The International Monetary Fund (IMF) has approved $3.4 billion in emergency financial assistance under its Rapid Financing Instrument to support the Nigerian authorities efforts, in addressing the severe economic impact of the COVID-19 shock and the sharp fall in oil prices.
The Fund confirmed on Tuesday that its Executive Board approved the country’s "request for emergency financial assistance of SDR 2,454.5 million ($ 3.4 billion, 100 percent of quota) under the Rapid Financing Instrument (RFI) to meet the urgent balance of payment needs stemming from the outbreak of the COVID-19 pandemic."
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 pandemic—along with the sharp fall in oil prices—has magnified vulnerabilities in the Africa’s largest economy leading to a historic contraction in real GDP growth and to large external and fiscal financing needs.
The IMF projects the Nigerian economy will contract by as much as negative 3.4 percent in 2020 as impact of the Coronavirus pandemic takes toll on the economy which was already facing headwinds from rising external vulnerabilities and falling per capita GDP levels.
The International Monetary Fund (IMF) expects a severe near-term economic impact of COVID-19 even as already high downside risks have increased.
Once the impact of the COVID-19 shock passes, the Nigerian authorities’ commitment to medium-term macroeconomic stability remains crucial to support the recovery and ensure debt remains sustainable, according to the Fund.
The International Monetary Fund (IMF) has approved Nigeria’s $3.4bn emergency loan request to assist the country tackle anticipated huge impact of the coronavirus pandemic, according to BusinessDay.
Hit by crashing oil prices and lockdowns, Nigeria requested the amount, which is the total of its existing holding with the IMF, under the Rapid Financing Instrument, which offers funding without the strings of a full program.
As at April 15, 2020, up to a hundred countries had approached the IMF for similar support under its rapid financing instrument, as calls heighten on the Fund to ramp up crisis response for emerging markets and developing countries to enable them combat impact of coronavirus.
Announcing the request to IMF earlier in the month, Zainab Ahmed, Minister of Finance, Budget and National Planning, had insisted that Nigeria does not intend to negotiate any formal bailout program with the IMF.
"This loan will not be tied to any conditionalities," Ahmed had said.
Ahmed also confirmed then Government was in talks with the World Bank for some support of up to $2.5bn, and had sent a similar request to the African Development Bank for up to $1bn as well as the Islamic Development Bank.