The current administration under the leadership of Bola Tinubu is gearing up to fulfill a significant financial commitment as it approaches the final stretch of its tenure.
A debt of $3.4 billion owed to the International Monetary Fund (IMF), originating from an emergency financial assistance package disbursed in April 2020, is expected to be fully repaid.
However, a recent investigation into the financial position of Nigeria within the IMF, as disclosed on the organization’s official website, reveals that an outstanding sum of $3.19 billion remains.
The loan in question was initially granted by the IMF in response to the economic upheaval triggered by the COVID-19 pandemic. Approved by the IMF’s Executive Board on April 28, 2020, under the Rapid Financing Instrument, the loan was intended to address the severe economic repercussions of the pandemic as well as the drastic drop in oil prices that the country experienced.
“In light of the COVID-19 shock and the sharp fall in oil prices, the IMF approved $3.4 billion in emergency financial assistance under the Rapid Financing Instrument to support the authorities’ efforts,” stated a release from the IMF at the time of the loan disbursement.
It has been revealed that the disbursed amount represented only one of the four loans initially agreed upon. The remaining payments were contingent on certain terms being met.
The breakdown of the repayment schedule indicates that Nigeria is expected to make annual payments in Special Drawing Rights (SDR), an international reserve asset established by the IMF. As per the latest available exchange rate, SDR1 equates to $1.33.
For the year 2023, Nigeria’s anticipated payment is SDR373.81 million ($497.17 million), encompassing both principal (SDR306.81 million/$408.06 million) and interest fees (SDR67 million/$89.11 million). The repayment obligation for 2024 amounts to SDR1.32 billion ($1.76 billion), split between a principal fee of SDR1.23 billion ($1.64 billion) and an interest fee of SDR94.76 million ($126.03 million). In the subsequent year, 2025, Nigeria’s total payment is projected to be SDR650.58 million ($865.27 million), made up of a principal fee of SDR613.63 million ($816.13 million) and an interest fee of SDR36.95 million ($49.14 million).
The repayment plan also includes the years 2026 and 2027, where only an interest fee of SDR25.56 million ($33.99 million) is due each year. Notably, the repayment period has been extended to 2027 from the initial 2026 timeframe that was previously reported.
In sum, the current administration’s obligation to the IMF stands at $3.19 billion, indicating that the previous administration had likely repaid around $320 million of the total loan.
The Central Bank of Nigeria (CBN) referenced the IMF loan in its 2022 financial statements, clarifying that the bank had arranged the rapid financing instrument with the IMF on behalf of the Federal Government. The loan, designed with a 5-year tenure and a 2-year moratorium, carries an interest rate of 1% per annum. The CBN further emphasized that the responsibility for repaying the IMF loans and associated charges rests with the bank.
As the current administration works diligently to fulfill this financial commitment, the nation watches closely to see the completion of this critical repayment to the IMF.
