The International Monetary Fund (IMF) has officially confirmed that Nigeria has repaid in full the $3.4 billion financial assistance it received during the height of the COVID-19 pandemic. The facility, which was provided under the IMF’s Rapid Financing Instrument (RFI), aimed to support Nigeria’s economy at a time of extreme global uncertainty, plummeting oil prices, and mounting fiscal pressures.

In a statement released on Thursday by the IMF’s Resident Representative in Nigeria, Christian Ebeke, the institution disclosed that the repayment was finalized on April 30, 2025. This milestone marks the successful conclusion of one of the largest RFI disbursements globally during the pandemic era.

Background: Nigeria’s Emergency Financing in 2020

Amid the global economic crisis triggered by the COVID-19 outbreak, Nigeria’s economy experienced a significant downturn. The country faced a sharp decline in oil revenues, its primary source of foreign exchange, coupled with a contraction in GDP and rising fiscal deficits. In response, Nigeria turned to the IMF for rapid financial assistance and received $3.4 billion in April 2020 under the RFI—a program designed to provide quick support to member countries facing urgent balance of payment needs.

The IMF’s emergency assistance came with relatively lenient terms, requiring no traditional program conditionalities or interest payments at the time of disbursement, which was a relief for many developing countries grappling with immediate pandemic-related fiscal needs.

IMF Confirms Full Settlement of Debt

According to the IMF’s Thursday statement, “As of April 30, 2025, Nigeria has fully repaid the financial support of about US$3.4 billion it requested and received in April 2020 from the International Monetary Fund (IMF) under the Rapid Financing Instrument to help alleviate the impact of the COVID-19 pandemic and the sharp fall in oil prices.”

The full repayment not only reflects Nigeria’s efforts to honor its financial obligations but also strengthens its image within the global financial community. It demonstrates that the country, despite ongoing economic challenges, has remained committed to meeting its international debt obligations within agreed timelines.

Nigeria Still Liable for SDR-Related Charges

Although Nigeria has now paid off the principal of the IMF loan, the country will continue to incur annual Special Drawing Rights (SDR) charges over the coming years. SDRs are international reserve assets allocated by the IMF to its member countries, and they function as supplementary foreign exchange reserves.

The Fund explained that Nigeria’s continued payments, estimated at roughly $30 million annually, are tied to the difference between the country’s SDR holdings and its cumulative SDR allocations. These SDR-related charges are scheduled to be paid periodically throughout the year, with 2025 payments set for May, August, and November.

IMF data projects that Nigeria’s total SDR charges for 2025 will reach SDR 22.35 million—equivalent to approximately $30.24 million at current exchange rates. These payments are considered minor relative to the original loan amount but signify ongoing engagement with the IMF’s financial mechanisms.

Significance of the Loan and Its Repayment

Nigeria’s $3.4 billion loan from the IMF in 2020 stood out as one of the largest single disbursements under the Rapid Financing Instrument globally. Its size and terms reflected the urgent need for support during a period when many nations, including Nigeria, were on the brink of fiscal collapse.

Unlike traditional IMF programs, which usually involve rigorous economic reforms and conditional benchmarks, the RFI allowed for swift disbursement with less red tape. Nigeria used the funds to support critical expenditures, including public health interventions, social safety nets, and efforts to stabilize its economy during an unprecedented global crisis.

Rising Debt Service in 2024

While the full loan repayment marks a positive development, Nigeria has also experienced a significant rise in external debt servicing. In 2024 alone, the country paid a total of $4.66 billion to service its external debt—a sharp increase from $3.5 billion in 2023.

Notably, debt repayments to the IMF accounted for $1.63 billion in 2024, all of which were principal payments. No additional interest or service charges were recorded during that year, highlighting the favorable nature of the original RFI agreement. Multilateral creditors, including the IMF, dominated Nigeria’s external debt service obligations, making up 56% of the total. The IMF alone accounted for about 35% of Nigeria’s external debt repayments in 2024.

Implications for Nigeria’s Economic Outlook

The successful repayment of the $3.4 billion loan enhances Nigeria’s external debt profile and signals a strengthened financial position in the eyes of international lenders. By meeting its obligations ahead of schedule and without default, Nigeria reaffirms its commitment to fiscal discipline, even in the face of economic headwinds such as inflation, currency devaluation, and sluggish GDP growth.

This development may also position the country favorably for future engagements with multilateral financial institutions, should the need arise. The IMF’s endorsement of Nigeria’s repayment further assures investors and development partners of the country’s creditworthiness.

However, challenges remain. Nigeria continues to grapple with a range of economic issues including a high debt-to-GDP ratio, foreign exchange instability, fuel subsidy burdens, and rising unemployment. While the loan repayment is a significant achievement, sustained reforms and prudent fiscal management will be critical to ensure long-term economic stability and growth.

Looking Ahead

As Nigeria exits its repayment obligations to the IMF under the RFI, attention will now shift toward maintaining macroeconomic stability, enhancing domestic revenue generation, and improving the efficiency of public spending. Continued engagement with international partners, alongside homegrown policy solutions, will be essential for Nigeria to achieve broad-based and inclusive growth in the years to come.