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FG battles COVID-19 with N500b package, seeks $3.4b IMF facility

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COVID-19: Egypt evacuates citizens from Nigeria•Budget 2020 benchmark now $30 per barrel; states get moratorium on debts
•Buhari okays withdrawal of $150m from stabilisation fund to boost June allocations
•Govs in talks with World Bank for support – Fayemi; seek strong synergy between FG, states

By Emma Ujah, Abuja Bureau Chief, Clifford Ndujihe &  Henry Umoru

ABUJA — Worried by the spread of COVID-19 pandemic, the federal and state governments were eagle-eyed yesterday, looking for funds from many quarters, both local and foreign, to fight the scourge as the central government announced a N500 billion stimulus package.

On the international scene, the Federal Government is seeking a $3.4 billion facility from the International Monetary Fund, IMF, and concessionary loans from the Islamic Development Bank and the African Development Bank, AfDB.

Also, state governments are in talks with the World Bank for support to mitigate the socio-economic costs of the plague.

At home, President Muhammadu Buhari has approved the withdrawal of $150 million from the Nigeria Sovereign Investment Authority, NSIA, Stabilization Fund to support the June 2020 Federation Account Allocation Committee, FAAC, disbursement to the three tiers of government.

Aside from providing N102.5 billion for direct interventions in the healthcare sector, the Federal Government announced fiscal relief for state governments, including a moratorium on some Central Bank of Nigeria, CBN, loans, which repayment could be suspended when allocations fall below certain thresholds.

Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed,disclosed these at a briefing on the fiscal stimulus measures in response to the COVID-19 pandemic and oil prices fiscal shock in Abuja, yesterday.

$3.4bn IMF facility

Mrs Ahmed explained that the facility being sought by government was from the Drawing Rights, meaning it would come from Nigeria’s contribution to the IMF and so would come without IMF conditions, adding that the country is not entering into any formal programme with the body.

She said: “We have also applied for funding from the International Monetary Fund’s COVID-19 Rapid Credit Facility to draw from our existing holdings with the World Bank Group/International Monetary Fund.

“This loan will not be tied to any conditionalities. Let me just state here and clarify that Nigeria does not intend to negotiate or enter into a formal programme with IMF at this time or in the foreseeable future.

“The COVID-19 Rapid Credit Facility is a right for every member country to draw up to limit of the amount it has contributed and Nigeria has expressed interest in that regard.

“We have about $3.4 billion with the IMF and we intend to withdraw the entire amount. The IMF has a provision that we can withdraw between 50-100 per cent. We are aware that 80 other countries have asked for similar facilities.”

In addition, Mrs. Ahmed said the Federal Government is in talks with other multilateral organizations such as the World Bank, the Islamic Development Bank and the African Development Bank, for concessionary loans to effectively fight the pandemic.

On the N500 billion stimulus package, Mrs. Ahmed said: “Mr. President has approved  the establishment of a N500 billion COVID-19 Crisis Intervention Fund. The establishment of this COVID-19 Crisis Intervention Fund will involve drawing much-needed cash resources from various Special Funds and Accounts, in consultation with, and the approval of the National Assembly.

“The N500 billion is proposed to be utilized to:

  • Upgrade healthcare facilities as earlier identified by the Presidential Task Force on COVID-19 and approved by Mr. President;
  • Finance the Federal Government’s interventions to support states in improving healthcare facilities; and
  • Finance the creation of a Special Public Works Programme; and fund any additional interventions that may be approved by Mr. President.”

She disclosed that the Federal Government had provided N102.5 billion for direct interventions in the healthcare sector.

“Of this sum, N6.5 billion has already been made available to the NCDC for critical expenditure. The Federal Government remains committed to supporting the states in these difficult times, particularly those states that are currently battling with the COVID-19 Pandemic.

READ ALSO: COVID-19: Economic crisis worse than ’08 financial crisis ― IMF

“Lagos State has already been provided N10 billion in emergency funding. As the situation in the FCT and other states at the forefront of our efforts unfolds, explicit criteria are to be agreed with the Federal Ministry of Health and the NCDC to determine when funds would be released to the affected states and the FCT. More funds are to be provided from the proposed COVID-19 Crisis Intervention Fund to address emerging and priority funding needs as these arise.”

Moratorium for states

The minister also announced fiscal relief for state governments, including a moratorium on the loans they received from the Central Bank of Nigeria, which repayment could be suspended when distribution from the Federation Account falls beyond certain thresholds, to be determined.

“Based on the fiscal assumptions underpinning the 2020 Appropriation Act, monthly Federation Account Allocation Committee, FAAC, disbursements to the Federal and State Governments were projected at N888.5 billion.

“However, due to the significant drop in international oil prices, FAAC monthly disbursements have declined in recent months to N716.3 billion in January and N647.4 billion in February 2020.

“Our experience shows that monthly average 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,” she said.

Withdraws $150m from NSIA Stabilisation Fund

Mrs. Ahmed said further: “To address these emerging fiscal risks, Mr. President has approved that the sum of US$150 million be withdrawn from the Nigeria Sovereign Investment Authority, NSIA, Stabilization Fund to support the June 2020 FAAC disbursement.

“The Stabilisation Fund was created for such emergencies and is to be utilized for this purpose. We are also exploring other options to augment FAAC disbursements over the course of the 2020 fiscal year.”

$30 per barrel benchmark

The minister also announced a downward review of the Budget 2020 crude oil benchmark from the original $57 pbl to $30 per barrel.

