The Nigerian government will source N2.7 trillion from multilateral financial institutions and the Nigeria Sovereign Investment Authority (NSIA) to cushion the effects of COVID-19 on the economy and vulnerable Nigerians.
This excludes the N500 billion President Muhammadu Buhari is seeking the approval of the National Assembly to disburse as stimulus package.
It also does not include what the government will access from the Islamic Development Bank (IDB) and the dividends it expects from the Nigerian Liquified Natural Gas (NLNG).
The N2.7tr comprises of $3.4 billion (N1,292,000,000,000) that Nigeria has saved with the International Monetary Fund (IMF); $2.5 billion (N950,000,000,000) from the World Bank; $1 billion (N350,000,000,000) from the African Development Bank and $150 million (N57,000,000,000) stabilisation fund in the NSIA.
Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, made this known on Monday in Abuja.
Mrs. Ahmed said: “Nigeria has a contribution of $3.4 billion with the IMF and we are entitled to draw up to the entire $3.4 billion no 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.
“The $3.4 billion is the amount of our contribution with the IMF and this is the provision that IMF has made for every member country to apply for between 50 to 100 per cent of their contribution.”
The money that will be coming from the IMF, she explained, “is for a programme that has no conditions attached to the multi-lateral institution’s programmes and this is not an IMF programme.”
Defending the government’s decision to drawn down on its contributions, she said: “Up to date, we were told that up to about 80 countries have applied to draw from their contributions.”
Other sources of fund the government hopes to draw from to meet the challenges of coronavirus, the minister said, include a “request from the World Bank for $2.5 billion and $1 billion from the AfDB.”
The request made to the IMF, World Bank, IDB, and the AfDB, Ahmed said “are requests for the nation both for the Federal Government and the states.
She explained that Buhari gave other approvals in order to address the emerging fiscal risks that have emerged as a result of the drop in the international oil prices and COVID-19.
These include the $150 million to be withdrawn from the NSIA to support the June 2020 Federation Accounts Allocation Committee (FAAC) disbursement.
The Stabilisation Fund, according to the minister “was created for such emergencies, and based on the fiscal assumptions underpinning the 2020 Appropriation Act, monthly FAAC disbursements to the federal and state governments were projected at N888.5 billion.”
She stated that “our experience shows that monthly FAAC receipts must average at least N650 billion for the federal and state governments to meet their current obligations. “Unfortunately, we project that monthly receipts may decline to below N400 billion, over the next three to six months.”
Mrs. Ahmed said the President has also approved that her ministry should engage with the Central Bank of Nigeria (CBN) on how to reach a consensus on “a debt and interest moratorium for state on federal government and CBN-funded loans, in order to create fiscal space for the states, given the projected shortfalls in FAAC allocations.
“Accordingly, once monthly average FAAC receipts fall below a specific threshold, interest and capital payments by states shall be suspended till monthly average FAAC receipts exceed the threshold,” the minister said.
The details of this moratorium she said “will be expeditiously worked out with a view to submitting the final proposals for President Buhari’s guidance and final approvals.
“The intervention is vital to create fiscal space for the States, as they deal with the health and economic impact of the crisis. States will also be encouraged to explore similar arrangements on their outstanding debts to commercial banks.
The N500 billion fiscal stimulus package comprises various measures with funding drawn from various special funds and accounts, in consultation with and with the approval of the National Assembly.
It is to be utilised for the upgrade of healthcare facilities in states; creation of a Special Public Works Programme; and to fund any additional interventions that may be approved by the President.
