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Naija to receive $1.5 billion IMF loan

Posted by Paul "EFCC" Hawk Adams on August 31, 2009 at 7:05pm
Nig.e.ria is expected to get about $1.5 billion under the International Monetary Fund (IMF) Special Drawing Rights scheme. The sum is broken into $1.3 billion under the general loan scheme and $218.6 million under the special rights scheme. The facility is being offered under the IMF $283 billion Special Drawing Rights loan to strengthen liquidity in the global system. The move is in response to April's call by the G-20 to supplement the existing reserve assets of member nations to combat the negative impact of the global economic crisis, Announcing the allocations to countries on Friday, the monetary fund, in a statement, said the facility would be released in tranches with an initial allocation of $250 billion, and will be subsequently followed by an additional $33 billion to be disbursed Wednesday, September 9. The allocations will significantly increase SDR's outstanding stock to about $316 billion. About $110 billion of the combined allocations will go to the emerging market and developing countries, including over $20 billion to low-income countries, most of which currently face difficult spending decisions on how to handle the impact of the global crisis. The SDR allocations, seen as IMF's strategy to boost member countries' foreign exchange reserves, to give them the impetus to weather the storm of global economic recession, is based on a long-term global need, to provide succour to low-income countries, like Nigeria. Caroline Atkinson, IMF External Relations Director, explained that the loans were meant to provide access to unconditional financial resources to mitigate the need for adjustment through contractionary policies and allow greater scope for counter-cyclical policies in the face of recession and rising unemployment. "The general SDR allocation is a key part of our response to the global crisis, demonstrating the value of a cooperative multilateral approach," Ms. Atkinson said, adding that despite a smaller number of SDRs going to the IMF's low-income members, the allocation would result in a proportionately higher increase in reserves for them than it will for the advanced economies, which already have a substantial cushion of reserves. Under the voluntary trading arrangements, Atkinson urged individual member countries to be ready to trade the SDRs within certain limits, with the IMF acting as a voluntary broker charged with the responsibility of arranging transactions between prospective buyers and sellers.
Tags: $1.5, IMF, Naija, billion, loan, receive, to
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