She said: “The 2020 Appropriation Act was based on certain fiscal assumptions, which we have been compelled to revisit given the emerging economic realities. Specifically, projected oil revenues have been significantly affected in that: Dated Brent Oil Prices fell to as low as US$19.125/barrel (as at Friday 3rd  April 2020) as compared with the 2020 Budget Benchmark of US$57/barrel; and oil production in 2020 year-to-date is 2.0 mbpd as compared with the 2020 Budget’s projection of 2.18 mbpd.

“We are, therefore, revising the benchmark oil price for 2020 to US$30/barrel and oil production to 1.7mbpd. We have similarly had to adjust downwards our non-oil revenue projections, including various tax and customs receipts, as well as proceeds of privatization exercises.

‘’In this regard, the Budget Office is currently working on a revised 2020-2022 Medium-Term Expenditure Framework /Fiscal Strategy Paper (MTEF/FSP) as well as an Amendment to the 2020 Appropriation Act.

“The proposed Amended Budget will provide for the COVID-19 Crisis Intervention Fund and other adjustments required due to the decline in international oil prices.”

Restructured TSA

The minister disclosed that President Buhari has approved the restructuring of the Treasury Single Account, TSA, in order to better mobilize cash donations from the generality of the people and corporate bodies across the nation, create flexibility and build a coalition with financial institutions while maintaining the sanctity of the TSA.

She said that going forward, the COVID-19 Donor Accounts, which would form part of the existing TSA arrangement, would be opened with four banks: Zenith, First Bank, UBA and Access.

Fund Monitoring Committee

She assured Nigerians that all private donations and public funds set aside for the fight against the COVID-19 would be transparently utilized, adding that an independent committee would be set up to monitor the disbursements and appropriate inform the public on how the funds were spent.

The minister said that the Federal Government is committed to working closely with the National Assembly, state governments, multilateral organisations, the donor community, and the international community at large, to alleviate the suffering of Nigerians due to the on-going economic and healthcare challenges.

Govs in talks with World Bank to support states— Fayemi

Meanwhile, the Nigeria Governors’ Forum, NGF, has said it is in touch with the World Bank for funds to fight the COVID-19 pandemic.

Governor Kayode Fayemi of Ekiti, the NGF chairman, said this in a communique, yesterday, after a meeting of the governors.

The governors also called for strong synergy between the Federal Government and states on COVID-19; and approved use of vulnerability model data to halt spread, and partnering MTN; backed unification of exchange rates into single market-determined window; and supported FG’s timely implementation of the petrol price modulation.

Fayemi also said there are plans to include disbursement of existing and new financing for states under the State Fiscal, Transparency, Accountability and Sustainability, SFTAS, Programme-for-Results (PforR) project.

The SFTAS is an agreement signed between the Federal Government and the World Bank, designed to strengthen the fiscal transparency, accountability and sustainability in Nigerian states.

The initiative aims to improve states’ revenue, increase fiscal efficiency in public expenditure and reduce their debts with a grant of $750 million open to the 36 states between 2018 and 2021, according to their performances.

In February, the World Bank announced that 12 states missed out on its $4.5 million (N1.37 billion) 2018 grant for not meeting the eligibility criteria.

The Forum also expressed gratitude to the Private Sector Coalition Against COVID-19 (CA-COVID) set up by the Central Bank of Nigeria (CBN) for their pledge to support states to increase their capacity to mitigate the spread of the virus and care for confirmed cases through the construction of isolation centres and the distribution of personal protective equipment to states.

The CA-COVID Relief Fund is domiciled at the CBN. As at April 1, it has realised about N15.325 billion as contributions to tackle coronavirus in the country.

“Ongoing plans include accelerated disbursement of existing and new financing for states under the State Fiscal, Transparency, Accountability and Sustainability Programme-for-Results, and mitigation and recovery support for expenditures to protect livelihoods, support local economic activity and recovery over the next 18 months to two years.

“The forum also expressed full support for the federal government’s timely implementation of the petrol price modulation mechanism to eliminate petrol subsidy permanently in the country.”

The Forum expressed appreciation to the Private Sector Coalition Against COVID-19 (CACOVID) set up by the Central Bank of Nigeria (CBN) for their pledge to support states increase their capacity to mitigate the spread of the virus and care for confirmed cases through the construction of isolation centres and the distribution of personal protective equipment to States. Members underscored the need for CACOVID to work directly with the States in the distribution of palliatives.

‘’Following a briefing from Mr. Boss Mustapha, Secretary to the Government of the Federation (SGF) on the activities of the Presidential Task Force on COVID-19 which he chairs, the Forum commended the SGF and his team for the commitment in leading a national response to the COVID-19 pandemic.

Members also emphasized the necessity for stronger collaboration with States because they are best positioned to administer palliatives to mitigate the impact of the crisis, includingthe distribution of food and essential materials to households to help them cope with the expected loss of income and livelihoods.

The governors reiterated the importance of canceling all deductions and deferring or restructuring all commercial debt service payments on federal government and CBN-owned debts.

Govs partner MTN

The governors resolved to partner mobile operator, MTN Nigeria, with a view to profiling states’ vulnerability to the spread of the coronavirus based on parameters such as population, age, and density, travel history, location, and income level.

The Governors and the Management of MTN arrived at the agreement Sunday night at a meeting held to deliberate on the COVID-19 pandemic in the country and after the Forum received a presentation from Mazen Mroue, Chief Operating Officer and Olubayo Adekanmbi, Chief Transformation Officer, MTN Nigeria.

Rising from the 3rd NGF Teleconference meeting,  the governors unanimously supported the unification of exchange rates into a single, market-determined window and the use of the market-determined exchange rate to calculate all revenues due to the Federation.

Vanguard

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