(3 minutes read)
· The International Monetary Fund’s executive board approved
US$3.4 billion in emergency financial assistance for Nigeria to
support the oil exporter’s response to the coronavirus pandemic
· The assistance will help Nigeria to limit its decline in
international reserves, cushion its temporary spending hikes to
contain the pandemic and mitigate its economic impact due to fall in
oil prices
The International Monetary Fund’s executive board approved US$3.4
billion in emergency financial assistance for Nigeria to support the
oil exporter’s response to the coronavirus pandemic. This is, by far,
the largest assistance to any country in Africa. There are two subtle
reasons for extending assistance of this magnitude: first, Nigeria
with its population at 200 million is the most populated country in
the continent; two, the country has the repaying capacity on account
of its huge reserves of oil and gas and three the steady decline in
oil prices and mounting expenses for containment of Covid-19.
Of late, Nigeria n has been undergoing a difficult phase because of
the sharp drop in oil prices, disrupting its growth potentials. The
IMF said it would continue to engage with Nigeria in fine tuning its
reform process.
The assistance will help Nigeria to limit its decline in international
reserves, cushion its temporary spending hikes to contain the
pandemic and mitigate its economic impact due to fall in oil prices.
Declining oil prices and more protracted containment measures are
seriously affecting Nigeria’s economy. The IMF also said that once
the COVID-19 crisis passes, the focus should remain on medium-term
macroeconomic stability, with revenue-based fiscal consolidation to
keep Nigeria’s debt sustainable and create fiscal space for priority
spending. Nigerian authorities feel that the assistance would help the
country to mitigate partly the financial gap because of the oil price
decline. At the same time, the IMF is pressing for proper governance
arrangements and independent audits to ensure emergency funds are used
as intended. It also urges the West African country to approach other
development agencies to plug the resource gap.
