IMF says Nigeria to repay $3.4bn loan in 2027

International Monetary Fund (IMF) has disclosed that the Nigerian government will pay off the sum of $3.51bn accruing from between 2022 and 2026 in order to offset a $3.4bn loan credited to the country.

According to the IMF, the money would be paid during the administration of President Bola Tinubu.

The IMF statement published on its website and titled; ‘Nigeria: Financial Position in the Fund as of July 31, 2023,’ said an outstanding of $3.19bn, will be paid off during the current administration.

It would be recalled that in April 2020, the IMF disbursed a $3.4bn 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.

“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,” a statement by the IMF on the loan read.

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. 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 SDR373.81m ($497.17m), which includes principal (SDR306.81m/$408.06m) and interest fee (SDR67m/$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 SDR613.63m ($816.13m) and an interest fee of SDR36.95m ($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.

Reports said that repayment had been extended to 2027 from the initial 2026 earlier reported.

In total, the new administration is expected to pay $3.19bn to the IMF, which further suggests that the previous administration likely paid $320m on the loan.

In its 2022 financial statements, the CBN made reference to the loan.

“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.

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