Zainab Ahmed, the minister of finance, has said the $3.4 billion credit facility approved for Nigeria by the International Monetary Fund (IMF) is a loan.
This is contrary to remarks earlier made by the minister on April 6, 2020, that Nigeria will not take a loan from the Bretton Wood institution.
Ahmed told Channels TV on Wednesday that the facility is will be paid over a period of five years with three and a quarter years moratorium.
“This loan is to be paid over a period of five years but before the repayment starts, we have a moratorium of three and a quarter years so altogether, we are looking at eight and a quarter years. It is a facility with an interest cost of one per cent,” she said.
The minister added that the funds would be used to funding health and social development spending and bridge the revenue shortfall caused by the drop in crude oil prices.
Addressing journalists on April 6 when she unveiled the federal government’s fiscal response to the COVID-19 pandemic, Ahmed had said: “We have also applied for funding 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”.
Adding that it would not be tied to any conditionalities, the minister had said, “it is important to clarify that Nigeria does not intend to negotiate or enter into a formal programme with the International Monetary Fund, at this time, or in the foreseeable future.”
She made similar remarks in an April 7 interview with Arise TV.
“Nigeria has already made a request to access $3.4 billion which is our contribution to IMF which is what the IMF is now offering to member countries as funds that we can access. That’s our contribution to the IMF, that’s like our shareholding. We have made a request to the IMF, there are no conditionalities attached to it,” she said.
“It’s not an IMF program we are entering into. We are taking that as a right just like any country that is attached to the IMF. Up to 80 countries have applied to access their own funds because it is our resources but we need it here now and the IMF is making it available.
“This is not an IMF program. This is Nigeria accessing the resources that it has with the IMF as part of its shareholding. The IMF has made those resources available to any member country that wants to access it. It is not an IMF program so there are no particular conditions that are normally attached to IMF programs.”
However, the loan Nigeria received was disbursed under the IMF’s rapid financing instrument.
Oluwatosin Olaseinde, a chartered accountant and founder of Money Africa, said Nigeria would incur $178 Million to service the loan during the repayment period.
ALL YOU NEED TO KNOW ABOUT THE IMF $3.4 Billion
1.) It is a 5 – year tenor loan not a grant with 3 years moratorium.
2.) The repayment of the loan will commence in 2023
3.) We will incur $178 Million to service the loan in that duration of time (5 years) pic.twitter.com/jNLHWOISY3
— Olúwatósìn Olaseinde (@tosinolaseinde) April 30, 2020