The IMF has granted $3.4bn in emergency aid to help Nigeria tackle the economic effects of the Covid-19 pandemic.
The IMF said that the pandemic, coupled with the recent sharp drop in oil prices, "has magnified [Nigeria's] existing vulnerabilities", and has led to "a historic decline in growth and large financing needs".
Nigeria is the second African Opec member state to get assistance from the IMF's Rapid Financing Instrument, which provides swift and low-access fiscal aid to countries facing an urgent balance of payments need. Gabon received around $150mn on 9 April.
With crude as its dominant source of export and government revenues, Nigeria faces severe challenges in the lower price environment and from its commitments under the latest Opec+ production restraint deal. The IMF highlighted lower prices and production as two of the key factors that could undermine Nigeria's growth in its most recent country surveillance report, and it said more recently that any further price declines would strain the country's financing.
Nigeria's gross domestic product (GDP) growth was 2.55pc in the fourth quarter of last year, but the country's central bank has said this will probably slow because of tepid oil demand. The government has revised down its budgeted oil price to $30/bl, but this is still some way above current levels.
Indeed, state-owned NNPC's official selling prices (OSPs) for its crude in May are at decades-lows. All 33 grades are at discounts to North Sea Dated, some of the lighter ones by upwards of $5/bl. At current Dated levels, this means some Nigerian grades will sell for less than $10/bl next month. The price cuts are borne of necessity — Nigeria desperately needs to place its crude, and lacks onshore storage facilities. Tankers laden with Nigerian grades are already idling off its shores, waiting for a home.
Abuja's options are limited by its commitment to cap output to 1.41mn b/d in May and June, as part of the Opec+ deal. The country has a long history of poor compliance with Opec-agreed production ceilings, and the country's liquids export loading programme for May shows in excess of 2mn b/d.
