President Bola Tinubu’s administration is expected to pay off a $3.4 billion owed to the International Monetary Fund (IMF) during his first tenure.
It was earlier reported that the Federal Government of Nigeria is expected to pay the IMF a total of $3.51 billion between 2022 and 2026 to offset the $3.4 billion loan.
However, according to information obtained from a webpage on the IMF’s 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 disbursed a $3.4 billion emergency financial assistance to Nigeria.
The loan was approved under the Rapid Financing Instrument by the Executive Board of the IMF on April 28 to address challenges arising from the economic impact of COVID-19 in the country.
The loaned amount was disbursed on April 30, 2020.
A statement by the IMF on the loan read, “The IMF approved $3.4bn 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.”
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’, a breakdown of how much Nigeria is expected to pay each year is provided.
The amount to be paid was provided in the Special Drawing Rights (SDR). The SDR is an international reserve asset, created by the IMF in 1969 to supplement its member countries’ official reserves.
SDR1 is currently $1.33 based on the exchange rate provided by the IMF on its website.
As a result, in 2023, Nigeria is expected to pay SDR 373.81m ($497.17m), which includes principal (SDR 306.81 m/$408.06m) and interest fee (SDR 67m/$89.11m) on the loan.
Nigeria is expected to pay a total of SDR1.32bn ($1.76bn) in 2024. This comprises a principal fee of SDR1.23bn ($1.64bn) and an interest fee of SDR94.76m ($126.03m).
In 2025, Nigeria is expected to pay a total of SDR650.58m ($865.27). This comprises a principal fee of SDR 613.63m ($816.13m) and an interest fee of SDR 36.95m ($49.14m).
The country is expected to pay a total of SDR25.56m ($33.99m) each in 2026 and 2027, which is only an interest fee. This is the least amount during the repayment period.
It was however observed that repayment had been extended to 2027 from the initial 2026 earlier reported.
In total, the new administration is expected to pay $3.19 billion to the IMF, which further suggests that the previous administration likely paid $320 million on the loan.
In its 2022 financial statements, the CBN made reference to the loan.
It stated, “In 2020, the Bank entered into a rapid financing instrument’s arrangement with the International Monetary Fund on behalf of the Federal Government of Nigeria. The loan is a five years tenor facility, repayable after a moratorium of two years and the interest rate is 1% per annum.”
The CBN added, “Repayment of the IMF loans as well as charges is the responsibility of the bank.”