Nigeria to suffer significant economic impact from crash of oil prices amid coronavirus, IMF says

The collapse of oil prices will have “significant impact” on the Nigerian economy amid an escalating pandemic, the International Monetary Fund (IMF) said in Washington D.C., adding that African nations impacted by COVID-19 can take advantage of the IMF’s Catastrophe Relief Fund to respond to the coronavirus.

Speaking during a virtual press briefing from Washington D.C. on March 12, 2020, IMF spokesperson Mr. Gerry Rice, said the severity of the economic impact would dependent on “the response, and well-targeted, proportionate, sizeable measures to strengthen health services and to contain the impact on the economy.”

“So, this is on Nigeria, on the economic impact of oil price and its decline, we expect that this will have significant impact, again, on Nigeria as a major oil exporter, and particularly activity in the non-oil sector.

“So, it’s something that, as this evolves, you know, again just happened this week, we will be looking at any vulnerabilities that this may expose with the Nigerian authorities. We’ll be looking at that very closely in the coming days. Again, in Nigeria, in other countries, this is all about the response, and well-targeted, proportionate, sizeable measures to strengthen health services and to contain the impact on the economy,” he said in response to a question by TODAY NEWS AFRICA‘s Simon Ateba on the impact of the collapse of oil prices on Nigeria.

Mr. Rice also discussed how African could benefit from the announcement last week by the U.K. that it was contributing £150 million, $194 million, to the IMF’s Catastrophe Relief Fund, to respond to the coronavirus impact.

“This trust is, as I explained earlier, specifically to provide debt relief to the poorest countries, and the most vulnerable countries hit by catastrophic events such as coronavirus, you know, so public health disasters do fall in that category.

“You might recall, those of you who follow the Fund, that during the Ebola outbreak in 2014, a number of Sub-Saharan African countries benefited greatly from this Catastrophe Trust, the CCRT. So, I would expect that going forward, again, we’re working with countries right now, assessing what needs might be, but I would expect that Sub-Saharan African countries would be eligible for this CCRT support.

“I should add, however, that one of the things that I mentioned earlier, and Kristalina Georgieva has been emphasizing, is that this Trust Fund at the moment, is significantly underfunded. We have about 200 million available, that’s why we have been urging member countries to contribute urgently.

“And that’s why, again, we were very much appreciative, and want to commend the generous effort made by the United Kingdom yesterday, and indeed the leadership it has demonstrated in contributing that £150 million, that’s a substantial contribution from the U.K. Government to the CCRT Trust.

“It’s an important element of this global response to the coronavirus challenge that we are all facing. The World Bank and the IMF are working together with other partners to try to make sure that response can be as effective as possible. And we will keep you updated as much as possible going forward,” he said.

Read full transcripts of press briefing below.

MR. RICE: Good morning, everyone, and welcome to this press briefing on behalf of the International Monetary Fund. I am Gerry Rice of the Communications Department. And this morning our briefing will be embargoed until 10 o’clock, that’s Washington time.

We are doing our briefing this morning a little bit differently. We are doing it essentially virtually, doing it online with you. And, you know, in keeping with the times and what’s happening in the world, we thought it was appropriate to do that today. So, thank you very much for joining us and working with us in that spirit.

Thank you in particular for sending many questions in advance for the briefing today. I’ll try to get to them as much as I can, and I will also try to take questions that come in real time if you have them. So again, thank you for your patience. Thank you for bearing with us.

We are going to see how this virtual format works and, you know, we are going to be doing a bit more of this obviously as we head into our Spring Meetings and so on. So, let’s get started.

And look, before getting to anything else, I want to express the IMF’s and my own personal sympathies to all those affected by the coronavirus outbreak that virtually the entire world is facing at the moment. So that’s really the first thing to say. This is a health crisis first and foremost; this is a human crisis first and foremost so sympathies to everyone affected.

We have been communicating quite a bit on this issue in recent weeks and during the last week, you will have seen quite a number of different materials. It’s hard to, for everyone to keep up so I want to just mention that we have tried to make it a bit easier for everyone looking at IMF material, looking for IMF information on this issue of the coronavirus.

