COVID-19: IMF Grants Approval to Nigeria’s $3.4bn Emergency Support

The International Monetary Fund on Tuesday approved $3.4 billion in emergency financial assistance to the Federal Government in addressing the severe economic impact of the COVID-19 pandemic.
The financial assistance, approved under the Rapid Financing Instrument, would also enable Nigeria to address the sharp fall in oil prices.
The Nigerian Government had requested an emergency financial assistance of $3.4bn (100 per cent of quota) under the RFI to meet urgent balance of payment needs stemming from the outbreak of the COVID-19 pandemic.
The financial support is expected to limit the decline in international reserves and provide funds for targeted and temporary spending increases aimed at mitigating the impact of the pandemic.

In granting Nigeria’s request Mr Mitsuhiro Furusawa, Deputy Managing Director and Acting Chair, noted that the COVID-19 outbreak magnified by the sharp fall in international oil prices and reduced global demand for oil products  and had severely impacted economic activity in Nigeria. According to Furusawa, “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.”
COVID-19 pandemic on the world economy and the international capital market had forced the Federal Government to reappraise its borrowing plans. Consequently, the government decided that it would be more expedient to raise the N850bn, earlier approved as external borrowing, from domestic sources. The statement said, “This conversion from external to domestic is to ensure that the implementation of the 2020 Appropriation Act is not jeopardised by lack of funds. “Thus, the N850bn is not new or incremental borrowing. Rather, it is an amendment of the source of borrowing from external to domestic.”
Meanwhile Germany said it had granted Nigeria debt relief amounting to N8.9bn (€22.4m) on account of the coronavirus pandemic.
Also, the German government said it had successfully campaigned for the G20, the Paris Club and creditor countries in favour of a debt moratorium for nations heavily affected by the economic impact of COVID-19.
The European  country stated this in a statement in Abuja on Tuesday, while announcing the provision of additional €5.5m (N2.2bn) to the Nigeria Humanitarian Fund managed by the United Nations to continue life-saving aid in Borno, Adamawa and Yobe states. It said the fund was for the drilling of wells, construction of sanitation facilities, rehabilitation of buildings or construction of shelters for internally displaced persons and other victims of insecurity in the North-East.
“This brings Germany ́s contribution to the NHF to a total of more than €29m since it became operational in May 2017, making Germany a major donor to the NHF over the past three years,” the German mission said in the statement.
It noted, “In 2020, the German treasury relieves Nigeria of debt repayments amounting to € 22.4m (N8.9bn)