IMF ready to grant more COVID-19 loans to Nigeria, others

The International Monetary Fund (IMF) has expressed its readiness to grant more loans to Nigeria and other developing countries.

IMF stated this in its recently published note on its website title ‘Stepping Up to Meet Low-Income Countries’ Pandemic Recovery Needs’

According to the Bretton Woods Institution, financial assistance to 50 low-income countries reached $13 billion in 2020, up from an average of $2 billion per year prior to the pandemic and $739 million in grant-based debt service relief was granted to 29 of the organization’s poorest and most vulnerable members.

The IMF is expecting this financing to hit $48 billion in the coming years.

IMF last year created COVID-19 financial assistance and debt service relief programme to help developing countries access to financial assistance at zero-interest rates.

The Nigerian government has so far received $3.4 billion from IMF under this scheme the highest in Sub-Saharan Africa.

However, a report by Transparency International (TI) has accused the Nigerian government of making it difficult to track how the IMF funds have been spent.

“In almost all cases, there was not sufficient identifying information about beneficial owners to ensure that people were not illicitly profiting from government contracts. Moreover, governments did not specify how they would provide the information they committed to disclosing,” TI noted in its report.

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“Many of Nigeria’s poorest citizens have yet to see the benefit of the assistance,” it added.

Despite these reservations, the IMF expects Nigeria and other developing nations to seek additional external financial assistance in the coming years.

IMF also expects Poverty Reduction and Growth Trust (PRGT) loan to countries to peak at $32 billion in 2025-26.

“In the first stage, the Fund aims to mobilize a further $18 billion in PRGT loan resources and $3.3 billion in new bilateral contributions for subsidy resources to allow continued lending through the PRGT at zero interest rates. Donors will be offered various, flexible mechanisms for providing subsidy resources. This will be complemented by the use of IMF internal resources of about $0.7 billion.

“In the second stage of the strategy, in 2024/25—by which time current economic uncertainties are expected to have receded—the IMF will decide on the size of the PRGT and associated funding mechanisms for the long term. Use of existing and new SDRs is expected to facilitate the funding effort.” IMF stated.

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