We have a landing page, consolidated landing page on IMF.org, our website where you can find everything that we have been communicating, you know, basic questions, press releases, blogs, videos. Anyway, you’ll find it all on that page. We are updating it on a frequent basis. That’s on IMF.org.

Let me also just say again, that we have announced with our World Bank colleagues that the 2020 Spring Meetings which are upcoming in a few weeks’ time, that they will have a virtual format, a bit like this press briefing today.

That said, I just want to emphasize we will be releasing, the IMF will be releasing our flagship documents. I know that many of you in the media look to these documents for our assessment of the global forecast and country forecasts and there is more interest in those than ever probably right now. And just to assure you, we will be coming with our World Economic Outlook, the Global Financial Stability Report, the Fiscal Monitor report and so on as normal. We will be releasing those to you. We will have virtual press conferences around those and make sure the material gets to you in the usual way and that you have an opportunity to ask your questions. So, we’ll be working with you on all of that.

We will also have for each of our major area departments, so the five major regions of the world, we will have regional press briefings for each of those and we will do those virtually with you as well.

So again, even though the meetings, the Spring Meetings are going to be virtual, we think they can be — they will be effective, and we will make sure that you get the information and the communication opportunities that you expect.

I’m going to begin then today with the COVID-19 and I’ll get to a few other topics, but most of the questions that have come in have been around that topic and no surprises there and I’m going to take some of them.

They’ve been in broadly a number of areas what’s the economic impact, what do we mean by coordinated action to address the coronavirus? What is the role of the IMF and, you know, some questions about the impact of oil? So, I’ll try to get to those questions. And as I say, if there are more in real time, I’ll try and take those.

Just before we came on air, Delphine and Heather at Agence France Press just sent me some questions on the coronavirus that said: following the new developments, the declaration of pandemic, Italy in lockdown, the travel ban announced last night by the U.S., European travel and so on, could you, Delphine and Heather asked, could you update your outlook?

Do you see recession in the horizon? How would you characterize this global crisis? Have you seen anything like this before? Have there been any requests for IMF funds from Iran or any other country? That’s just a slew of questions that have come in from AFP just before we came on air.

Eric Martin at Bloomberg also had sent in a question just before we came on air on the same topic. The IMF has been urging large targeted fiscal stimulus. What’s the reaction to these types announced on Wednesday night by President Trump?

So, I’ll try to get to those questions by just going through a group of issues. So, first on economic impact, as we have said, under any scenario, global growth in 2020 will drop below last year’s level which was 2.9 percent.

How far will it fall? How long, what’s our forecast? It’s difficult to predict at this point, obviously given the uncertainty. It depends of course on the spread, the propagation of the outbreak. It depends on the measures taken to respond and how effective they are.

And we will be, you know, we have been talking about it obviously. Gita Gopinath, our economic counselor was talking about it a day or so ago. But we will be coming with more precision and numbers, details, and our forecasts in that upcoming World Economic Outlook to which I referred earlier.

There are questions around the issue of coordinated action. The questions have been you, IMF, have been calling for coordinated action. What sort of action are you talking about and in particular are you talking about the monetary and the fiscal side?

And what we have been saying is indeed, international cooperation is essential to effectively address the coronavirus outbreak. Again, obviously this is a disease, this is not something that stops at national borders. We need to work together.

There are many different aspects of that. You know, there is an information aspect. We need to be talking to each other, exchanging information, learning about this virus, leveraging our resources as much as we can.

There is a big health element obviously as I said. First and foremost, this is a health issue. We have been saying, we have been asking for governments to be forward leaning. That means to take this issue very seriously, to be active, to take well targeted and proportionate measures. Again, to strengthen public health systems first and foremost and to contain the impact on the economy.

So, it’s targeted financing to support healthcare systems, to immediately help the people that are effective and secondly, monetary and fiscal support to help the economy where it’s needed most.

