The International Monetary Fund (IMF), on Tuesday, approved US$3.4
billion emergency financial assistance for Nigeria to fight coronavirus.
The Executive Board approved Nigeria’s request under the Rapid Financing Instrument (RFI).
The IMF explained that the near-term economic impact of COVID-19 is
expected to be severe, while already high downside risks have increased.
It noted that even before the COVID-19 outbreak, Nigeria’s economy
was facing headwinds from rising external vulnerabilities and falling
per capita GDP levels.
The world body added that the pandemic – along with the sharp fall in
oil prices – has magnified the vulnerabilities, leading to a historic
decline in growth and large financing needs.
The IMF said it remains closely engaged with the Nigerian authorities
and stands ready to provide policy advice and further support, as
needed.
Mitsuhiro Furusawa, Deputy Managing Director and Acting Chair, in a
statement said: “The COVID-19 outbreak – magnified by the sharp fall in
international oil prices and reduced global demand for oil products – is
severely impacting economic activity in Nigeria.
“These shocks have created large external and financing needs for
2020. Additional declines in oil prices and more protracted containment
measures would seriously affect the real and financial sectors and
strain the country’s financing.
“The authorities’ immediate actions to respond to the crisis are
welcome. The short-term focus on fiscal accommodation would allow for
higher health spending and help alleviate the impact of the crisis on
households and businesses. Steps taken toward a more unified and
flexible exchange rate are also important and unification of the
exchange rate should be expedited.
“Once the COVID-19 crisis passes, the focus should remain on
medium-term macroeconomic stability, with revenue-based fiscal
consolidation essential to keep Nigeria’s debt sustainable and create
fiscal space for priority spending. Implementation of the reform
priorities under the Economic Recovery and Growth Plan, particularly on
power and governance, remains crucial to boost growth over the medium
term.”
