In a notable development, Nigeria has received an extension from the International Monetary Fund (IMF) for the repayment period of a significant $3.4 billion loan. The original repayment timeline of 2022 to 2026 has been extended to 2027, offering relief amid the country’s ongoing economic difficulties.
The IMF’s executive board approved the disbursal of this historic loan to Nigeria in 2020, as a response to the combined impact of the COVID-19 pandemic and plummeting oil prices. While not a conventional loan, Nigeria is obliged to reimburse the amount with interest, falling under the category of countries holding reserves with the IMF.
Nigeria’s share from the IMF is the second-largest among nations benefiting from the Rapid Financing Instrument (RFI) during the pandemic. South Africa leads with $4.3 billion, followed by other recipients such as Côte d’Ivoire with $886.2 million, Egypt with $2.77 billion, and Tunisia with $745 million.
This financial aid is closely connected to the concept of Special Drawing Rights (SDR), an international reserve asset introduced by the IMF in 1969 to supplement member countries’ official reserves. The SDR’s value is determined by a basket of key global currencies, including the dollar, euro, pound, Japanese yen, and Chinese renminbi.
Nigeria’s allocated amount of $3.4 billion covers its entire quota with the IMF.
Recent IMF data shows Nigeria’s repayment schedule spanning from 2023 to 2027, distributed over five installments. The first installment in 2023 includes both principal and interest, followed by similar patterns in subsequent years. The last two installments in 2026 and 2027 consist solely of interest payments.
With the passage of time, each installment’s size will gradually decrease as the principal loan amount is paid off. This extension offers Nigeria a crucial financial respite as it navigates pandemic-related challenges and economic fluctuations.
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