Nigeria: Request for Purchase under the Rapid Financing Instrument - Press Release; Staff Report; and Statement by the Executive Director for Nigeria

IMF Staff Country Reports, April 29, 2020

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Nigeria: Request for Purchase under the Rapid Financing Instrument - Press Release; Staff Report; and Statement by the Executive Director for Nigeria

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Bibliographic details

• Published: April 29, 2020
• Series: IMF Staff Country Reports
• DOI: https://doi.org/10.5089/9781513542546.002

Summary findings

• The paper presents Nigeria’s Request for Purchase Under the Rapid Financing Instrument (RFI).
• The authorities’ immediate actions to respond to the crisis are described as welcome.
• Short-term fiscal accommodation would allow for higher health spending and help alleviate the impact of the crisis on households and businesses.
• Steps toward a more unified and flexible exchange rate are important; unification of the exchange rate should be expedited.
• Once the coronavirus disease 2019 crisis passes, focus should remain on medium-term macroeconomic stability.
• Revenue-based fiscal consolidation is essential to keep Nigeria’s debt sustainable and create fiscal space for priority spending.
• Implementation of reform priorities under the Economic Recovery and Growth Plan, particularly on power and governance, remains crucial to boost growth over the medium term.
• Emergency financing under the RFI will provide much needed liquidity support to respond to urgent balance of payments needs.
• Additional assistance from development partners will be required to support the government’s efforts and close the large financing gap.

Short-term response and emergency financing

• Immediate actions taken by authorities are welcomed.
• Short-term fiscal accommodation objectives:
  • Allow higher health spending.
  • Alleviate impact on households and businesses.
• Emergency financing under the RFI:
  • Provides liquidity support for urgent balance of payments needs.
• Financing gap:
  • Additional assistance from development partners will be required to close the large financing gap.

Exchange rate policy

• Steps toward a more unified and flexible exchange rate are noted as important.
• Recommendation:
  • Unification of the exchange rate should be expedited.

Medium-term macroeconomic policy and fiscal consolidation

• Priority after the crisis:
  • Focus on medium-term macroeconomic stability.
• Fiscal policy recommendation:
  • Revenue-based fiscal consolidation is essential to:
  • Keep Nigeria’s debt sustainable.
  • Create fiscal space for priority spending.

Structural reforms and growth

• Implementation priorities under the Economic Recovery and Growth Plan:
  • Power sector reforms.
  • Governance improvements.
• Rationale:
  • These reforms remain crucial to boost growth over the medium term.

Subjects and keywords

• Subject: Banking, COVID-19, Energy subsidies, Exchange rates, Expenditure, Foreign exchange, Health, Oil prices, Prices, Public debt
• Keywords: central bank financing, COVID-19, CR, crisis pass, emergency financing request, Energy subsidies, Exchange rates, financing, financing need, Global, IMF financial support, IMF lending tracker, ISCR, Oil prices, shock pass

Content in this bundle

• 1ngaea2020001 — Executive Summary
  • 1ngaea2020001 — Executive Summary (Markdown version)
  • 1ngaea2020001 — Executive Summary (PDF)