Why Nigeria is requesting for $3.4 billion emergency bailout from IMF

The Federal Government, for the first time in over 20 years is seeking an emergency bailout fund from the International Monetary Fund, IMF. The Minister of Finance, Zainab Ahmed had hinted earlier that the government requested a $3.4 billion rapid credit from IMF and a total of $9.6 billion from multilateral lenders to cushion the effect of COVID-19 on the economy.

The request was made after the IMF announced earlier in March that it was prioritizing requests from Sub-Saharan African countries in disbursing its emergency financing to combat the impact of the coronavirus pandemic.

Caught in the middle of an impending economic crisis following the crash in global oil prices and the COVID-19 pandemic, Nigeria is seeking the fund to bridge the revenue gap in the 2020 budget. It also seeks the suspension of its debt-servicing obligations for 2020 and 2021 to free up much-needed cash to revitalize the economy.

Without the expected revenue from oil exports pegged at $57 per barrel in the 2020 budget, the government is finding it difficult to meet its financial obligations. And the Coronavirus outbreak has worsened the situation, as major economic activities are currently on hold.

"The emerging health and economic risks resulting from the COVID-19 pandemic and decline in international oil prices pose existential threats to Nigeria's economy, healthcare system, national security, as well as the lives of our citizens," Zainab Ahmed said.

To offset these threats, she said the government had to look to the likes of IMF, World Bank and African Development Bank (AfDB) for some reprieve. 

The IMF Managing Director, Kristalina Georgieva acknowledged Nigeria's economic dilemma by disclosing that the executive board of the monetary organization will meet on Tuesday, April 28 to deliberate on granting Nigeria's request.

"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," Georgieva said in a statement.

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