Nigeria has received a loan of $3.4billion from the International Monetary Fund (IMF). The loan was given to support the country’s efforts to address the adverse economic impact of the coronavirus and the fall in the price of oil, Nigeria’s major export commodity. The loan is to be fully repaid by 2025 in eight quarterly disbursements beginning after three years and three months from when it is disbursed, with a 1% interest rate. Experts have argued that a non-concessional loan such as this attracts other charges such as a commitment fee and a service charge. While some observers view the loan in terms of its purpose to address the country’s urgent Balance of Payments (BOP) needs, others view it as a debt trap, which may hamper on the country’s efforts towards economic recovery. They wonder why Nigeria opted to borrow under the IMF’s Rapid Financing Instrument (RFI), as opposed to the interest-free and long term Rapid Credit Facility (RCF), with a maturity period of 10 years.
Issues of transparency and accountability remain major concerns over the utilisation of funds received by the Nigerian Government in form of donations and loans, by multilateral, private and other organisations. The IMF is reported to have attached conditions which Nigeria must fulfill to be able to draw on the loan; including removal of subsidy on petroleum products, scrapping of multiple exchange rates and downsizing of its civil service.