The Managing Director of the IMF, Kristalina Georgieva, noted the impact of the pandemic, which has threatened the Nigerian economy as a result of the shocks associated with sharp falls in international crude oil prices.
Following the outbreak of the virus, also known as COVID-19, crude oil price was drastically forced down to about $30 per barrel, more then 59 per cent below the approved $57 per barrel benchmark price in the 2020 Appropriation Act.
As a result, the Nigerian government was jostled into a panic adjustment of the fiscal fundamentals in the budget. It reviewed the underpinning projections for the year.
“Because the 2020 Appropriation Act was based on certain fiscal assumptions, we have been compelled to revisit them given the emerging economic realities as a result of the impact of COVID-19,” the Minister of Finance, Budget and National Planning, Zainab Ahmed, said on Monday at the launch of the N500 billion stimulus package against the pandemic.
The minister said with projected oil revenues significantly affected, the Nigerian government was compelled to revise the benchmark oil price for 2020 from $57 per barrel to $30 and oil production to 1.7 million barrels per day.
Similarly, she said the government resolved to adjust downwards its non-oil revenue projections, including various tax and customs receipts as well as proceeds from the privatisation exercises.
The IMF noted the various interventions adopted by the Buhari administration to contain the spread of the virus and its impact on the economy.
The Fund identified some of the measures to include swiftly releasing contingency funds to the Nigeria Center for Disease Control (NCDC) and working on an economic stimulus package to help provide relief for millions of households and businesses devastated by the unprecedented global economic downturn.
“To support these efforts, Nigeria’s government has requested financial assistance under the
Fund’s Rapid Financing Instrument (RFI),” the IMF said, confirming the disclosure by Mrs Ahmed last Monday of Nigeria’s request.
“This emergency financing would allow the (Nigerian) government to address additional and urgent balance of payments needs and support policies that would make it possible to direct funds for priority health expenditures and protect the most vulnerable people and firms.
“We are working hard to respond to this request so that a proposal can be considered by the IMF’s Executive Board as soon as possible,” Ms Georgieva assured.
On Monday, the finance minister announced the Nigerian government’s request for 100 per cent of its contribution to the international finance body as part of a $7.05 billion mobilization of financial support from multilateral organisations to battle coronavirus.
The minister said details of the other financial support include a request for similar credit facilities from the World Bank ($2.5 billion) and $1 billion from the African Development Bank (AfDB).
These would be in addition to another $150 million to be drawn through the Nigerian Sovereign Investment Authority (NSIA) from the Stabilisation Fund, a special fund established to help support the government’s economic recovery in times of emergencies.