According to reports, the Bola Tinubu administration is expected to pay off a $3.4 billion debt owed to the International Monetary Fund (IMF) during this tenure. The Federal Government is expected to pay a total of $3.51 billion between 2022 and 2026 for the loan. However, according to information obtained from a webpage on the IMF website, titled “Nigeria: Financial Position in the Fund as of July 31, 2023,” there is an outstanding of $3.19 billion, which will be paid off during the current administration.
In April 2020, the IMF approved $3.4 billion in emergency financial assistance under the Rapid Financing Instrument to support Nigeria’s efforts in addressing the severe economic impact of the COVID-19 shock and the sharp fall in oil prices. The COVID-19 pandemic had resulted in the government declaring a weeks long lockdown. This affected the economy, leading to a historic contraction in real GDP growth and to large external and fiscal financing needs. The agency had stated that following the impact of the pandemic, the government’s commitment to medium-term macroeconomic stability remained crucial to support the recovery and ensure debt remains sustainable.
Loan was given to cushion the effect of the economic downturn.
This financial assistance was to help limit the decline in international reserves and provide financing to the budget for targeted and temporary spending increases, which was aimed at containing and mitigating the economic impact of the pandemic and of the sharp fall in international oil prices. At the time, the IMF said that it remained closely engaged with the Nigerian authorities and stood ready to provide policy advice and further support as needed. The pandemic magnified Nigeria vulnerabilities, prompting the Fund to come to the country’s aid.
After the Executive Board discussion of Nigeria, Mr. Mitsuhiro Furusawa, Deputy Managing Director and Acting Chair, had issued a statement that the focus should remain on medium-term macroeconomic stability, with revenue-based fiscal consolidation essential to keep Nigeria debt sustainable and create fiscal space for priority spending. Specifically, he had said that the implementation of the reform priorities under the Economic Recovery and Growth Plan, particularly on power and governance, remained crucial to boost growth over the medium term.
Schedule of payments by the Federal Government.
Eventually, the loaned amount was disbursed on April 30, 2020. It was also disclosed that out of four agreed loans, disbursement was made on only one loan. Under a section titled “Overdue Obligations and Projected Payments to Fund,” the webpage showed a breakdown of how much Nigeria is expected to pay each year. The amount to be paid was provided in the Special Drawing Rights (SDR). The SDR is an international reserve asset, which was created by the IMF in 1969 to supplement its member countries’ official reserves.
Based on the exchange rate provided by the IMF on its website, SDR1 is currently $1.33. As a result, in 2023, Nigeria is expected to pay SDR 373.81m ($497.17 million), which includes principal (306.81m, the equivalent of $408.06 million) and interest fee (67m, which equals $89.11 million) on the loan. Nigeria is expected to pay a total of SDR 1.32bn ($1.76 billion) in 2024. This comprises a principal fee of 1.23bn ($1.64 billion) and an interest fee of 94.76m ($126.03 million). In 2025, Nigeria is expected to pay a total of SDR 650.58m ($865.27). This comprises a principal fee of 613.63m ($816.13 million) and an interest fee of 36.95m ($49.14 million).
CBN referenced the loan in its 2022 statements.
Also, the country is expected to pay a total of SDR 25.56m ($33.99 million) each in 2026 and 2027. These are both interest fees, which is the least amount during the repayment period. The media had also observed that repayment had been extended to 2027 from the initial 2026 earlier reported. The new administration is expected to pay $3.19 billion to the IMF, an indication that the previous government paid $320 million on the loan. The Central Bank of Nigeria (CBN) referenced the loan in its 2022 financial statements. According to it, repayment of the IMF loans as well as charges is the responsibility of the bank.
Debt Management Office Nigeria: Website