International Monetary Fund IMF, has confirmed that Nigeria has asked for financial assistance from the multilateral institution to fight covid-19 under the rapid financing instrument. IMF Managing Director Ms. Kristalina Georgieva, in a statement issued in Washington said that it is working hard to respond to the request. Georgieva said “To support these efforts, Nigeria’s government has requested financial assistance under the Fund’s Rapid Financing Instrument (RFI). This emergency financing would allow the government to address additional and urgent balance of payments needs and support policies that would make it possible to direct funds for priority health expenditures and protect the most vulnerable people and firms.
“We are working hard to respond to this request so that a proposal can be considered by the IMF’s Executive Board as soon as possible.” Ms. Kristalina Georgieva, Managing Director of the International Monetary Fund (IMF) further said “Nigeria’s economy is being threatened by the twin shocks of the COVID-19 pandemic and the associated sharp fall in international oil prices. President Buhari’s administration is taking a number of measures aimed at containing the spread of the virus and its impact, including by swiftly releasing contingency funds to Nigeria’s Center for Disease Control and working on an economic stimulus package that will help provide relief for households and businesses impacted by the downturn”.
Minister of Finance Zainab Ahmed had said that the federal government 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. According to Zainab, 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.