The Federal Government of Nigeria has disclosed its plan to use the reserve boost from the International Monetary Fund (IMF) to fund 2022 budget.
According to the Finance Minister, Zainab Ahmed Nigeria received an IMF allocation of $3.35 billion in reserve assets – known as special drawing rights (SDR), and plans to use the funds to reduce a budget deficit that’s set to exceed a legal limit.
“We’re taking the IMF SDRs as part of the financing for the 2022 budget,” she said. “That may mean that we don’t have to borrow externally next year.”
“The government still needs to negotiate the terms at which it plans to borrow the IMF funds from the central bank,” Ahmed stated.
It’s still unclear if the IMF’s boost will help Nigeria avoid external borrowing altogether in 2022.
“That may be a possibility, but it’s too early to say,” Patience Oniha, the director-general of the Debt Management Office explained.