COVID-19 – Fiscal authorities unleash another round of stimulus
Earlier today, 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 rating 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 the 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 an 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 facilities 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
