The executive board of the International Monetary Fund (IMF)
has approved the $3.4 billion requested by the Nigerian government for
emergency support.
The board met on Tuesday to discuss Nigeria’s request for
emergency support under the rapid financing instrument.
The amount represents the total special drawing right (SDR)
Nigeria holds with the international lender.
The disbursement is also the highest to be approved for any
African nation so far.
A statement released by the IMF announcing the approval said
the financial support will “help limit the decline in international reserves
and provide financing to the budget for targeted and temporary spending
increases aimed at containing and mitigating the economic impact of the
pandemic and of the sharp fall in international oil prices”.
Mitsuhiro Furusawa, deputy managing director and acting
chair of the IMF executive board, commended the “immediate action” taken by the
federal government to respond to the COVID-19 crisis.
“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,” he said.
“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.”
Furusawa said the emergency funding will provide the
liquidity needed to respond to urgent balance of payments needs.
“Additional assistance from development partners will be
required to support the government’s efforts and close the large financing gap.
The implementation of proper governance arrangements—including through the
publication and independent audit of crisis-mitigating spending and procurement
processes—is crucial to ensure emergency funds are used for their intended
purposes.”
The IMF said it stands ready to “provide policy advice and
further support as needed”.
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