COVID-19: IMF Approves $3.4 Billion Emergency Funding for Nigeria

• The International Monetary Fund (IMF) on Tuesday, approved an emergency funding of $3.4 billion, as requested by Nigeria, to help the country mitigate the effects of the coronavirus pandemic on its economy.
• It is the single biggest assistance for any nation in Africa facing the pandemic. 
• The board noted that COVID-19’s near-term economic effect is expected to be significant on Nigeria as the country was already facing high external headwind risks

The International Monetary Fund (IMF) on Tuesday, approved an emergency funding of $3.4 billion, as requested by Nigeria, to help the country mitigate the effects of the coronavirus pandemic on its economy.

Under the Rapid Financing Instrument, the fund’s executive board approved the Government’s efforts to resolve the devastating effects of COVID-19.

It is the single biggest assistance for any nation in Africa facing the pandemic. The fund had previously approved $1 billion for Ghana.

On April 6, at the launch of the N500 billion fiscal stimulus measures in response to the COVID-19 pandemic, the Minister of Finance, Budget and National Planning, Zainab Ahmed, said that the IMF proposal was one of a range of options the country was exploring to collect funds to save its economy.

The minister said the other options for mobilizing financial support to the economic stimulus fund of the country included the World Bank’s $2.5 billion credit facility and the African Development Bank’s $1 billion.

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At its Executive Board meeting on Tuesday to consider Nigeria request for funding due to the coronavirus pandemic,  the IMF noted that the outbreak of COVID-19 has magnified existing economic vulnerabilities, leading to a significant contraction in most countries’ economic development, and largely to their external and fiscal financing needs.

“Once the impact of the COVID-19 shock passes, the authorities’ commitment to medium-term macroeconomic stability remains crucial to support the recovery and ensure debt remains sustainable,” the board said.

The board said the assistance was based on the country’s Special Drawing Rights under the Rapid Financing Instrument.

Noting that COVID-19’s near-term economic effect is expected to be significant, the board said Nigeria was already facing high external headwind risks.

The effect of the pandemic, combined with the rapid downturn in crude oil prices on the international oil market, has exacerbated the vulnerabilities of the country, resulting in a drastic decline in growth and significant funding needs.

The IMF said its financial support would help Nigeria limit the decline in international reserves and provide funding to the budget for targeted and temporary rises in expenditure aimed at controlling and mitigating the economic impact of the pandemic and the sharp fall in international oil prices.