And we are seeing virtually every day we are seeing different countries come forward with different fiscal and monetary measures. I mentioned Gita Gopinath. She actually came forward with a blog on the types of measures, economic measures that we have in mind.

I can also point you to two other blogs. One by our financial counselor, Tobias Adrian, published yesterday where he went into detail on the monetary side, on the financial stability.

and our director for our Fiscal Affairs Department, Vitor Gaspar, also issued a blog just recently on the fiscal measures. You know, I’m saying that not to avoid answering the question about monetary and fiscal measures but really just to try and save some time and point you to those communications, those blogs which have a lot of details. And again, they’re all easily available on that landing page.

On the role of the IMF, again, we have communicated what we’ve been trying to do. We’ve been very active. We are in touch with our member countries. That’s 189 member countries. A few days ago, the Managing Director, Kristalina Georgieva had a teleconference call with our 189 members. We did this via our governing council, the International Monetary and Financial Committee, the IMFC, you know that meets at the time of the Spring and the Annual Meetings.

Well, they had an emergency meeting some days ago to deal with the Coronavirus outbreak hosted by the Managing Director. So, I say that again just as an example of how coordinated efforts are taking place.

We know you know central banks are talking to each other. There was the BIS, Bank for International Settlements call with other central banks the other day. Coordinating with our partners very closely in real time with the World Health Organization, with the World Bank with the regional development banks. All different forms of coordination.

In terms of the Fund’s direct help and support, it’s coming in several ways. We announced last week that support to vulnerable countries would be available via our existing lending facilities, rapid financing facilities. And we said that that could amount to up to $50 billion for the low income and emerging market member countries. And we broke down how that $50 billion was comprised. And we explained the different kinds of instruments, the rapid credit facility, the rapid financing instrument.

We have the Catastrophe Containment and Relief Trust (CCRT) which is another instrument the IMF has for very poor countries to help them with debt relief. These are essentially grants for debt relief. And we have called upon our membership. The Managing Director did this in the call with the IMFC to which I referred. To replenish this trust, this CCRT trust.

And I can tell you that just yesterday, the United Kingdom announced as part of its budget statement that it was making a contribution to that of £150 million. We greatly appreciate that effort and we urge other members countries to make the same kind of contribution.

So, we are very active. We have these existing facilities, lending facilities that can be used. There was a question well, are we using them, are countries asking? To which I can say that again, we are in very active consultation with our member countries. We are receiving inquiries and requests from a number of countries including Iran which was asked about. And I can tell you we are proceeding expeditiously with all requests in line with our policies. I would expect to have, again, more specificity on that in the coming days.

So, we’ve got these existing lending instruments. Programs that we have with countries can also be augmented by additional financing, you know, provided the criteria is appropriate. And, of course, we are working very hard on the capacity development front as well and helping countries where we can with technical assistance.

There was a question about how we assess the impact of the oil price decline and, you know, how that impacts with the economic impact of effects of the Coronavirus. It’s obviously something we’re looking at very closely. It’s a bit too early, this just happened a few days ago. It’s a bit too early in the process to give a specific assessment about the sharp decline in the price of oil. So, that impact is something that we will be looking at. It depends on the behavior of the oil markets in the period ahead.

And again, we will have much more to say on this topic and its impact on our global forecast as we head into the world economic forecast in a few weeks in some weeks’ time. I think that about covers the questions that were asked on Coronavirus. We are keeping that webpage updated in real time. Please do go there and we will try and get as much information to you as we can.

So, I’m going to turn away from Coronavirus. If there are more questions in real time, I’ll try and come back to it. Again, looking at my screen here for anything that might pop up. There have been a number of questions on Argentina including Eric Martin from Bloomberg just before I came on. Asked, does the IMF expect a new agreement with Argentina before or after the government concludes negotiations with private creditors?

And there was a slew of questions from our Argentine colleagues in the media from Lan Asean, Raphael Mathus asking just for an update on the talks. There was a question, two questions from Raphael actually. He asked, is Article IV going to be delayed because of Coronavirus.

