The International Monetary Fund (IMF) has projected that the present global health crisis could make Nigeria lose more than $26 billion from crude oil sales.
In a statement issued on Thursday night, the international lender also said it expects the country’s economy to contract by about 3.4 percent in 2020, a 6-percentage point drop compared to pre-COVID-19 projections.
Nigeria, Africa’s largest economy, has crude oil as its main export commodity, representing around 90 percent of its exports.
Since prices of the commodity crashed few months ago, the country has recorded shortfall in revenue and few weeks ago, Nigerian cargoes carrying oil were looking for buyers.
“The sharp fall in international oil prices, together with reduced global demand for oil, is worsening the country’s fiscal and external positions. The country’s oil exports are expected to fall by more than $26 billion,” the IMF said in the statement.
The global lender explained that it was because of the impending economic crisis it approved its largest COVID-19 emergency financing package, $3.4 billion, under the Rapid Financing Instrument (RFI) for Nigeria.
The federal government requested an emergency assistance of about $3.4 billion, equivalent to 100 percent of its quota, under the IMF’s RFI.
The fund was approved by the IMF Executive Board on April 28, 2020 to help alleviate the impact of the COVID-19 pandemic and the sharp fall in oil prices.
According to the IMF, the money will provide critical support to shore up Nigeria’s heath care sector, and shield jobs and businesses from the shock of the COVID-19 crisis. It will also help limit the decline in international reserves.
IMF noted that, “To enhance transparency and governance, the Nigerian authorities committed to undertake an independent audit of crisis-mitigation spending and related procurement processes, and to publish procurement plans and notices for all emergency-response activities, including the names of awarded companies and beneficial owners.
“Special budget lines are to be created to record all crisis emergency response measures, which are published daily on Nigeria’s treasury online portal.
“These measures will not only ensure financial assistance received as part of the COVID-19 response is used for its intended purposes, but also significantly strengthen the oversight of the entire budget used for the government’s crisis response.”
Recall that recently, precisely on April 13, the IMF Executive Board approved immediate debt service relief to 25 of the IMF’s member countries, including 19 from Africa, under the IMF’s revamped Catastrophe Containment and Relief Trust (CCRT).
However, Nigeria was excluded from the fund, which is a part of IMF’s response to help address the impact of the COVID-19 pandemic.
Explaining the rationale behind this, the US-based organisation said, “Nigeria was not included in the list of beneficiary countries for this initiative because Nigeria had no outstanding debt owed to the IMF at that time.”