Conditions for IMF’s $3.4 billion loan to Nigeria

Nigeria’s $3.4billion IMF loan comes with many charges, fees, surcharges and interest of between two to three percent per annum, and further devalues the Naira to N389.976/USD as against CBN’s N360/USD.

As expected the International Monetary Fund, IMF, yesterday approved Nigeria’s application for $3.471.83 billion to bridge shortfalls in the 2020 budget and respond to the COVID-19 emergencies appropriately.

The figure converted to IMF’s Special Drawing Rights, SDR, amount to SDR (XDR) 2, 544.5 million. One XDR as at April 28 when the loan was approved = 1.36445USD; while 1USD = 0.732898XDR. Likewise, 1NGN = 0.0187919XDR; while 1XDR = 532.146NGN. On the other hand, 1NGN = 0.0025646USD and 1USD, according to IMF official figures, = N389.976, as against the N360.00 official CBN figure.

What this means is that IMF and CBN differ on the value of the Naira. Traditionally, IMF works with the national currency of member countries as stated by each country’s central bank. In the case of Nigeria, CBN has N360/1USD advertised on its website; while IMF has N389.976/USD. It suggests that the CBN is not telling Nigerians the truth about the value of their currency.

The amount a member can borrow is dependent on her quota subscription. Nigeria’s quota presently is SDR 2, 454, 500 and the country is borrowing SDR 2, 544,500, which based on capital appreciation represents 100 percent of her quota.

Effective DateQuota
March 30, 196150,000
November 16, 196663,000
March 19, 1968100,000
December 08, 1970135,000
May 31, 1978360,000
December 22, 1980540,000
December 23, 1983849,500
December 02, 19921,281,600
February 22, 19991,753,200
February 22, 20162,454,500
Nigeria IMF Quota (In Thousands SDRs). source IMF

The value of the $3.47 billion loan comes to about N1.35 trillion Naira. 

Nigeria’s loan comes under what the Fund classifies as Rapid Financing Instrument. RFI. The Fund is providing emergency financial assistance and debt relief to member countries facing the economic impact of the COVID-19 pandemic, and augmentation of existing financing arrangements under two broad categories: Rapid Credit Facility, RCF, Rapid Financing Instrument, RFI. Some debt relief grants are also financed by the Catastrophe Containment and Relief Trust, CCRT. 

The RCF “provides rapid concessional financial assistance with limited conditionality to low-income countries, LICs, facing an urgent balance of payments need.” It was created under the Fund’s Poverty Reduction and Growth Trust, PRGT, “as part of a broader reform to make the Fund’s financial support more flexible and better tailored to the diverse needs of LICs, including in times of crisis.” It emphasizes a country’s poverty reduction and growth objectives. Nigeria does not qualify for this category.

On the other hand, the RFI, which Nigeria has subscribed to, “provides rapid financial assistance … to all member countries facing an urgent balance of payments need.”  It replaced the IMF’s previous emergency assistance policy and can be used in a wide range of circumstances.

According to IMF, “The RFI provides rapid and low-access financial assistance to member countries facing an urgent balance of payments need, without the need to have a full-fledged program in place. It can provide support to meet a broad range of urgent needs, including those arising from commodity price shocks, natural disasters, conflict and post-conflict situations, and emergencies resulting from fragility. 

“The RFI is designed for situations where a full-fledged economic program is either not necessary or feasible. The former situation may arise when the shock is transitory and limited in nature, while the latter may arise when the member’s policy design or implementation capacity is limited, including due to the urgent nature of the balance of payments need or to fragilities. Financial assistance under the RFI is provided in the form of outright purchases without the need for a full-fledged program or reviews. A member country requesting RFI assistance is required to cooperate with the IMF to make efforts to solve its balance of payments difficulties and to describe the general economic policies that it proposes to follow,” states the Fund.

The loan provides for “emergency assistance” and “may also provide technical assistance to build the country’s capacity to implement comprehensive macroeconomic policies. Areas of focus may include building statistical capacity and establishing and organizing fiscal, monetary, and exchange institutions to help build tax and government expenditure capacity, payment, credit, and foreign exchange operations.” 

Loans under this window are to be repaid within 3¼ to 5 years and subject to charges, surcharges and commitment fees. If funding needs do not materialize, Nigeria will pay only a commitment fee which increases with the level of access available over a 12-month period, effectively ranging between 24 and 27 basis points for access between 500 and 1000 percent of quota.   

The interest rate is between 2.0 to 2.6 percent, and about 2.4–3.3 percent after 3 years. These interest rates exclude a flat 50 basis points service charge, which is applied to all IMF disbursements. 

IMF loans to sub-Saharan Africa in April 2020 

CountryType of Emergency FinancingAmount Approved
(in SDRs)
Date of Approval
Burkina FasoRapid Credit Facility (RCF)SDR 84.28 millionApril 14, 2020
Cabo VerdeRapid Credit Facility (RCF)SDR 23.7 millionApril 22, 2020
Central African RepublicRapid Credit Facility (RCF)SDR 27.85 millionApril 20, 2020
ChadRapid Credit Facility (RCF)SDR 84.12 millionApril 14, 2020
Comoros, Union of theRapid Credit Facility (RCF)

Rapid Financing Instrument (RFI)
SDR 2.97 million

SDR 5.93 million
April 22, 2020

April 22, 2020
Congo, Democratic Republic of theRapid Credit Facility (RCF)SDR 266.5 millionApril 22, 2020
Côte d’IvoireRapid Credit Facility (RCF)Rapid Financing Instrument (RFI)SDR 216.8 millionSDR 433.6 millionApril 17, 2020
GabonRapid Financing Instrument (RFI)SDR 108 millionApril 9, 2020
Gambia, TheRapid Credit Facility (RCF)SDR 15.55 millionApril 15, 2020
GhanaRapid Credit Facility (RCF)SDR 738 millionApril 13, 2020
Madagascar, Republic ofRapid Credit Facility (RCF)SDR 122.2 millionApril 3, 2020
Mozambique, Republic ofRapid Credit Facility (RCF)SDR 227.2 millionApril 24, 2020
NigerRapid Credit Facility (RCF)SDR 83.66 millionApril 14, 2020
NigeriaRapid Financing Instrument (RFI)SDR 2,454.5 millionApril 28, 2020
RwandaRapid Credit Facility (RCF)SDR 80.1 millionApril 2, 2020
São Tomé and Príncipe, Democratic Republic ofRapid Credit Facility (RCF)SDR 9.03 millionApril 21, 2020
SenegalRapid Financing Instrument (RFI)

Rapid Credit Facility (RCF)
SDR 215.73 million

SDR 107.87 million
April 13, 2020
TogoAugmentation of ECFSDR 71.49 millionApril 3, 2020
Total Amount ApprovedSDR 5,379.08 million


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