The board of the International Monetary Fund (IMF) has approved $3.4 billion to support Nigeria’s fight against COVID-19.

The emergency financial assistance to Nigeria is the highest so far to any member country.

The assistance, facilitated via the Rapid Financing Instrument (RFI), will help limit the decline in Nigeria’s international reserves, the IMF said.

It will also help to provide financing for the country’s budget, which has been severely affected by falling oil prices triggered by the pandemic and price wars.

The IMF praised the Nigerian government’s “immediate” response to the crisis, describing it as “welcome.”

However, it noted that short-term focus should be on higher health spending and palliative for households and businesses.

The financial body also said Nigeria should take steps to unify its exchange rate as quickly as possible.

After the COVID-19 crisis passes, Nigeria’s “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,”, Deputy Managing Director and Acting Chair of the IMF, Mr Mitsuhiro Furusawa said.

“Even before the COVID-19 outbreak, Nigeria’s economy was facing headwinds from rising external vulnerabilities and falling per capita GDP levels.

“The pandemic, along with the sharp fall in oil prices, 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 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 IMF said.

Following the Executive Board’s discussion of Nigeria, Mr Mitsuhiro Furusawa, IMF Deputy Managing Director and Acting Chair, said the COVID-19 outbreak, magnified by the sharp fall in international oil prices and reduced global demand for oil products, was severely impacting economic activity in Nigeria.

Furusawa said these shocks had created large external and financing needs for 2020, while additional declines in oil prices and more protracted containment measures would seriously affect the real and financial sectors and strain the country’s financing.

“The authorities’ immediate actions to respond to the crisis are welcome. 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.

“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.

“The emergency financing under the RFI will provide much needed liquidity support to respond to the urgent BOP 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,” Furusawa said. (NAN)