The federal government said it may draw from the recent food security package offered by the International Monetary Fund (IMF) if the terms and conditions are favourable.
The money, the government said, could be useful in adding to the country’s reserves and coping with the challenges the country is facing, particularly the impending stress to the food system as a result of recent floods across the country.
Minister of finance, budget and national planning, Zainab Ahmed, stated this on the sidelines at the ongoing IMF-World Bank meetings in Washington, on Wednesday.
The finance minister also said the federal government has been engaging financial institutions to look into the country’s portfolio debt to restructure and further stretch the debt service period to give more fiscal relief.
While acknowledging that Nigeria’s debt has increased over the last three to four years, she said the increase was occasioned by the different kinds of exogenous shocks the country faced, which is not unique to Nigeria.
“The last drawing we had from the IMF is the second round of special drawing rights (SDRs) that was provided for all the member countries. The IMF recently offered a food security package that countries can draw, and it is equivalent to about 50 percent of their SDRs.
“We have not taken a decision to draw on that. We have to examine the requirements, terms and conditions, to see if it will be safe for us to draw because we don’t want to be drawn into an IMF programme,” she stated.
Continuing, Ahmed pointed out that “The floods that have been happening are going to cause more stress on our food system. We realise that the floods are currently destroying crops and therefore the harvest that is expected will be much less, and it will mean that more of our people will struggle to afford food.”
On debt restructuring, Ahmed said the federal government plans to use up to 65 per cent of government revenues next year to service debt.
She said the government would also scale back on some tax incentives and expand the tax net to ramp up domestic revenue.
Earlier, Pierre-Olivier Gourinchas, IMF’s director of research department, advised low-income countries to progress toward debt restructuring to avert sovereign debt crises.
Gourinchas said many low-income countries are close to or are already in debt distress and should urgently consider improving their liquidity buffers, including by requesting access to precautionary instruments from the Fund.
