Nigeria to fully repay N1.224trn IMF loan by 2025

April 29, 2020
39 Views

Nigeria is to fully repay the $3.4 billion (N1.224 trillion at N360/$1) International Monetary Fund (IMF) loan approved on Tuesday by 2025.

This is as a finance expert, Professor Uche Uwaleke, warned that government’s decision to take the loan was unreasonable.

IMF Senior Country Director, Mr Amine Mati, who spoke in Abuja on Wednesday explained that the “$3.4 billion is a loan” provided through resources provided by all IMF member countries primarily through the quota.

“It is a loan of five years, with one percent interest rate which is one twelfth of what international capital market charges right now and the repayment starts in three and a quarter year and to be completed after five years in eight quarterly disbursements,” he declared.

Mati revealed that the loan approved by IMF executive board on Tuesday will be disbursed by the end of this week.

However, Uwaleke who is a professor of finance who hailed “an additional soft credit line of $3.5 billion which the government hopes to get from the World Bank and African Development Bank to wage COVID-19 war stands to reason, the same cannot be said of another $3.4 billion loan from the IMF for obvious reasons.

“First, it is a non-concessional loan with commercial terms being disbursed under the IMFs Rapid Financing Instrument (RFI) which, in addition to a basic interest rate charge, attracts a commitment fee, service charge and a surcharge on outstanding credit.

“The facility is for a short period due within three and one quarter to 5 years which means repayment will be done in eight quarterly instalments starting Q3 2023 assuming disbursement is made before end of Q2 2020.

“Secondly, except the relevant section is amended by the National Assembly, the IMF loan, unlike the long tenored concessional facilities from the World Bank and African Dev Bank, contravenes Section 41 of the 2007 Fiscal Responsibility Act which requires that the government can only go for long term concessional loans for capital expenditure.

“The RFI of the IMF, under which we are taking the loan, is not designed to finance capital projects but only to address BOP challenges which must be why the condition also states that any country receiving RFI loan is required to cooperate with the IMF in solving its BOP difficulties.

“Against this backdrop and bearing in mind the country’s painful experience with the Fund during the SAP era, the government is expected to make public the full cost implications beyond disclosing that a full-fledged program with the Fund won’t be necessary.

“It will also be interesting to know why Nigeria is not going through the IMF Rapid Credit Facility (RCF) window, just like Ghana that accessed $1 billion, considering that financing under RCF carries zero interest rate, has a grace period of 5 and half years and a maturity of 10 years.

“While the government is encouraged to muster every resource in the fight against the pandemic, entering into a debt trap will clearly jeopardize economic recovery effort post COVID’19.

Although Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed said the loan was without normal IMF conditions, Deputy Managing Director and Acting Chair, Mr. Mitsuhiro Furusawa said on Tuesday mentioned some conditions attached.

According to him, Nigeria must take steps toward a more unified and flexible exchange rate while unification of the exchange rate should be expedited.

“Once the COVID-19 crisis passes, the focus should remain on medium-term macroeconomic stability, with revenue-based fiscal consolidation essential to keep Nigeria’s debt sustainable and create fiscal space for priority spending.

“Implementation of the reform priorities under the Economic Recovery and Growth Plan, particularly on power and governance, remains crucial to boost growth over the medium term.

“The emergency financing under the RFI will provide much needed liquidity support to respond to the urgent BOP needs. Additional assistance from development partners will be required to support the government’s efforts and close the large financing gap.

“The implementation of proper governance arrangements—including through the publication and independent audit of crisis-mitigating spending and procurement processes—is crucial to ensure emergency funds are used for their intended purposes.”

YOU SHOULD NOT MISS THESE HEADLINES FROM NIGERIAN TRIBUNE

Buy and read digital replicas of your TRIBUNE titles by subscribing through E-VENDING

Islamic Teacher Who Keeps Over 500 Almajiri Girls And Boys Together Inside Mud House Arrested
An Islamic teacher who allegedly keeps over 500 boys and girls as almajiri in Zaria, Kaduna State, has been arrested and is currently being interrogated by the police. This was disclosed by the state Commissioner for Human Development and Social Services, Hajiya Hafsat Baba, while speaking with newsmen in Kaduna on Tuesday… Read full story

COVID-19: First Set Of Nigerians Abroad To Be Evacuated On Monday ― Foreign Affairs Minister
After several weeks of disappointment, the first set of Nigerians abroad anxious to return to the country would be evacuated by next Monday. Minister of Foreign Affairs, Geoffrey Onyeama made the disclosure on Tuesday at the weekly PTF briefing on COVID-19… Read full story

IG Orders Deployment Of Four CPs To Adamawa, Imo, Plateau, Abuja
The Inspector-General of Police (IG), Mohammed Adamu, has ordered the posting of four Commissioners of Police (CPs) to states and police formation. The Force Public Relations Officer (FPRO), DCP Frank Mba, disclosed this in a statement on Tuesday in Abuja… Read full story

COVID-19: Sokoto Records Three Deaths As Cases Hit 19
Sokoto State governor, Aminu Tambuwal has announced that three persons have died in the state as a result of coronavirus (COVID-19). The governor also disclosed that nine persons who had contact with the second confirmed COVID-19 patient in the state have also tested positive… Read full story

Constitution Review: How Far With NASS Ad Hoc Committee?
The ninth National Assembly has elected to undertake a review of the 1999 Constitution (as ammended) with a view to aligning its various provisions to contemporary political and economical concerns observed by Nigerians from all walks of life. As at the last count, there were over 40 bills seeking alteration of various sections of the constitution… Read full story

You may be interested

Social Media Trends For 28th September
News
News

Social Media Trends For 28th September

admin - September 30, 2020

NLC Strike Mixed reactions have trailed the suspension of the proposed strike by the Nigeria Labour Congress (NLC) after a…

News items that made headlines on Tuesday, September 29
News
1 views
News
1 views

News items that made headlines on Tuesday, September 29

admin - September 30, 2020

<!-- News items that made headlines on Tuesday, September 29 - ElombahNews HomeNewsNews items that made headlines on Tuesday, September…

Resettlement: I’ll Protect the Dignity of Every IDP in Borno State, Zulum Promises
News
1 views
News
1 views

Resettlement: I’ll Protect the Dignity of Every IDP in Borno State, Zulum Promises

admin - September 29, 2020

By Abraham Olatokunbo     Borno State Governor, Prof. Babagana Zulum has said no internally displaced persons shall be forced…

Leave a Comment

Your email address will not be published.