On Tuesday, the executive board of the International Monetary Fund (IMF) approved the sum of $3.4 billion emergency support requested by Nigeria.
IMF deputy MD Mitsuhiro Furusawa in a statement announcing the approval said the COVID-19 pandemic and the plunge in oil prices are severely impacting Nigeria, adding that the funds will provide much-needed liquidity to respond to urgent balance of payments needs.
Furusawa also called for the country to expedite the unification of its exchange rate.
The statement reads: “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 toward a more unified and flexible exchange rate are also important and unification of the exchange rate should be expedited.
“Once the COVID-19 crisis passes, the focus should remain on medium-term macroeconomic stability, with revenue-based fiscal consolidation essential to keep Nigeria’s debt sustainable and create fiscal space for priority spending. Implementation of the reform priorities under the Economic Recovery and Growth Plan, particularly on power and governance, remains crucial to boost growth over the medium term.”
