations told to spend more, poor nations told to spend less—it's hard to call it coincidence. The IMF frames it as fiscal responsibility, but the underlying assumption seems to be that poor countries can't afford public services the way rich ones can.
But doesn't Nigeria need to manage its debt?
Of course. But the question is how. The report argues that cutting teachers' salaries and healthcare budgets isn't the only path to fiscal stability. The UK manages higher debt while maintaining robust public services. Why is that option unavailable to Nigeria?
What's the actual harm if Nigeria can't afford to pay teachers well?
You lose the teachers. Or you keep them but pay them so little that the best ones leave for other countries or other work. Schools deteriorate. Healthcare collapses. You're not just managing debt—you're dismantling the institutions that allow a country to develop in the first place.
And this Total Return Swap—is that a way around the IMF's restrictions?
It's more complicated. It's a way to get hard currency without going through conventional borrowing markets. But Fitch is saying the terms are hidden. You can't see what Nigeria is actually committing to. That's dangerous when you're already under pressure to cut spending.
So Nigeria is trapped?
Not trapped, but constrained. The IMF says cut spending. The rating agencies say be transparent. But the financing tools available—like this swap—offer liquidity at the cost of opacity. Nigeria needs the money, but the terms of getting it are increasingly opaque and risky.
What should happen instead?
The report suggests the IMF should acknowledge that public services are investments, not luxuries. And countries should have financing options that don't require hiding the true cost of borrowing. That requires pressure from multiple directions—civil society, other countries, the rating agencies themselves.