The International Monetary Fund (IMF) has agreed to extend Nigeria’s deadline for repaying a $3.4 billion loan to 2027. The loan was originally due to be repaid between 2022 to 2026.
The executive board of IMF had in 2020 approved the historic disbursement of $3.4 billion to Nigeria as an assistant for the coronavirus pandemic and failing oil price.
The fund Nigeria received from IMF is the second-highest of the countries that have benefitted from RFI during the Covid-19 pandemic. South Africa got $4.3billion, Côte d’ivoire – $ 886.2 million, Egypt – $2.77 Billion, Tunisia – $745 million, amongst others.
Is it a loan
It is not a loan in the typical sense but Nigeria still has to pay back with interest. Countries hold reserves with the IMF. These reserves are held in what we can technically call a currency called Special Drawing Rights (SDR).
The SDR is an international reserve asset, created by the IMF in 1969 to supplement its member countries’ official reserves.
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The value of an SDR is based on the value of certain international currencies including the dollar, euro, pound, Japanese yen and the Chinese renminbi.
The $3.4 billion Nigeria got represents SDR 2,454.5 million (100% of the quota Nigeria holds with the IMF).
New repayment plan
New data from IMF has given a breakdown of how much Nigeria is expected to pay spread the payment from 2023 to 2027.
The first installment, due in 2023, will be worth SDR373.81 million, or $497.17 million. This includes SDR306.81 million in principal and SDR67 million in interest.
The second installment, due in 2024, will be worth SDR1.32 billion, or $1.76 billion. This includes SDR1.23 billion in principal and SDR94.76 million in interest.
The third installment, due in 2025, will be worth SDR650.58 million, or $865.27 million. This includes SDR613.63 million in principal and SDR36.95 million in interest.
The final two installments, due in 2026 and 2027, will each be worth SDR25.56 million, or $33.99 million. These installments will only be interest payments.
In total, Nigeria is expected to repay the IMF loan with interest over a period of 5 years. The amount of each installment will decrease over time, as the principal amount of the loan is paid down.
