Cardinalstone Research looks at the financial authorities plan to cushion the adverse effects of covid-19 on the country’s economy,Monday,April 6,2020.
Earlier today,Monday,April 6,2020, the Federal Government (FG), through the Minister of Finance, Budget, & National Planning,
formally announced a set of fiscal stimuli aimed at easing the medical-cum-economic burden of COVID-19 and the
impact of oil price decline. The new measures are expected to complement previous stimulus packages announced by
the Central Bank of Nigeria (CBN) and the country’s import substitution policies, which, interestingly, now
appear to be somewhat “inspired” in the face of current realities.
Notably, the ongoing crisis has coincided with two credit ratings downgrades, with the latest being Fitch’s
long-term credit downgrade to ‘B’ (from ‘B+’ previously) which came just before the minister’s broadcast. The
downgrades have largely been linked with suggestions that prior measures were inadequate to correct Nigeria’s
weakening external balance position as the crisis threatens to plunge the country into a second recession in
four years. The FG, in line with global trend, has opted to increase the scope and depth of its response to
cushion the impact of the shocks and better position the nation for a swift rebound. The new stimulus measures
include:
Establishment of a N500 billion COVID-19 crisis intervention fund
This fund is expected to draw from existing special funds and accounts, with the backing of a proposed bill in
the legislature. The fund will be directed at improving healthcare infrastructure, supporting FG’s state
healthcare interventions, and expanding the ongoing special public works programme to the 36 states.
Importantly, the pilot phase of the public works programme already commenced in 8 states early in the year. The
programme is expected to create 1,000 jobs in each of the 774 local government areas of the country
NCDC to drawdown outstanding $82 million REDISSE facility as FG sources more external funding
The Nigeria Centre for Disease Control (NCDC) has access to a $90 million Regional Disease Surveillance Systems
(REDISSE) credit facility from the World Bank but has drawn only $8 million so far. The FG is aiming to fully
drawdown on the balance of the facility and request a fresh $100 million from REDISSE to meet COVID-19
emergencies in Nigeria. The government revealed it has also applied for the International Monetary Fund’s
COVID-19 Rapid Credit Facility, to drawdown the totality of Nigeria’s contributions ($3.4 billion as par
government estimates) with the World Bank Group and the IMF. FG also made it clear that this drawdown will be
free from all conditionalities and that the country is unwilling to negotiate a formal programme with the IMF
now or in the future. A further $1.0 billion will also be sourced from the AFDB for same purposes.
Popular Posts
