IMF explains conditions for Nigeria’s $3.4bn loan

The $3.4 billion emergency funding for Nigeria on Tuesday by the International Monetary Fund (IMF) is a repayable loan approved to help the country cushion the impact of the coronavirus pandemic on her economy, the Bretton wood Group clarified on Wednesday.

The IMF also mentioned the two conditions attached to the loan.

Since April 6, when the Minister of Finance, Budget and National Planning, Zainab Ahmed, announced that Nigeria submitted a formal request for approval to draw 100 per cent of her contribution to the IMF, there has been conflicting opinions among Nigerians about the status of the funding.

The minister’s explanation during the N500 billion fiscal stimulus fund launch in Abuja that “the loan will not be tied to any (IMF) conditionalities” may have heightened the controversy, as many Nigerians associate the usual IMF loans with tough conditionalities and interest rates.

“The Federal Ministry of Finance is also reaching out to multilateral organisations where we have borrowed externally, either for the Federal Government itself, or on behalf of the States, to also negotiate a debt deferment or debt suspension.

“As a matter of fact, last week, we had a virtual meeting with all the African Ministers of Finance and agreed to collectively ask for the suspension of debt service obligations for 2020 and 2021.

“The World Bank and IMF that were in the meeting indicated to us that this is possible. We will be negotiating with them on the terms of those deferment.

“Nigeria has a contribution of $3.4 billion with the IMF, and we are entitled to draw up to the whole of that amount, no less.

“We have in the first instance applied for that maximum amount from the International Monetary Fund’s COVID-19 Rapid Credit Facility to draw from our existing holdings with the World Bank Group / International Monetary Fund. This loan will not be tied to any conditionalities.