300,504FansLike
227FollowersFollow
6FollowersFollow
FollowersFollow
906FollowersFollow
138SubscribersSubscribe

IMF forecasts economic turmoil for Nigeria in 2020 amid COVID-19 pandemic

Although we are headquartered in Washington D.C. USA, our reporters and editors are working around the globe to cover what you care about. We invite you to donate to our fundraiser to help us keep our quality news free and available for all.

The Nigerian economy would shrink by 5.4 percent in 2020, more than double the contraction expected in April amid the novel coronavirus pandemic, the International Monetary Fund (IMF) said on Monday in its latest regional economic outlook.

At least 25133 people have contracted COVID-19 in Nigeria, 573 fatalities have been recorded while 9402 cases have been closed, the Nigeria Center for Disease Control (NCDC) said in its latest update on Monday. Even as the country gradually reopens, the economy has already taken a hit from almost two months of lockdowns and shutdowns.

The IMF projected that the Nigerian economy would rebound in 2021 with an estimated growth of 2.6 percent, provided the coronavirus outbreak is contained and a second wave of the pandemic is avoided.

[read_more id="2" more="Read full article" less="Read less"]

Last April, the IMF projected a negative growth of 2 percent for Nigeria in 2020, and a positive rebound of 0.3 percent in 2021. But with prolonged lockdowns imposed by the government of President Muhammadu Buhari to beat the virus, the economy took a big and severe hit.

IMF Managing Director Kristalina Georgieva at the International Monetary and Financial Committee (IFMC) Plenary meeting held at IMF Headquarters during the 2019 IMF/World Bank Annual Meetings, October 19, 2019 in Washington, DC. Ryan Rayburn/IMF Photo
IMF Managing Director Kristalina Georgieva at the International Monetary and Financial Committee (IFMC) Plenary meeting held at IMF Headquarters during the 2019 IMF/World Bank Annual Meetings, October 19, 2019 in Washington, DC. Ryan Rayburn/IMF Photo

The Managing Director of the IMF Ms. Kristalina Georgieva said in April that Nigeria was facing twin evils – the expanding coronavirus pandemic and the collapse of oil prices.

Right Now in Africa

IMF said regionally, Sub-Saharan Africa’s economy is now expected to contract by 3.2 percent in 2020 amid COVID-19 pandemic; double the contraction expected in April.

IMF said poverty will rise and the poorest segments of the world’s population would be affected the most as the crisis expands and countries grapple with the best ways to ease lockdowns while protecting lives at the same time.

The latest Regional Economic Outlook for Sub-Saharan Africa was released even as new cases have been rising rapidly in recent weeks. There are now more than 380,000 confirmed cases of COVID-19 in the region and close to 10,000 deaths with South Africa accounting for over 30 percent of all the infections and about 23 percent of all fatalities, according to the Africa Center for Disease Control latest data. At least 182,569 people have fully recovered in Africa, the data show.

“This is a fast-moving crisis,” said Abebe Aemro Selassie, Director of the IMF’s African Department. “And recent developments suggest that the downturn will be significantly larger than we had anticipated only 10 weeks ago. The risks we highlighted in April all continue to be a concern, but the deterioration of the global outlook has been particularly striking. In line with this new outlook, and consistent with local high-frequency indicators, output in Sub-Saharan Africa is now projected to shrink by 3.2 percent this year, more than double the contraction we had outlined in April. Again, this is set to be the worst outcome on record.”

International Monetary Fund Director of the African Department Abe Selassie holds a press conference at the IMF Headquarters during the 2020 IMF/World Bank Spring Meetings April 15, 2020 in Washington, DC. IMF Photo/Joshua Roberts
International Monetary Fund Director of the African Department Abe Selassie holds a press conference at the IMF Headquarters during the 2020 IMF/World Bank Spring Meetings April 15, 2020 in Washington, DC. IMF Photo/Joshua Roberts

“This crisis is unprecedented. Our members need us now more than ever. And our efforts today will have significant consequences down the road, not only in helping our members offset the immediate tragedy of the crisis, but also in ensuring that peoples’ lives and livelihoods are not destroyed forever,” Selassie said.

He added: “Given the region’s already-stretched healthcare capacity, the immediate priority is still to protect lives and to do whatever it takes to strengthen local health systems and contain the outbreak.”

“On economic policies, sub-Saharan African countries have acted swiftly and aggressively to support the economy. Monetary and prudential policies have been eased, with countries adopting a mix of reduced policy rates, added injections of liquidity, greater exchange-rate flexibility, and a temporary relaxation of regulatory and prudential norms, depending on country circumstances.

“On the fiscal side, however, country responses have often been more constrained. Even before the crisis, debt levels were elevated for many countries in the region. In this context, and in light of collapsing tax revenues, the ability of governments to increase spending has been limited. To date, countries in the region have announced COVID-related fiscal packages averaging 3 percent of GDP. This effort has been indispensable. But it has often come at the expense of other priorities, such as public investment, and is markedly less than the response seen in other emerging markets or advanced economies.

“Also, authorities in sub-Saharan Africa face a distinct challenge in getting support to those who need it most. Around ninety percent of non-agricultural employment is in the informal sector, where participants are usually not covered by the social safety net. Moreover, a large proportion of this activity centers on the provision of services, which have been particularly hard hit by the crisis.

