The board of the International Monetary Fund (IMF) has approved the sum of $3.4 billion to support Nigeria amidst the COVID-19 fight.
The emergency financial assistance to Nigeria is the highest so far to any member country.
The assistance, facilitated via the Rapid Financing Instrument (RFI), will help limit the decline in Nigeria’s international reserves, the IMF said.
It will also help to provide financing for the country’s budget, which has been severely affected by falling oil prices triggered by the pandemic and price wars.
The IMF praised the Nigerian government’s “immediate” response to the crisis, describing it as “welcome.”
However, it noted that short-term focus should be on higher health spending and palliative for households and businesses.
The financial body also said Nigeria should take steps to unify its exchange rate as quickly as possible.
After the COVID-19 crisis passes, Nigeria’s “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,” Deputy Managing Director and Acting Chair of the IMF, Mr Mitsuhiro Furusawa said.
On April 13, the IMF had announced immediate debt relief for 25 poor countries – most in Africa, but also in the Middle-East – to help them free up funds to fight the coronavirus pandemic.
The news was greeted with dismay by some Nigerians.
“We call for the inclusion of Nigeria in the beneficiary list for the COVID-19 related debt relief and debt moratorium based on very cogent reasons,” President of the Nigeria Labour Congress, Ayuba Wabba, said.
However, the Minister of Finance clarified that Nigeria couldn’t be granted debt relief since “it is not indebted to the IMF” and has “no outstanding debt obligation to be forgiven.”
She added that Nigeria had applied for new financing at the IMF and the country’s application “is under consideration and receiving attention.”
Now that the application has been granted, it will provide the country with more financing options to tackle the effects of the pandemic on the economy.
Earlier on Tuesday, the Senate had approved President Muhammadu Buhari’s request to secure a fresh loan of N850 billion to fund some projects in the 2020 budget.
The Buhari administration said it seeks to raise the loan from the domestic capital market to ensure adequate funds to finance projects in the budget.
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