The executive board of the International Monetary Fund (IMF) has approved the $3.4 billion requested by the Nigerian government for emergency support.
The board met on Tuesday to discuss Nigeria’s request for emergency support under the rapid financing instrument.
The amount represents the total special drawing right (SDR) Nigeria holds with the international lender.
The disbursement is also the highest to be approved for any African nation so far.
A statement released by the IMF announcing the approval said the financial support will “help limit the decline in international reserves and provide financing to the budget for targeted and temporary spending increases aimed at containing and mitigating the economic impact of the pandemic and of the sharp fall in international oil prices”.
Mitsuhiro Furusawa, deputy managing director and acting chair of the IMF executive board, commended the “immediate action” taken by the federal government to respond to the COVID-19 crisis.
“The short-term focus on fiscal accommodation would allow for higher health spending and help alleviate the impact of the crisis on households and businesses,” he said.
“Steps taken toward a more unified and flexible exchange rate are also important and unification of the exchange rate should be expedited.
“Once the COVID-19 crisis passes, the focus should remain on medium-term macroeconomic stability, with revenue-based fiscal consolidation essential to keep Nigeria’s debt sustainable and create fiscal space for priority spending.
“Implementation of the reform priorities under the economic recovery and growth plan, particularly on power and governance, remains crucial to boost growth over the medium term.”
Furusawa said the emergency funding will provide the liquidity needed 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. The implementation of proper governance arrangements—including through the publication and independent audit of crisis-mitigating spending and procurement processes—is crucial to ensure emergency funds are used for their intended purposes.”
The IMF said it stands ready to “provide policy advice and further support as needed”.