Nduka Chiejina, Abuja and Collins Nweze, Lagos
BARELY 24 hours after receiving $311 million Abacha loot from the United States and the Island of Jersey, the Federal Government has been handed the $3.4 billion emergency fund it requested from the International Monetary Fund(IMF).
The emergency fund which was approved by the IMF Board on April 28, comes under the Rapid Financing Instrument (RFI). It is meant to assist Nigeria’s fight against COVID-19 and to resolve urgent balance of payment needs.
In spite of the dollar flow, government has projected that the economy will contract by 3.4 per cent this year due to the debilitating effects of COVID-19.
IMF Managing Director, Kristalina Georgieva, told CNBC Africa on Tuesay that the $3.4 billion had been credited to the CBN’s account.
Georgieva however said there was need for all receivers of the emergency fund in Nigeria to ‘keep receipts’ of expenditure.
According to her, the fund cannot afford to have credibility and accountability take back seats in the course of the COVID-19 crisis.
She explained that Nigeria had already met and exceeded the safeguards for the disbursement of the funds, which comes few days after the IMF board’s approval.
She said: ”We have already disbursed. In emergency assistance, the board approves, we disburse within days to the country and it goes to their Central Bank in dollars before it gets converted into naira in the case of Nigeria.
“The conditions are quite favourable. Repayment period is five years, up to two and half years is grace period and the interest on the loan is one per cent.”
The IMF said across Africa, countries are trying to build buffers to strengthen their economies, and for Nigeria, it is through collection of taxes.
She advised Nigeria to use the COVID-19 crisis to transform into a more resilient economy. “We have put in place policy tracking action, and we are seeing progress each country is making. The IMF will continue to support countries and shield them from catastrophic implications of the COVID-19 crisis,” she said.
Also on Tuesday the federal government again cut Budget 2020 plans to assume a lower petroleum price of $20 per barrel.
Finance Minister Zainab Ahmed stated this at a virtual conference tagged Citizens dialogue session on government fiscal policy decisions in response to the fall in oil prices and the COVID-19 pandemic.
At the session, she said that the benchmark would again have to be revised down.
According to her, “We are in the process of an amendment that is bringing down the revenue indicator to $20 per barrel,”
She however cautioned that “budget revisions would need to be approved by lawmakers before being signed into law by the president.
Ahmed also added that the country’s oil and gas projects will be “delivered much later than originally planned” due to upstream budget cuts.
With regards to Nigeria’s debt servicing obligations the finance minister said, Nigeria is in talks to defer debt service obligations to “2021 and beyond”.
This is coming a week after the country swapped plans to borrow $2.36 billion from the domestic market instead of borrowing from the international markets to finance the budget.
According to her, “it’s not debt forgiveness, it’s just rescheduling of our obligations,” said Ahmed, with regards to talks with lenders.
She did not provide details of the lenders with whom talks were held.
While lamenting that Nigeria was spending around 58 to 60 per cent of its revenue on debt servicing, Ahmed explained that that was why Nigeria approached the lenders.
Also at the session, the Director- General of the Budget Office of the Federation, Ben Akabueze, said oil revenues were expected to fall by more than 80 per cent.
He said the government had revised its projections and expected the economy to contract by 3.4% this year compared with its previous expectation that it would grow by 2.9%.
To respond to the projected contraction, Akabueze stated that “Nigeria would speed up marginal field licensing and oil mining licence renewals to try to raise revenues.”