Just In: Nigeria already in an unprecedented financial crisis — Hernandez

He said Covid-19 cannot be used as excuse for the current fiscal crisis.

Saturday, May 23, 2020

/ by National Pivot

As the Buhari administration waits for the World Bank to make a decision on its $1.5 billion loan request to support its fight against the novel coronavirus, Nigeria Country Director, World Bank, Shubham Chaudhuri, said Nigeria is currently facing its greatest fiscal crisis in 40 years, due to the coronavirus pandemic and resulting oil price crash.

Chaudhuri in an interview with Reuters, said Nigeria is in a dire financial situation right now, and will need the World Bank's support, to sail through its current challenges.

“The immediate challenge is a fiscal one: How does the government marshal the fiscal resources to keep basic government functions going?” Chaudhuri said.

On Thursday, Nigeria’s finance minister said the economy could shrink as much as 8.9 per cent in 2020.

"The World Bank expects Nigeria’s economy to shrink by between 3.2 per cent and 8 per cent in 2020, and government oil revenues could fall by a third or possibly more than half," said Chaudhuri.

But the World Bank's lead economist on Nigeria, Marco Hernandez, said the financial crisis currently facing the Nigerian government has been coming, and that even if the covid-19 outbreak were contained, the situation would have stiil been “unprecedented, and shocking.”

Nigeria’s 2016 recession sent 13 million people into unemployment; this crisis might be “much more pronounced,” Hernandez said.

World Bank loans like the $1.5 billion often have conditions attached to them – reforms that governments must enact to secure the money.

Chaudhuri and Hernandez declined to comment on any conditions for the loan, including contentious subsidies for fuel, electricity and propping up the naira currency that cost Nigeria billions of dollars a year.

“We have been recommending a move towards a unified exchange rate and a more flexible exchange rate for some time,” said Hernandez, adding that it would help the recovery and boost investor confidence.

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