FG requests $6.9bn from IMF, World Bank to fund covid-19 fight, Buhari approves N500bn crisis intervention fund

Federal Government has requested $6.9 billion from World Bank, International Monetary Fund and Africa Development Bank to combat the social economic impact of the coronavirus pandemic on the economy, the finance minister Zainab Ahmed said. The federal government Ahmed said at a press briefing in Abuja has asked for $3.4 billion from the International Monetary Fund, $2.5 billion from the World Bank and $1 billion from the African Development Bank (AfDB). A two-week lockdown was imposed last week on Lagos state, home to the nation’s sprawling commercial hub, as well as neighbouring Ogun state and the capital territory of Abuja, in an effort to prevent the virus spreading across the country.

Meanwhile the minister said that the President has approved a N500billion covid-19 intervention fund. She said “Mr. President has approved the establishment of a-N500 billion COVID-19 Crisis Intervention Fund. The establishment of the Fund will involve drawing much-needed cash resources from various Special Funds and Accounts, in consultation with and with the approval of the National Assembly. The N500 billion is proposed to be utilised to upgrade healthcare facilities as earlier identified by the Presidential Task Force on COVID-19 and approved by Mr. President. “This will help to finance the Federal Government’s Interventions to support states in improving healthcare facilities, finance the creation of a Special Public Works programme and Fund any additional interventions that may be approved by Mr. President”. The minister noted that although similar challenges were experienced in 2008/2009 as well as in 2015/2016, Nigeria had considerably lower fiscal buffers now than in previous economic downturns.

According to her, the decline in international oil prices and domestic production may be magnified if a severe outbreak of COVID-19 occurs, despite ongoing efforts to curtail the spread of the pandemic through compulsory lockdown of Lagos and Ogun States, as well as the FCT. The minister said to directly address these health and economic challenges, the president approved the Fiscal Stimulus Package among others as part of an Integrated Policy Framework to ensure that Nigeria’s healthcare system, fiscal position and economy were sufficiently supported to weather these shocks. The minister told a news conference in Abuja that Nigeria was one of several African states seeking the suspension of debt-servicing obligations for 2020 and 2021 from multilateral lenders. The requests are part of a wider debate over debt relief. But analysts say securing such relief will be a challenge as it requires winning approval from a disparate array of creditors. The IMF, which has received requests for help from about 80 nations including 20 in Africa, is making about $50 billion available from its emergency financing facilities to help countries cope with the crisis. The World Bank has approved a $14 billion response package. Nigeria’s finance minister said IMF support would not be tied to a formal programme and the funds would not have conditions attached because the cash was being borrowed previous Nigerian contributions to the Fund.

“It is important to clarify that Nigeria does not intend to negotiate or enter into a formal programme with the International Monetary Fund, at this time, or in the foreseeable future,” Ahmed added.

The government said last month that spending in the $34.6 billion budget for 2020 would have to be cut by around $4.9 billion due to low oil prices and the impact of the pandemic, which has driven down global demand for fuel. The minister said the budget would assume an oil price of $30 a barrel, down from $57, and production of 1.7 million barrels per day (bpd) rather than 2.1 million bpd. “The emerging health and economic risks resulting from the COVID-19 pandemic and decline in international oil prices pose existential threats to Nigeria’s economy, healthcare system, national security, as well as the lives of our citizens,” she said.

Nigeria, where economic growth had been about 2%, is still struggling to shake off a 2016 recession caused by a previous slide in oil prices to below $30 a barrel. In the latest crisis, oil prices plunged to a nearly two-decade low of close to $20. Fitch on Monday pushed Nigeria’s debt rating deeper into “junk” territory, rating it a “B” and saying it expected the virus pandemic to drive the economy back into recession. It forecast the economy would contract 1% in 2020. Ahmed said the government had provided 102.5 billion naira($285 million) to support the healthcare sector, of which 6.5 billion naira had already been made available as critical expenditure for the Nigeria Centre for Disease Control. Lagos state, where most confirmed cases of the virus in the country have been identified, had received 10 billion naira in emergency funding, the minister said. The government said on Saturday it planned to create a coronavirus fund to strengthen its healthcare infrastructure. Ahmed said on Monday the president had approved the fund and said backing from lawmakers was being sought to borrow the money from special accounts. According to  Ahmed President Muhammadu Buhari has approved the engagement of 774, 000 Nigerians on Special Public Works programme in the country to cushion the effect of COVID-19 pandemic. Mrs Ahmed disclosed this at a press conference on fiscal stimulus measures in response to COVID-19 pandemic and oil prices fiscal shock, on Monday in Abuja. She said that 1, 000 people were expected to be recruited from each of the 774 local government areas in the country.

According to her, the sum of N60 billion for allowances and operational cost has been earmarked from the COVID-19 crisis intervention fund for the initiative. She disclosed that President Buhari had previously approved a pilot special public works programme in eight states to be implemented by the National Directorate of Employment, NDE. She added that Buhari had now approved that this programme be extended to all 36 States and the FCT from October to December 2020 and the selected time-frame was to ensure that it was implemented after the planting season. “The Federal Ministry of Finance, Budget and National Planning is also evaluating how best to extend the Special Public Works Programme, to provide modest stipends for itinerant workers to undertake Roads Rehabilitation and Social Housing Construction. Ahmed said: “And also Urban and Rural Sanitation, Health Extension and other critical services. This intervention will be undertaken in conjunction with the key federal ministries responsible for Agriculture, Environment, Health and Infrastructure, as well as the states, to financially empower individuals who lose their jobs due to the economic crisis.

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