By Collins Nweze
The Executive Board of the International Monetary Fund (IMF) approved Nigeria's request for $ 34 billion in emergency financial assistance.
The loan, which has a maximum repayment period of five years, is covered by the Rapid Financing Instrument (RFI), intended for the country to meet its urgent balance of payments due to the outbreak of the COVID-19 pandemic.
However, the IMF called for Nigeria's exchange rate to be unified and for much of the $ 3.4 billion to be channeled to the health sector.
In a statement released on Tuesday, the Fund said the short-term economic impact of COVID-19 is likely to be severe, while downside risks have risen.
He said that even before the outbreak of COVID-19, Nigeria's economy was facing headwinds against increasing external vulnerabilities and falling per capita Gross Domestic Product (GDP).
The pandemic – along with the sharp drop in oil prices, the global financial agency said, has widened vulnerabilities, leading to a historic decline in growth and major financing needs.
Financial support from the IMF will help limit the decline in international reserves and finance the budget for targeted and temporary spending increases, with the aim of containing and mitigating the economic impact of the COVID-19 pandemic and the sharp drop in international oil prices .
"The IMF remains closely engaged with the Nigerian authorities and is ready to provide political advice and additional support as needed," the statement said.
Following the Executive Council's discussion of Nigeria's request, Mitsuhiro Furusawa, Deputy Administrative Director and Acting President, issued the statement which says in part:
“The outbreak of COVID-19 – amplified by the sharp drop in international oil prices and the reduction in global demand for oil products – is severely impacting economic activity in Nigeria.
"These shocks created major external and financing needs for 2020. Additional drops in oil prices and more prolonged containment measures would seriously affect the real and financial sectors and would be undermining the country's financing."