Covid-19: IMF to Provide an Emergency Bailout for Nigeria

• The IMF is considering a $3.4 billion emergency bailout for Nigeria to alleviate the economic issues caused by the Covid-19 pandemic.
• This is following Nigeria’s request for a loan from the IMF.
• Nigeria will use the bailout to cover it large revenue deficit due to the drop in oil prices and a failure to finance the greater part of its 2020 budget.

The International Monetary Fund is getting set to provide a $3.4 billion emergency bailout for Nigeria. The fund will be used to reduce the effects of the Covid-19 pandemic on the Nigerian economy. This was made known by Kristalina Georgieva, the Managing Director of the IMF.

Nigeria’s finance minister, Zainab Ahmed, announced earlier that the country had approached the IMF and other multilateral institutions for a $6.9 billion loan as it deals with declining government revenues and economic instability following the oil price collapse and the COVID-19 pandemic.

IMF’s Managing Director stated that they were considering an “emergency financing” for Africa’s largest economy. According to Georgieva “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”.

In a statement earlier in March, the International Monetary Fund (IMF) and the World Bank expressed concern and readiness to assist member countries in addressing the challenges raised by the Coronavirus outbreak. We have promised support for emerging market economies such as Nigeria.

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“The IMF and the World Bank Group stand ready to help our member countries address the human tragedy and economic challenge posed by the COVID-19 virus. We have engaged actively with international institutions and country authorities, with special attention to poor countries where health systems are the weakest and people are most vulnerable.

We will use our available instruments to the fullest extent possible, including emergency financing, policy advice, and technical assistance. In particular, we have rapid financing facilities that, collectively, can help countries respond to a wide range of needs. The strengthening of country health surveillance and response systems is crucial to contain the spread of this and any future outbreaks.”

Nigeria is expected to use the bailout to cover its large revenue deficit in the aftermath of the oil price collapse and its failure to finance a major portion of its 2020 budget. Nigeria has also demanded a freeze on debt service to unlock cash that is desperately required to bring the economy back on track.

The government has stated that it is considering several stimulus measures as it seeks to boost investor trust. The Central Bank and the banker’s committee have already committed to a N3.5 trillion debt finance and refinancing package for the private sector.

The FG also announced on Tuesday that it would go ahead with its Eurobond loans, while still pursuing debt relief. The International Monetary Fund (IMF) and the World Bank Community have urged all bilateral creditors to postpone debt payments by Nigeria and other 75 member countries of the International Development Association that have applied for it.