There’s a question from Juan Barca about Coronavirus impact on Argentina. Claudine Paula Lugones, could the Coronavirus affect the discussions, the negotiations between the Fund. Argentina and a question about Argentina: does the country qualify for resources under the IMF’s announcement last week of what might be made available under existing lending facilities.

So, let me try and take that clutch of Argentina questions. And first on the status of where we are, there was an IMF staff team in Buenos Aires last week for technical meetings with the authorities. To talk about the government’s economic strategy and debt strategy as well. There have been regular meetings. Kristalina Georgieva meet with Minister Guzman recently at the G-20. We communicated about that.

So, all to say very active, ongoing engagement which I would continue to characterize, as I have before, as constructive discussions and dialogue with the authorities. I don’t have more on specific timing modalities of next steps. That dialogue, I can say in response to some of the questions has not been affected by the Coronavirus outbreak. The dialogue has not been affected. That’s ongoing.

As we’ve said more broadly, as I’ve just said, the outbreak, the Coronavirus outbreak will have, you know, a significant impact on global economic activity. And Argentina, like other countries, is not immune to these developments. So, we’re looking at that, we’re monitoring that, we’re discussing that with the authorities. And you’ll have more to say in that context once we have a better assessment of what’s actually happening on the ground.

That’s true for Argentina, essentially true for all countries. We’re actively working with them to get a better sense of what’s happening on the ground and how we can respond as effectively as possible. So, that’s true of Argentina.

To the impact, again, like other countries, will depend on the spread and the response. I can tell you; the authorities have not approached us with a request for under the existing facilities that we talked about earlier. And, you know, that’s about where we are on Argentina. The authorities have been communicating regarding their calendar and estimated schedule around the debt discussions and, you know, we are in active contact with them. There have been coming before the press conference a number of questions on Ecuador including, again, from Bloomberg’s Eric Martin, just before we came on air, and Eric was asking, President Moreno saying: that the decree this week reforming some budgeting guidelines, does this fix the problem that delayed the later disbursement of Ecuador’s funding?

So, let me just say, there are a few other questions on Ecuador from Monica Orazco, El Comercio; Evelyn Tapia, El Comercio: Should the program with the Fund be reviewed given the new external scenario, I take it that’s referring to coronavirus, and Ecuador’s enormous liquidity needs? Why was the Fourth Review of Ecuador not carried on schedule? Why did the technical team (inaudible) at Kito? What about the upcoming — could Ecuador receive an upcoming contingent line to face external shocks due to the fall in Crude Oil, and the impacts of coronavirus?

Those were the questions that came in, which, again I’ll try to respond to just by giving an update on where we are with Ecuador.

Indeed there was a team, a Staff team led by Anna Ivanova in Kito about a month ago, to take stock of recent developments, and following its return to Washington, we continue to work closely with the authorities to internalize these developments including looking at this sharp fall in oil prices which affects Ecuador obviously, as an oil exporter.

I can tell you, furthermore, that just on Tuesday, Kristalina Georgieva had a call with President Moreno, the call was an opportunity to exchange views on these rapidly evolving global developments and their impact on Ecuador. And the Managing Director recognized the implications for Ecuador, of the recent sharp fall in oil prices and the effects of the coronavirus and indicated that we will continue to work closely with the Ecuadorian authorities to help them navigate this challenging, evolving economic environment.

Our priority remains the same. It’s the government’s goal as well, to put in place policies that address the country’s vulnerabilities, fosters strong and inclusive growth, and improves the lives for all the Ecuadorian people. In terms of the measures announced just recently by the government, we see these as positive steps, and again, we’ll continue to work with the authorities to assist Ecuador navigate this terrain, as best we can.

There’s a question about Ukraine, and the question is from Yaroslav Dovgopol, of Ukrinform News Agency: Could you please comment on the last changes in the Ukrainian Government, and how that affects the prospects for the IMF program in Ukraine?”

