The Federal Government is seeking $6.9 billion (equivalent of N2.53 trillion) from the International Monetary Fund (IMF), the World Bank, the African Development Bank and the Islamic Development Bank to mitigate the impact of the ravaging coronavirus pandemic on Nigeria’s economy.
This is besides the N500 billion COVID-19 Crisis Intervention Fund recently approved by President Muhammadu Buhari.
The Minister of Finance, Budget and Planning, Zainab Ahmed, disclosed this in Abuja last Monday at a press briefing on the government’s fiscal stimulus measures in response to the Covid-19 pandemic and the oil price fiscal shock.
IMF savings to be emptied
It was gathered that out of the sum the federal government was planning to get, $3.4bn is Nigeria’s total savings at the IMF, which the government is applying to draw completely through the IMF’s COVID-19 Rapid Credit Facility Window.
“This drawing will not be tied to any conditionality. However, it is important to clarify that Nigeria does not intend to negotiate or enter into a formal programme with the International Monetary Fund at this time or in the foreseeable future,” the minister said.
She said a $2.5bn concessional loan was sought from the World Bank Group and another $1bn concessional loan from the African Development Bank.
The minister stressed that all these funds would be used to support the 2020 budget.
She said $1bn from the World Bank loan would go to the states; $1.5bn, to the federal government.
The minister did not specify the amount being sought from the Islamic Development Bank.
“Nigeria has a contribution of $3.4bn and we are entitled up to the whole of $3.4bn. We have in the first instance applied for the maximum amount. In the process, we will negotiate and get the maximum amount or less. This is a provision that the IMF has made for all member countries, you can apply for between 50-100 per cent of your contributions” she said.
According to her, the minimum time Nigeria could access the fund at the IMF was six weeks, but it could take up to two months to get the loans from the World Bank and the ADB.
Following dwindling of revenues to states and the FG, the minister noted that based on the fiscal assumptions underpinning the 2020 Appropriation Act, “monthly FAAC disbursements to the federal and state governments were projected at N888.5bn. However, due to the significant drop in international oil prices, FAAC monthly disbursements have declined in recent months to N716.3bn in January and N647.4bn in February 2020.
“Our experience shows that monthly average FAAC receipts must average at least N650 billion for the federal and state governments to meet their current obligations.
“Unfortunately, we project that monthly receipts may decline to below N400 billion over the next 3 to 6 months,” she said. “Thus, the sum of $150m will be withdrawn from the Nigeria Sovereign Investment Authority Stabilisation Fund to support the June 2020 FAAC disbursement.”
Borrowing inevitable now – Experts
Nigeria has no choice but to find money from wherever it can to fund the COVID-19 response as the country’s key sources of revenues have collapsed, an economist, Tope Fasua, told Daily Trust Monday.
He said that the COVID-19 challenge would extend beyond 2020.
“Our revenue has also totally collapsed. However, I would advise that we raise even more money through a domestic war bond which can mop up idle funds in the hands of Nigerians for government’s use,” he said.
Fasua, who is a member of Daily Trust Board of Economists, said the war bond would reduce the impact of borrowings on the Naira and hopefully lead to some inflow of much needed foreign exchange from diaspora and foreign portfolio investors.
“Nigeria should use this opportunity to improve productivity and diversify the economy. It can be done. Economic diversification at the end is about being highly self-sufficient. As we can see, globalisation is on recess and every nation will have to fend for itself in everything including even financing ourselves out of this long term economic depression,” he said.
The economist said Nigeria must begin to look inwards, calibrate strategies and open the economy after this first two-week break while keeping some cautious practices in place.
An industrialist, Professor Adesoji Adesugba, said there was nothing wrong in borrowing as long as the money borrowed was judiciously used for the purpose it was meant for, and it created adequate commensurate value.
According to Adesugba, if the loan was properly planned, executed and monitored in a transparent manner, this could lead to the development of a sector hitherto neglected to the benefit of the whole country.
On the economy generally, the industrialist said: “any serious government will use this opportunity to revamp the health sector.”
Buhari orders distribution of 150 trucks of seized rice to Nigerians
The finance minister also said President Buhari had ordered distribution of 150 trucks of rice seized by Nigeria Customs Service to the 36 states of the federation.
She said the seized trucks of rice had been handed over to the ministry of humanitarian affairs and disaster management for onward distribution to Nigerians.
The minister said the president had also approved distribution of grains from strategic grain reserves across the country.
She added that Buhari also approved reduction of the price of fertiliser from N5, 500 to N5, 000 per bag with a view to giving subsidy to farmers as a result of the economic crisis caused by the coronavirus pandemic.
She stated: “We don’t want to rush and announce measures that will end up benefiting only a few of the segments. Our interest is to make sure that as much as possible a lot of Nigerians are productive and have liquidity in their hands.
“This will help to increase the consumption thereby assist to improve the economy. This is not something we will announce in a hurry without consulting with the central ministry and also without consulting with the key participants in the sector.”
She said the emerging health and economic risks resulting from the coronavirus pandemic and the decline in global oil prices posed existential threats to Nigeria’s economy, healthcare system, national security and lives of citizens.
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