Nigeria gets IMF’s $3.4bn loan at 1% interest rate

…as FG seeks debt service deferral

The International Monetary Fund (IMF) said it has already disbursed the $3.4 billion to Nigeria at one per cent interest rate, the Managing Director of the fund, Kristalina Georgieva disclosed.

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Speaking on CNBC Africa Georgieva said that the money is now with the Central Bank of Nigeria (CBN).

According to her, we have already disbursed the money to Nigeria. In emergency assistance, once the board approves, we disburse within days to the country and it goes to the Central Bank in dollars before it’s converted to Naira for the Federal Government’s use.

“The conditions are quite favourable. The repayment period is five years, up to two and a half years is a grace period and the interest on the loan is 1 per cent,” she said.

Georgieva said that there was a need for all receivers of the emergency funds in Nigeria to keep receipts of expenditure. She pointed out that Nigerians should demand accountability from its leaders in the spending of the emergency funds.

She added: “The funds could not afford to have credibility and accountability take the back seat in the course of the coronavirus crisis. Going further, she said that Nigeria had already met and exceeded the safeguards for disbursement of the funds.

This loan is the single largest disbursement by the Bretton Woods institution to any country that has been ravaged by the coronavirus pandemic. This emergency fund, which is a Rapid Financing Instrument (RFI), was approved by the IMF on April 28, 2020, to help Nigeria mitigate the devastating impact of the coronavirus pandemic and also to sort out the balance of payment issues.

Meanwhile, Minister of Finance, Budget and National Planning, Zainab Ahmed, had said that the federal government is seeking a debt service deferral form the IMF.

In Nigeria, federal government revenues are dwindling especially oil revenues and customs duties, which has compounded federal government’s revenue challenges that have been lingering for some time now.

As such, the minister said that on order for the federal government to continue delivering good governance to its people, it is seeking a debt service deferral from the International Monetary Fund.

As it stands, Nigeria’s debt servicing as contained in the 2020 appropriation act is N2.453 trillion.

The amount the federal government has stated it cannot spend on debt servicing considering the current economic challenges facing the country.

“We’re exploring a deferment of some of our debt servicing obligations from 2020-2021 and beyond. It’s not debt forgiveness, just a postponement of repayments until a time when we are better able to,” she said

She further clarified that the $3.4billion IMF emergency assistance to Nigeria had no conditionalities attached, adding that Nigeria will not commence repayment immediately.

According to her, “This is a 3-and-a-quarter moratorium on the IMF assistance to Nigeria. This means we don’t have to start repaying until 3.25yrs”