NIGERIA may get approval from the International Monetary Fund (IMF) today for a $3.4bn the government asked for as the body’s executive board is due to sit and deliberate on the matter and reach a decision on the application.
On April 6, Nigeria’s finance minister Zainab Ahmed, had applied for the loan to help fund the government’s 2020 budget after doing so from oil proceeds became impossible. Nigeria’s 2020 budget was set at $28.8bn but this was predicated on the country selling 2m barrels of oil at day at a price of $57 a barrel.
With the total collapse in the global oil economy as a result of the spread of the coronavirus pandemic, prices have collapsed to below $10 a barrel and Nigeria is struggling to find any buyers for her petroleum. Nigeria’s four export terminals are stacked with barrels of oil that cannot be sold and shipping tankers have had to return to port because nobody wants their cargo.
Faced with an impossible scenario, Mrs Ahmed asked for a loan so the government can at least continue functioning and salaries can be paid. Although the loan request is likely to be approved today, the funds are expected to arrive within six to 12 weeks of the original request date.
If approved, the loan would be among the largest allocations by the IMF to an African country in response to the Covid-19 pandemic. According to the IMF, about 102 countries applied for aid as a result of the Covid-19 pandemic and it has already approved requests from several countries.
IMF managing director, Kristalina Georgieva, said: “Nigeria’s economy is being threatened by the twin shocks of the Covid-19 pandemic and the associated sharp fall in international oil prices.”
She added that the federal government had initiated a number of measures aimed at containing the spread of the virus and its impact, including the swift release of contingency funds to Nigeria Centre for Disease Control. According to Ms Georgieva, the Nigerian government is also working on an economic stimulus package that would help provide relief for households and businesses impacted by the downturn.
According to the IMF, Nigeria and other African countries need an estimated sum of $114bn to fund the campaign against the outbreak of the coronavirus disease across the continent. Nigeria is banking on the IMF loan and similar requests from the World Bank and the African Development Bank, to cushion the effects of the pandemic on the country’s economy.