Indeed, last week a new Government was appointed in Ukraine, and the new administration has indicated that it wants to continue the close cooperation with the IMF, including with an IMF-supported program. The authorities have stressed, including recently, that they want to continue with the sound macroeconomic policies to safeguard stability, and to advance reforms to achieve stronger and sustainable growth. And we stand ready; we are totally engaged to continue to support Ukraine’s reform efforts, and the policies to achieve those objectives.

There is a question on Lebanon, asking, this is actually AFP, Delphine Touitou, asked this question on Lebanon: Can you update us that Lebanon requests financial assistance from the IMF?

I want to say what I’ve said here recently. The Lebanese authorities have not requested financial assistance from the IMF. We did have a Staff team visit in Lebanon some weeks ago. They are now back in Washington, and we are waiting to receive from the authorities their plans on how to tackle the economic challenges they face.

Given the severity of economic conditions in Lebanon, it’s important that the Government designs and implements promptly, a comprehensive package of reforms, to effectively address the economic challenges, and improve Lebanon’s economic prospects. We stand ready at the IMF to assist the authorities in those efforts, but again, there has been no request for financial support from Lebanon.

The last question that I got online was from Nigeria. And it came from Simon Ateba, of Today News Africa, and he’s asking about the impact on Nigeria from the collapse of oil prices. And he adds that yesterday the U.K. announced it was contributing £150 million, that’s about $200 million, $194 million, to the IMF’s Catastrophe Relief Fund, to respond to the coronavirus impact.

How much of that money can be made readily available to African nations that may soon be feeling the maximum economic impact from the coronavirus? That was his question.

So, this is on Nigeria, on the economic impact of oil price and its decline, we expect that this will have significant impact, again, on Nigeria as a major oil exporter, and particularly activity in the non-oil sector. So, it’s something that, as this evolves, you know, again just happened this week, we will be looking at any vulnerabilities that this may expose with the Nigerian authorities. We’ll be looking at that very closely in the coming days.

Again, in Nigeria, in other countries, this is all about the response, and well-targeted, proportionate, sizeable measures to strengthen health services and to contain the impact on the economy.

On the question about how could Africa benefit from this Catastrophe and Containment Trust? This trust is, as I explained earlier, specifically to provide debt relief to the poorest countries, and the most vulnerable countries hit by catastrophic events such as coronavirus, you know, so public health disasters do fall in that category.

You might recall, those of you who follow the Fund, that during the Ebola outbreak in 2014, a number of Sub-Saharan African countries benefited greatly from this Catastrophe Trust, the CCRT. So, I would expect that going forward, again, we’re working with countries right now, assessing what needs might be, but I would expect that Sub-Saharan African countries would be eligible for this CCRT support.

I should add, however, that one of the things that I mentioned earlier, and Kristalina Georgieva has been emphasizing, is that this Trust Fund at the moment, is significantly underfunded. We have about 200 million available, that’s why we have been urging member countries to contribute urgently.

And that’s why, again, we were very much appreciative, and want to commend the generous effort made by the United Kingdom yesterday, and indeed the leadership it has demonstrated in contributing that £150 million, that’s a substantial contribution from the U.K. Government to the CCRT Trust.

It’s an important element of this global response to the coronavirus challenge that we are all facing. The World Bank and the IMF are working together with other partners to try to make sure that response can be as effective as possible. And we will keep you updated as much as possible going forward.

Thank you very much for joining me for this virtual press conference. I know it was a bit different today. Thank you for bearing with us. Thank you for your questions, in advance, and we’ll see you in a couple of weeks’ time. Stay safe, everybody.

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Simon Ateba
Simon Ateba
Based in Washington, District of Columbia, United States of America, Simon leads a brilliant team of reporters, freelance journalists, analysts, researchers and contributors from around the world to run TODAY NEWS AFRICA as editor-in-chief. Simon Ateba's journalistic experience spans over 10 years and covers many beats, including business and investment, information technology, politics, diplomacy, human rights, science reporting and much more. Write him: [email protected]

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