“Further, informal workers typically have few savings and limited access to finance. So staying at home is often not an option; complicating the authorities’ efforts to maintain an effective lockdown.

“In response, many authorities have done what they can to temporarily expand their safety nets; using home-grown, often innovative approaches to ensure that transfers reach as much of their population as possible. But again, resources are limited, and these efforts cannot hope to offset the full impact of this crisis.

“In sum, many authorities in Sub-Saharan Africa face a particularly stark set of near-term policy choices; concerning not only the scale of support they can afford, but also the pace at which they can reopen their economies.”

Against this backdrop, Mr. Selassie pointed to a number of policy priorities going forward.

“First and foremost, the immediate priority remains the preservation of health and lives. But as the region starts to recover, authorities should gradually shift from broad fiscal support to more affordable, targeted policies; concentrating in particular on the poorest households and those sectors hit hardest by the crisis.

“Looking even further forward, and once the crisis has waned, countries should refocus their attention on transforming their economies, creating jobs, and boosting living standards— clawing back some of the ground lost during the current crisis. “

“As before the crisis, part of this effort will require putting put fiscal positions back on a path consistent with debt sustainability; which will in turn require a renewed determination to implement revenue-mobilization, debt-management, and public financial management reforms.

“In addition, sustainable, job-rich, and inclusive growth will require private-sector investment, along with a business environment in which new ideas and projects can flourish, and where new opportunities (such as from the digital revolution) can be developed fully.

“None of this will be easy, particularly in light of the scale of the crisis and its longer-term consequences. The region cannot tackle these challenges alone, and a coordinated effort by all development partners will be key.

“The IMF has modified the Catastrophe Containment and Relief Trust (CCRT) to provide immediate debt service relief for its poorest and most vulnerable members, and has also doubled its emergency lending facilities.

“So far, 29 countries in the region have received around $10 billion in funding through these facilities, or through expanded access under existing programs.

“In April, the G20 also announced the Debt Service Suspension Initiative (DSSI), which allows the world’s poorest countries—most of them in Africa—to suspend up to US$14 billion of debt service payments due between May and December this year.

“Nonetheless, more international support is needed urgently. This year alone, countries in the region face will additional financing needs of over $110 billion, and despite the efforts outlined above, $44 billion of this has yet to be financed.”

[/read_more]

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: simonateba@todaynewsafrica.com

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Trending Now

300,504FansLike
227FollowersFollow
6FollowersFollow
1FollowersFollow
906FollowersFollow
138SubscribersSubscribe

JUST IN

Ramphosa urges world leaders to fight racism, grant Africa more Security Council seats, lift sanctions against Zimbabwe and Sudan and cancel continent’s interests on debt

African Union Chairperson, the President of South Africa, Cyril Ramaphosa, on Tuesday, urged the United Nations General Assembly to fight racism,...

More than 200,000 people have now died of COVID-19 in US, even as President Trump says coronavirus “affects virtually nobody”

More than 200,000 people have now died of COVID-19 in the United States, according to the Johns Hopkins University virus tracker,...

How the African Continental Free Trade Agreement can succeed

The President of the Nigerian Senate, Ahmad Lawan, seems to know exactly how the African Continental Free Trade Agreement can succeed....

Alleged Nigerian fraudster on FBI watchlist turns self in over $6m internet scam

The Nigerian Economic and Financial Crimes Commission, EFCC, has commenced the investigation of Felix Osilama Okpoh, an alleged fraudster on the watchlist...

Cybercriminals target South Africa, Kenya and Nigeria with millions of attacks in 2020, and the year is not over

South Africa, Kenya and Nigeria have already seen millions of cyberattacks in 2020 with three months to the end of the...

MOST POPULAR

Damning report finds detainees in Iran were sexually abused and given electric shocks in gruesome post-protest crackdown

Iran’s police, intelligence and security forces, and prison officials have committed, with the complicity of judges and prosecutors, a catalogue of...

IMF approves disbursement of additional $1 billion for Angola to respond to COVID-19 economic fallout

The International Monetary Fund (IMF) on Wednesday approved the disbursement of an additional $1 billion for Angola to respond to...

USAID awards millions of dollars to Washington State University to combat lethal livestock disease in East Africa known as East Coast Fever

The U.S. Agency for International Development (USAID) has awarded millions of dollars to Washington State University to combat a lethal livestock...

Ethiopia charges prominent opposition figure Jawar Mohammed with terrorism

As human rights organizations continue to warn that Prime Minister Abiy Ahmed is turning Ethiopia into a dictatorship, his administration on...

WHO and UNICEF sign 10-year partnership to promote mental health of children and adolescents

 A new partnership between WHO and UNICEF is calling for key actions in universal health coverage, mental health, emergencies and nutrition

Ramphosa urges world leaders to fight racism, grant Africa more Security Council seats, lift sanctions against Zimbabwe and Sudan and cancel continent’s interests on debt

African Union Chairperson, the President of South Africa, Cyril Ramaphosa, on Tuesday, urged the United Nations General Assembly to fight racism, grant Africa more Security Council seats, lift sanctions against Zimbabwe and Sudan, cancel the continent’s interests on debt and support the rollout of a comprehensive stimulus package for African countries.Mr. Ramaphosa, who was the first African leader...

Stay connected

[/read_more]

[read_more id="2" more="Read full article" less="Read less"]

76 Shares
Share
Tweet
WhatsApp
Reddit
Share