The IMF has explained the conditions attached to the $3.4 billion emergency funding it granted Nigeria in a bid to help the country cushion the impact of the coronavirus pandemic on her economy.
On Tuesday, the Executive Board of the IMF, during its special meeting to consider Nigeria’s request, gave approval to the credit facility, saying that the approval for the funding was given under the Fund’s Rapid Financing Instrument (RFI).
It said the approval of 100 per cent of Nigeria’s contribution to the Fund as emergency financial assistance was based on the country’s Special Drawing Rights (SDR) under the RFI.
The IMF said the $3.4 billion approved for Nigeria was equivalent to SDR 2,454.5 million (of 100 per cent of Nigeria’s quota held with the Fund).
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 have 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 Minister said:
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.
But in the process of negotiation, we might get that maximum amount or less. This is a provision the IMF has made for every member country, to apply for between 50 to 100 per cent of their contribution to the IMF. This is a programme that has no condition attached like other IMF programmes.
Confirming the funding to be a loan, however, an IMF Representative, Laraba Bonet, while mentioning the conditions, said:
It is a loan, to be repaid within five (5) years, at a one per cent interest rate.
Similarly, the Director-General of the Debt Management Office (DMO), Patience Oniha, also confirming the funding to be a loan, stated:
It is a loan. We (Nigerian government) will publish the terms in due course.