Reuters reports that the “International Monetary Fund’s said its executive board on Tuesday approved $3.4 bln in emergency financial assistance for Nigeria to support the oil exporter’s response to the coronavirus pandemic.
The global lender said it remained closely engaged with the Nigerian authorities and was ready to provide policy advice and further support, as needed.
The International Monetary Fund has been approving billions of disbursements under the Rapid Credit Facility (RCF) to help nations suffering the COVID-19 lockdown economic hits in order to meet the urgent balance of payments stemming from the pandemic.
The IMF wrote in a blog, that to preserve the stability of the global financial system and support the global economy, central banks across the globe have been the first line of defence:
- First, they have significantly eased monetary policy by cutting policy rates—in the case of advanced economies to historic lows. And half of the central banks in emerging markets and lower income countries have also cut policy rates. The effects of rate cuts will be reinforced through central banks’ guidance about the future path of monetary policy and expanded asset purchase programs.
- Second, central banks have provided additional liquidity to the financial system, including through open market operations.
- Third, a number of central banks have agreed to enhance the provision of US dollar liquidity through swap line arrangements.
Central banks will remain crucial to safeguarding the stability of global financial markets and maintaining the flow of credit to the economy. But this crisis is not simply about liquidity. It is primarily about solvency—at a time when large segments of the global economy have come to a complete stop. As a result, fiscal policy has a vital role to play,
the IMF wrote, concluding:
Together, monetary, fiscal, and financial policies should aim to cushion the impact of the COVID-19 shock and to ensure a steady, sustainable recovery once the pandemic is under control. Close, continuous international coordination will be essential to support vulnerable countries, to restore market confidence, and to contain financial stability risks. The IMF is ready to assert the full weight of its resources—first, to help protect the world’s most vulnerable economies, and, for the long term, to strengthen the eventual recovery.
Meanwhile, equity markets have been able to survive the COVID-19 spanner in the works to a fraction of what it could otherwise have done without such aid. The S&P 500 dropped to less than a 50% mean reversion of the decade-long bull run, buoyed by such patchwork by both central banks and the IMF. Meanwhile, oil markets are in desperate need and this is one step in the right direction for downstream participants of the market place.