There has been a cacophony of voices regarding Nigeria’s repayment of $3.4 billion loan to the International Monetary Fund (IMF). While some believe that there is no truth in the claim, others hail the Bola Tinubu administration for clearing the debt. There are even others who are simply sceptical about the entire episode.
However, Economy Post has chosen to provide some clarity on the loan. First, it is true that Nigeria repaid $3.4 billion borrowed from the multilateral body. The actual name of the facility is the Rapid Financing Instrument (RFI), which was given to Nigeria in 2020 due to the impact of COVID-19 on oil prices. During the start of the pandemic, oil prices plunged, upending the plans of several nations. Brent Crude closed at $9.12 per barrel on April 21 2020, far lower than $70 a barrel seen at the beginning of the year.
Though the price plunge was temporary, demand contraction lasted a bit longer basically because of the impact of the pandemic on China, which is one of the world’s biggest oil buyers. Investopedia, a global financial media website, says that “in 2020, worldwide demand for oil fell rapidly as governments closed businesses and restricted travel due to the COVID-19 pandemic.”
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It explains that “an oil price war between Russia and Saudi Arabia erupted in March when the two nations failed to reach a consensus on oil production levels.” It further explains that “in April, an oversupply of oil led to an unprecedented collapse in oil prices, forcing the contract futures price for West Texas Intermediate (WTI) to plummet from $18 a barrel to around -$37 a barrel.”
This was exactly when the IMF extended the facility to oil-producing nations to be able to meet their obligations. And Nigeria was one of those nations.
Two, President Tinubu did not do anything magical; he only fulfilled an obligation in line with the agreement reached with the IMF. The loan was originally supposed to be repaid in 2025 as its tenor is five years. Any failure to meet this obligation would have worsened Nigeria’s credit outlook and stymied Nigeria’s plan to access more loans from other multilateral institutions or lenders, including China.
“It is in Nigeria’s interest to repay the loan, otherwise it would send wrong signals to lenders and investors,” said an Abuja-based economist, Mr Dotun Shogunle.
Source: Debt Management Office (DMO), shared by Kalu Aja
Three, cost of the loan was 1 percent. This means that it is almost close to no cost for Nigeria. So, it is one of the best decisions taken by former President Muhamadu Buhari’s administration. It is not expensive and does not contain conditionalities that would put Nigeria in fiscal danger.
Fourth, by clearing this loan, Nigeria now has a clean slate with the IMF. According to a financial analyst, Mr Kalu Aja, “Nigeria does not regularly take IMF loans. Last real IMF loan was in 2000.” This implies that there is no outstanding loan with the IMF in particular.
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Fifth, Nigeria still owes other multilateral institutions such as African Development Bank (AfDB), International Fund for Agricultural Development, African Development Fund, European Development Fund, Islamic Development Bank, Arab Bank for Economic Development Agency, Exim Bank of China, among others, In fact, Nigeria owes no fewer than 18 international institutions, according to data from the Debt Management Office (DMO).
Previous and current debt
Nigeria’s debt stood at N144.6 trillion as at December 2024. Economy Post reported in April 2024 that President Bola Tinubu had borrowed N56.6 trillion in just 23 months.
Mr Tinubu’s debt in 23 months was N18.7 trillion or 75.2 percent less than N75.26 trillion loans taken by former President Muhammadu Buhari in the whole of 8 years. Under President Tinubu, Nigeria’s public debt jumped from N87.379 trillion as at June 2023 (one month after Mr Buhari’s exit from power) to N142.319 trillion as at September 2024. The debt reached N144.67 trillion ($94.23 billion) in December 2024.
With the World Bank’s approval of a fresh $1.08bn loan in April 2025 to Nigeria to support education, nutrition, and economic resilience in the country, the total public debt is now around N144.67 trillion, which is a worry to financial experts.
However, with $3.4 billion loan repaid, Nigeria’s total debt stands at N139.23 trillion and brings Mr Tinubu’s debt down to N51.16 trillion, which is a significant step towards reducing the nation’s debt stock, according to financial analysts and economists.
