Managing Director of the International Monetary Fund (IMF) Ms. Kristalina Georgieva, yesterday acknowledged Nigeria’s loan request to boost Federal Government’s effort to contain the coronavirus threat.
In a statement released in Washington DC, the IMF boss promised that the board would give the request some expediated treatment to ensure prompt realisation of the objectives of the request.
“Nigeria’s economy is being threatened by the twin shocks of the COVID-19 pandemic and the associated sharp fall in international oil prices’. She said President Buhari’s administration is taking a number of measures aimed at containing the spread of the virus and its impact, including by swiftly releasing contingency funds to Nigeria’s Centre for Disease Control and working on an economic stimulus package that will help provide relief for households and businesses impacted by the downturn.
“To support these efforts, Nigeria’s government has requested financial assistance under the Fund’s Rapid Financing Instrument (RFI). This emergency financing would allow the government to address additional and urgent balance of payments needs and support policies that would make it possible to direct funds for priority health expenditures and protect the most vulnerable people and firms. We are working hard to respond to this request so that a proposal can be considered by the IMF’s Executive Board as soon as possible.” the statement read.
This came as the United Nations last week noted that the consequences of a combined health pandemic and a global recession will be catastrophic for many developing countries and could halt their progress towards the Sustainable Development Goals.
Consequently, the global body has recommended that a total of $1 trillion be made available through the expanded use of Special Drawing rights $1 trillion of debts owed by developing countries should be cancelled this year.
It also said that about $500 billion was needed to fund a Marshall Plan for health recovery and dispersed as grants.
With two-thirds of the world’s population living in developing countries (excluding China) facing unprecedented economic damage from the COVID-19 crisis, the UN called for a US$2.5 trillion package for these countries as part of efforts to turn expressions of international solidarity into meaningful global action.
According to a UNCTAD (the UN trade and development body), report released on March 30, 2020, the speed at which economic shockwaves from the coronavirus pandemic have hit developing countries has been quite dramatic, even when compared to the 2008 global financial crisis.
“The economic fallout from the shock is ongoing and increasingly difficult to predict, but there are clear indications that things will get much worse for developing economies before they get better,” UNCTAD Secretary-General Mukhisa Kituyi said.
The report shows that in the two months since the virus began spreading beyond China, developing countries have taken an enormous hit in terms of capital outflows, growing bond spreads, currency depreciations and lost export earnings, including from falling commodity prices and declining tourist revenues.