By Daniel Edu

The ongoing administration led by Bola Tinubu is anticipated to fulfill the repayment of a $3.4 billion debt owed to the International Monetary Fund (IMF) within its tenure.

The Nigerian government is slated to disburse a total of $3.51 billion to the IMF between 2022 and 2026 to cover the outstanding $3.4 billion loan.

Per information gleaned from a section on the IMF’s website titled ‘Nigeria: Financial Position in the Fund as of July 31, 2023,’ an outstanding balance of $3.19 billion remains, and this debt is anticipated to be settled during the present administration’s term.

In April 2020, Nigeria received an emergency financial assistance of $3.4 billion from the IMF, endorsed by the IMF’s Executive Board through the Rapid Financing Instrument. The loan’s purpose was to address the economic repercussions of the COVID-19 pandemic and the subsequent decline in oil prices.

The disbursal of the loan took place on April 30, 2020. The IMF’s official statement on this loan elucidated, “The IMF approved $3.4 billion in emergency financial assistance under the Rapid Financing Instrument to support the authorities’ efforts in addressing the severe economic impact of the COVID-19 shock and the sharp fall in oil prices.”

The repayment details, broken down into Special Drawing Rights (SDRs), an international reserve asset established by the IMF, are outlined in a segment titled ‘Overdue Obligations and Projected Payments to Fund.’

As per the prevailing exchange rate provided by the IMF, SDR1 is valued at $1.33.

For the year 2023, Nigeria’s payment is projected at SDR373.81 million ($497.17 million), encompassing both principal (SDR306.81 million/$408.06 million) and interest fees (SDR67 million/$89.11 million).

In the year 2024, Nigeria’s total repayment is expected to be SDR1.32 billion ($1.76 billion), consisting of a principal fee of SDR1.23 billion ($1.64 billion) and an interest fee of SDR94.76 million ($126.03 million).

The year 2025 will see Nigeria disburse a total of SDR650.58 million ($865.27 million), comprising a principal fee of SDR613.63 million ($816.13 million) and an interest fee of SDR36.95 million ($49.14 million).

In both 2026 and 2027, the country is scheduled to pay an identical interest fee of SDR25.56 million ($33.99 million). These two years represent the period of least repayment amount.

It’s worth noting that the repayment period has been extended to 2027 from the initial projection of 2026.

Consequently, the new administration’s total payment to the IMF is expected to amount to $3.19 billion, implying that the preceding administration potentially repaid $320 million of the loan.

The Central Bank of Nigeria (CBN) referred to this loan in its 2022 financial statements, stating, “In 2020, the Bank entered into rapid financing instrument’s arrangement with International Monetary Fund on behalf of Federal Government of Nigeria. The loan is a 5 years tenor facility, repayable after a moratorium of 2 years and the interest rate is 1% per annum.”

The CBN clarified, “Repayment of the IMF loans as well as charges is the responsibility of the bank.”