The International Monetary Fund (IMF) has approved US$3.4 billion emergency financial assistance for Nigeria to fight coronavirus.
The Executive Board approved Nigeria’s request under the Rapid Financing Instrument (RFI).
The IMF explained that the near-term economic impact of COVID-19 is expected to be severe, while already high downside risks have increased.
It noted that even before the COVID-19 outbreak, Nigeria’s economy was facing headwinds from rising external vulnerabilities and falling per capita GDP levels.
The world body added that the pandemic – along with the sharp fall in oil prices – has magnified the vulnerabilities, leading to a historic decline in growth and large financing needs.
The IMF said it remains closely engaged with the Nigerian authorities and stands ready to provide policy advice and further support, as needed.
Mitsuhiro Furusawa, Deputy Managing Director and Acting Chair, in a statement said: “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.”