The Executive Board of the International Monetary Fund (IMF) has approved Nigeria’s request for $34 billion in emergency financial assistance.
The loan, which has a maximum repayment period of five years, comes under the Rapid Financing Instrument (RFI) meant for the country to meet its urgent balance of payment stemming from the outbreak of the COVID-19 pandemic.
The IMF has however asked that Nigeria’s exchange rate be unified and that a large part of the $3.4 billion should be channelled to the health sector.
In a statement on Tuesday, the Fund said the near-term economic impact of COVID-19 is expected to be severe, while high downside risks have increased.
It said that even before the COVID-19 outbreak, Nigeria’s economy was facing headwinds from rising external vulnerabilities and falling per capita Gross Domestic Product (GDP) levels.
The pandemic—along with the sharp fall in oil prices, the global financial body said, has magnified the vulnerabilities, leading to a historic decline in growth and large financing needs.
The IMF 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 COVID-19 pandemic and of the sharp fall in international oil prices.
”The IMF remains closely engaged with the Nigerian authorities and stands ready to provide policy advice and further support, as needed,” the statement said.