he International Monetary Fund (IMF) recently announced the approval of $3.4 billion emergency support to Nigeria under its Rapid Financing Instrument (RFI) facility1. This support fund comes as part of efforts to assist the nation in mitigating potential balance of payment problems as a result of both the decline in oil revenue as well as the economic effects of the COVID-19 pandemic. The IMF has approved a total of $8.3 billion to countries in the sub-Saharan region under various financing schemes in order to mitigate the impact of the pandemic2. However, the fund to Nigeria is the single largest disbursement made to any nation within the region and it is expected to provide the country with the much-needed liquidity during this critical period. On the grounds that Nigeria is taking 100% of its quota under the RFI, the government is expected to pay a concession fee totaling about 1.05% with repayment period up to 5 years. Although, this loan is not expected to completely finance the government’s spending plans or avert the imminent recession, it will serve as a cushion for revenue shortage problems.
May 28, 2020
Nigeria Economic Update (Issue 18)
Related
Nigeria Economic Update (Issue 50)
Crude oil price experienced
a mixed week from November 18 to November 25, 2016. Specifically, OPEC basket
price and Brent crude price fluctuated, to a daily average of $44.6 (from
$42.33)and $48.3 (from $46.86)per barrel
respectively. The present oil volatility is as a result of sell-offs,
attributable to speculations/fears of an insufficient production cut by OPEC (in
its bid to control oversupply) - a deal scheduled for its next meeting on
November 30th 2016. This speculations have arisen due to
the reluctance of major OPEC member country (Saudi Arabia) to participate in the
potential oil cut dealwhich could exert a downward pressure on oil
prices. However, oil prices should rise if OPEC members agree to the oil cut
deal. Irrespective of the outcome of the meeting, Nigeria is exempted from the
potential crude oil cut. Thus, it will be optimal for the government to act
quickly to address the insurgence in the Niger Delta region, in order to raise domestic oil production as much as
possible.