IMF Approves $3.4 Billion Loan to Nigeria to Address the COVID-19 Pandemic

The International Monetary Fund (IMF) has approved the disbursement of US$3.4 billion financial assistance to Nigeria to be drawn under the under the Rapid Financing Instrument (RFI).

The money is to help Nigeria address the “severe economic impact of the COVID-19 shock and the sharp fall in oil prices especially in the wake of the COVID-19 pandemic.

The loan is the total of Nigeria‘s existing holding with the IMF under the Rapid Financing Instrument without any conditions attached to it.

The IMF financial support will help limit the decline in international reserves and provide financing to the budget for targeted and temporary spending increases aimed at containing and mitigating the economic impact of the pandemic and of the sharp fall in international oil prices.

The Minister of Finance and Chairman, Special Ministerial Task Force on COVID-19, Mrs. Zainab Ahmed, had early this month hinted of government’s move to apply for the loan to grow the economy, especially with the steady fall in the price of crude in the international market.

The IMF Managing Director, Kristalina Georgieva, had on Monday gave the clue on a webcast held by the Atlantic Council that the approval for Nigeria’s loan would come by the end of this month.

While confirming that the IMF board would meet yesterday to consider the request, Georgieva said: “We are working very rapidly to provide a significant emergency financing to Nigeria. I expect this to be done by the end of the month.”

Following the Executive Board’s discussion of Nigeria, Mr. Mitsuhiro Furusawa, Deputy Managing Director and Acting Chair, issued the following statement:

“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 to ward a more unified and flexible exchange rate are also important and unification of the exchange rate should be expedited”.

“The emergency financing under the RFI will provide much needed liquidity support to respond to the urgent BOP needs. Additional assistance from development partners will be required to support the government’s efforts and close the large financing gap. The implementation of proper governance arrangements—including through the publication and independent audit of crisis-mitigating spending and procurement processes—is crucial to ensure emergency funds are used for their intended purposes.”

25 Countries in Sub-Saharan Africa Have So Far Received $7.9B in Emergency Financial Assistance from the IMF Since the Covid-19 Outbreak Started.

The list includes: