The International Monetary Fund (IMF) announced that Nigeria has completely settled the $3.4 billion in COVID-19 financial assistance received through the Rapid Financing Instrument (RFI).

However, the government still owes approximately $30 million to the multilateral organisation for Special Drawing Rights (SDR) charges.

This $30 million, equivalent to ₦48.2 billion, will be paid annually over four years as fees associated with the loan, totalling over ₦190 billion.

SDRs are additional foreign exchange reserve assets established and maintained by the IMF, representing a claim to currency held by member countries for potential exchange.

According to reports, the announcement of the full repayment has elicited mixed reactions despite the presidency’s enthusiastic celebration.

The Senior Special Assistant to the President, Otega Ogra, shared a widely circulated post on 𝕏, heralding Nigeria’s removal from the IMF debtors’ list.

He characterised this achievement as a sign of ‘Discipline, reform, and strategic reset by the Tinubu-Shettima administration in restructuring our finances for a more prosperous future.’

The announcement comes amid ongoing criticism of the President Bola Ahmed Tinubu-led administration regarding the increasing domestic and external debts. As of December 2024, Nigeria’s total domestic and external debts exceed ₦144.67 trillion, according to the Debt Management Office (DMO).

Nigeria Still Owes IMF
In a statement issued on Thursday, May 8, on behalf of the IMF’s Resident Representative for Nigeria, Christian Ebeke, clarification was provided regarding the repayment of the RFI loan facility that was disbursed in April 2020 amid the COVID-19 pandemic.

During this period, the global economy faced significant disruptions, leading to a steep decline in oil prices, a reduction in economic activities, and a substantial decrease in government revenues.

Following the repayment of the principal amount, the federal government is now anticipated to settle the interest and associated charges on the loan, which are estimated to be approximately ₦200 billion.

“As of April 30, 2025, Nigeria has fully repaid the financial support of about US$3.4 billion it requested and received in April 2020 from the International Monetary Fund (IMF) under the Rapid Financing Instrument to help alleviate the impact of the COVID-19 pandemic and the sharp fall in oil prices,” IMF said.

It was clarified that Nigeria will continue to make yearly payments of around $30 million in charges related to Special Drawing Rights over the forthcoming years.

These charges, it noted, arise from the disparity between Nigeria’s holdings of Special Drawing Rights and its total allocation of Special Drawing Rights.

Furthermore, the statement indicated that Nigeria is anticipated to fulfil further payments amounting to approximately $30 million each year in the form of Special Drawing Rights charges.

“In line with the IMF’s Articles of Agreements, these charges, levied at the SDR interest rate, which is updated at the beginning of each week, apply to the difference between Nigeria’s SDR holdings (SDR 3,164 million) (US$4.3 billion) and its cumulative SDR allocation (SDR 4,027 million) (US$5.5 billion) The net payment of the charges stops when Nigeria’s SDR holdings reach the cumulative allocation amount,” the International organization further stated.

Nigeria’s Public Debt Burden Persists
It is worth noting that Nigeria’s public debt, which stood at ₦144 trillion as of December 2024, continues to raise concerns among stakeholders and observers.

This figure is expected to increase significantly by the year’s end due to a projected budget deficit of ₦13 trillion for 2025.

The recent sharp decline in oil prices suggests that the federal government may need to incur additional borrowing to cover this deficit.

Currently, the federal government owes substantial amounts to various multilateral organisations, including the IMF, World Bank, and African Development Bank (Afdb).

In the previous year, Nigeria allocated $4.66 billion for external debt servicing, a notable rise from $3.5 billion in 2023, with multilateral creditors representing the largest share at $2.62 billion, or 56 per cent of the total.

Furthermore, Nigeria has continued to secure new loans from the World Bank, amounting to over $8 billion from that institution alone.

Given the outstanding loan obligations and the prospect of additional borrowing, particularly from the World Bank, economic analysts warn that the government is not yet in a stable position.

They specifically advise caution regarding the repayment of loans from the IMF and emphasise the importance of focusing on foreign loans to ensure both debt and fiscal sustainability.

IMF Loan Repayment Has Not Changed Anything
Speaking with journalists, Emeritus Professor of Economics, Ndubisi Nwokoma, said that nothing has changed, as there were other loan facilities still hanging around the neck of the federal government.

“That has not changed the big picture, the big picture is still not a good or desired position.

“Government is still borrowing, we are indebted to many multilateral institutions, we are indebted to AfDB, World Bank, we are taking bilateral loans, so it doesn’t significantly change our debt profile and with the drop in the price of oil, it makes it more difficult for government to stay without borrowing, even though it has been made easier by the removal of fuel subsidy and the harmonisation of the foreign exchange market.

“This had made it easier for the government in terms of public finance and not to be under serious pressure, if there were still fuel subsidy the fall in price of fuel would have been a very big blow on public finance because basically we are talking about public finance, government has much money to play around with, so the triple down effect on the economy is not very strong, but in terms of fiscal sustainability for government, it’s an improvement.

“So nothing has changed on the part of the common man or the economy or inability to get the economy out of the woods but public finance, fiscal sustainability is being assisted with those earlier policies that took place in 2023 but drop in price of crude may make us go back to our borrowing ways, so not much has really changed,” Nwokoma told Daily Trust.

No Nation Can Do Without Borrowing – Ajuwon
However, an economist at the African School of Economics in Abuja, Dr. Oluseye Ajuwon, has hailed the Nigerian government for clearing the IMF loan.

He stated that no nation exists without borrowing. However, Nigeria must borrow responsibly, he said.

“There is no nation that can do without borrowing, not even a developed country not to talk of a struggling economy like ours. However, we need to borrow responsibly.

“Borrowing responsibly simply means borrowing money for a project that will be able to repay the loan by itself, and spending the loan judiciously,” Ajuwon noted.

Nigeria Needs To Double Down On Reduction Of Debts
On his part, the Director/CEO, Centre for the Promotion of Private Enterprises (CPPE), Dr. Muda Yusuf, said the repayment of the IMF loan signalled the commitment of the government to reduce its debt burden.

He said: “However, I think we need to continue to double down on the reduction of our debts because given the current debt level and particularly given the current level of our debt service commitment and the amount of resources we are committing to debt service, I think it will help our fiscal sustainability, our debt sustainability if we work towards reducing the totality of our debt exposure especially external debt because from all indications, external debts are much more difficult to manage and service than domestic debts.”

According to him, the focus must be on doubling down on both domestic and external debt.

“So the payment of these components of debt is a welcome development, it will in some sense reduce the burden of outstanding debts and we need to do a lot more of that and going forward, as much as possible, we should reduce our exposures, especially to foreign debts,” Yusuf stressed.

“And utilisation of debts is also essential, debts must be committed to projects that would enhance the productivity in the economy and that should be our priority, and that is speaking largely to our infrastructure stock.

“We should prioritise infrastructure investment in our debt exposure, which is extremely important. I am also hoping that our fiscal consolidation objectives will be improved and better achieved with the current tax reform.

“We expect that the revenue administration would be much more efficient without necessarily putting additional burden on the citizens or businesses. If we are able to do that, then the pressure to incur more debt would reduce. We need to ensure that the cost of domestic debts is as low as it can be as well,” he concluded.