The Nigerian government has announced the complete repayment of a $3.4 billion loan from the International Monetary Fund (IMF), secured in 2020 to mitigate the economic fallout of the COVID-19 pandemic. The milestone, confirmed on May 12, 2025, reflects Nigeria’s commitment to fiscal discipline and signals a strengthening economic position amid ongoing reforms.
The loan, part of the IMF’s Rapid Financing Instrument, was disbursed in April 2020 to support Nigeria’s healthcare system, stabilize foreign exchange reserves, and cushion the impact of global economic disruptions. It carried a five-year repayment period with a three-year grace period and an interest rate of approximately 1%.
The funds were critical in addressing a 2020 GDP contraction of 1.8%, enabling interventions like cash transfers to vulnerable households, medical equipment procurement, and support for small businesses. The final repayment, completed ahead of schedule, was facilitated by improved oil revenues, which averaged $65 per barrel in 2024, and non-oil sector growth, particularly in telecommunications and agriculture.
The repayment aligns with President Bola Tinubu’s economic agenda, which emphasizes reducing external debt dependency and boosting domestic revenue. Nigeria’s external debt stood at $42 billion in December 2024, down from $45 billion in 2023, reflecting cautious borrowing. The Central Bank of Nigeria (CBN) played a key role, leveraging a stabilized naira, trading at ₦1,537 to the dollar, and foreign exchange reserves of $40 billion to meet the obligation. The government highlighted that the repayment frees up fiscal space for infrastructure projects, including the $13 billion Lagos-Calabar Coastal Highway, and social programs like the expanded student loan scheme.
The IMF has commended Nigeria’s fiscal prudence, noting that early repayment demonstrates credibility in international financial markets. However, challenges persist, with inflation at 24.48% in January 2025 and public debt servicing consuming 60% of federal revenue. Critics argue that the government must prioritize domestic economic relief, given persistent food insecurity affecting 25 million Nigerians. The repayment milestone positions Nigeria favorably for future IMF engagements, potentially under concessional terms, as it navigates economic recovery and global uncertainties.