The International Monetary Fund (IMF) has projected that the present
global health crisis could make Nigeria lose more than $26 billion from
crude oil sales.
In a statement issued on Thursday night, the
international lender also said it expects the country’s economy to
contract by about 3.4 percent in 2020, a 6-percentage point drop
compared to pre-COVID-19 projections.
Nigeria, Africa’s largest economy, has crude oil as its main export commodity, representing around 90 percent of its exports.
Since
prices of the commodity crashed few months ago, the country has
recorded shortfall in revenue and few weeks ago, Nigerian cargoes
carrying oil were looking for buyers.
“The sharp fall in
international oil prices, together with reduced global demand for oil,
is worsening the country’s fiscal and external positions. The country’s
oil exports are expected to fall by more than $26 billion,” the IMF said
in the statement.
The global lender explained that it was
because of the impending economic crisis it approved its largest
COVID-19 emergency financing package, $3.4 billion, under the Rapid
Financing Instrument (RFI) for Nigeria.
The federal government
requested an emergency assistance of about $3.4 billion, equivalent to
100 percent of its quota, under the IMF’s RFI.
The fund was
approved by the IMF Executive Board on April 28, 2020 to help alleviate
the impact of the COVID-19 pandemic and the sharp fall in oil prices.
According
to the IMF, the money will provide critical support to shore up
Nigeria’s heath care sector, and shield jobs and businesses from the
shock of the COVID-19 crisis. It will also help limit the decline in
international reserves.
IMF noted that, “To enhance transparency
and governance, the Nigerian authorities committed to undertake an
independent audit of crisis-mitigation spending and related procurement
processes, and to publish procurement plans and notices for all
emergency-response activities, including the names of awarded companies
and beneficial owners.
“Special budget lines are to be created to
record all crisis emergency response measures, which are published
daily on Nigeria’s treasury online portal.
“These measures will
not only ensure financial assistance received as part of the COVID-19
response is used for its intended purposes, but also significantly
strengthen the oversight of the entire budget used for the government’s
crisis response.”
Recall that recently, precisely on April 13,
the IMF Executive Board approved immediate debt service relief to 25 of
the IMF’s member countries, including 19 from Africa, under the IMF’s
revamped Catastrophe Containment and Relief Trust (CCRT).
However,
Nigeria was excluded from the fund, which is a part of IMF’s response
to help address the impact of the COVID-19 pandemic.
Explaining
the rationale behind this, the US-based organisation said, “Nigeria was
not included in the list of beneficiary countries for this initiative
because Nigeria had no outstanding debt owed to the IMF at that time.”