Prior to the new twist, Nigerians were inundated with reports that the money was a drawdown on Nigeria’s savings with the IMF without any conditions attached.
But yesterday, the government admitted that the Rapid Financing Instrument (RFI) was approved for the country on Tuesday, with strings attached.
Speaking on a Nigerian Television Authority (NTA) programme, which LEADERSHIP monitored in Abuja yesterday, the minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, explained that the $3.4 billion facility was granted at one per cent interest rate with a three
and half years repayment moratorium. She added that the facility has a repayment plan of five years.
Addressing journalists earlier in the month, the minister had said: ”This (the $3.4billion emergency support fund) will not be tied to any conditionalitie
In a swift reaction, a professor of capital market, Uche Uwaleke, urged the government ”to be as wise as a serpent” in her dealing with the IMF.
The former Imo State finance commissioner said that while an additional soft credit line of $3.5 billion which the government hopes to get from the World Bank ($2.5 billion) and the African Development Bank ($1 billion) to wage COVID-19 war stands to reason, the same cannot be said of the $3.4 billion loan from the IMF.
In a telephone interview with LEADERSHIP, Prof. Uwaleke said that his reservation was to the fact that the IMF credit facility was a non-concessiona
Financial assistance under the RFI is provided in the form of outright purchases without the need for a full-fledged programme 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. Prior actions may be required where warranted.
He explained that the facility was like a cooperative society granting its member loan the amount of which is determined by what is contributed. The country is not leaving the IMF membership by pulling its contribution/
Uwaleke said that ”while the government is encouraged to muster every resource in the fight against the pandemic, entering into a debt trap will clearly jeopardise economic recovery effort post COVID-19.”
Beyond that, Uwaleke said that except the relevant section is amended by the National Assembly, the IMF loan, unlike the long tenured concessional facilities from the World Bank and AfDB, contravenes Section 41 of the 2007 Fiscal Responsibility Act which requires that the government can only go for long -term concessional loans for capital expenditure.
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Who are the ones to bear the brute... How many of them that are in power now will be active to administer and ensure all as expected? Abeg make una continue to borrow with reckless abundance...