Bimbola Oyesola, Uche Usim, Abuja, Adewale Sanyaolu and Chiwendu Obienyi
In a strategic move to stem the dreaded COVID-19 pandemic, the Federal Government on Monday disclosed that Nigeria is seeking to pool over $7.05 billion from contributions and loans from multilateral institutions to strengthen is interventions .
Using the official dollar rate of N380/$1, the money translates to N2.679 trillion.
Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, who made the disclosure in Abuja at a media briefing to intimate Nigerians on efforts made so far in tackling the pestilence, also said the government was prospecting an undisclosed amount of money in accruals from the Nigerian Liquefied Natural Gas (NLNG), among others.
A breakdown of the fund being expected shows that $3. 4 billion will come from Nigeria’s contributions (savings) to the International Monetary Fund (IMF), while $2.5 billion will be a loan from the World Bank. Again, $1 billion loan is expected from African Development Bank (AfDB) while $150 million would come from the stabilisation fund domiciled with the Nigerian Sovereign Investment Authority (NSIA).
The N2.679 trillion being sourced is different from the N500 billion intervention package sourced locally from special accounts that have already been announced by President Muhammadu Buhari.
The Minister noted that plans were afoot to create 1,000 jobs per local government area, saying that the programme would be done in conjunction with the National Directorate of Employment (NDE).
The Minister explained that the $3.4 billion IMF savings comes with no conditionalities being one of the windows the global Fund intends to use to support countries access more funding to battle coronavirus.
She said: “Nigeria has a contribution of $3.4 billion with the IMF and we are entitled to draw up to the whole of that $3.4 billion or less. We have in the first instance applied for that maximum amount, then in the process, when we negotiate, we might get the maximum amount or less but that is the amount of our contribution with the IMF and this is the provision that IMF has made for every member country that you can apply for between 50 to 100 per cent of your contribution to the IMF.
“Again, this is a programme that has no conditions attached. Up to date, we were told that up to about 80 countries have applied to draw from their contributions to the IMF.
“Again, we have requested $2.5 billion from the World Bank, $1 billion from the AfDB. Let me state that the request we’ve made from the IMF, to the World Bank, to the Islamic Development Bank, to the AfDB are request for the nation both for the federal as well as the states.
“For example, the request to the World Bank, $1.5 billion is for FG and $1 billion for states. That’s our request but during the process of reviews and negotiations, that proportion could change but the request we are doing is on behalf of the federation to all of this multilateral institutions”, she explained.
To address the emerging fiscal risks occasioned by COVID-19, the Minister said President Buhari has approved that $150 million be withdrawn from the Nigeria Sovereign Investment Authority (NSIA) Stabilization Fund to support the June 2020 Federal Account Allocation Committee (FAAC) disbursement.
“The Stabilisation such emergencies and is to be utilized for this purpose. We are also exploring other options to augment FAAC disbursements over the course of the 2020 fiscal year.
“On when the projected funds will be received, Ahmed said multilateral funds take a minimum processing period of six weeks.
On other efforts at creating palliatives for the country, she said; “The Federal Government has provided N102.5 billion in resources to be available for direct interventions in the healthcare sector. Of this sum, N6.5 billion has already been made available to the NCDC for critical expenditure.
Meanwhile, the Organised Private Sector (OPS) yesterday, said the move to withdraw Nigeria’s savings from the IMF to fight coronavirus has become inevitable bearing in mind the current state of the economy.
The Lagos Chamber of Commerce and Industry (LCCI) said it was obvious that with the current situation, Nigeria has serious fiscal viability issues, which make desperate borrowing measures inevitable.
The LCCI Director General, Muda Yusuf, noted that Nigeria presently is grappling with unprecedented slump in revenue, from both domestic and external sources.
“It is a shock that we are not prepared for. We will be lucky to have any funding for capital projects in this financial year,” he said.
According to Yusuf, Nigeria’s current situation calls for serious introspection on the management of public finances, cost of governance, revenue optimisation from revenue generating agencies, forex policies among other initiatives.
However, the Director, Centre for Petroleum and Energy Economics, University of Ibadan, Prof Adeola Adenikinju, said two issues should be at the front burner of this drawdown; the conditionalities attached and the purpose of the withdrawal.
He warned that a country drawing down its IMF contributions should also be concerned about the independence of its monetary policy decisions.
Adenikinjo noted that the country should be transparent enough to allow citizens know the areas in which it wants to inject the funds and ensure that it is judiciously spent.
He lamented that the inability of Government to create buffers, especially building up its reserves before now, lead us to this precarious situation, adding that what Government is trying to do at the moment is to explore options created by IMF and other multilateral agencies for vulnerable countries which Nigeria is a part of.
For his part, Chief Executive Officer of Crane Securities Limited, Mr. Mike Eze, said apart from health challenges related to the CoVID-19, the next challenge we are having is on the economy because post COVID-19, the economy will be drastically affected. ‘‘As we speak, the economy is shut down and one does not have to be diplomatic. So if the Federal Government draws down its contribution in IMF, majority of it apart from going to health will go to the economy.
‘‘As we speak, the economy is shut down and one does not have to be diplomatic. So if the Federal Government drawdown its contribution in IMF, majority of it apart from going to health will go to the economy.
Also, we have seen that the GDP may be affected by the lockdown in the three major cities and once that is affected, then the economy as a whole will be affected.