My note: “Then praise him [President Buhari] for really good moves like closing the latest loan (extremely necessary for Nigeria)…” I had noted that it was “extremely necessary” for Nigeria to have taken the recent IMF emergency loan despite the concerns to the previous unbalanced and thoughtless one, pre Covid-19.
This is why that loan is very important:
- NNPC was not making money due to the Covid-19 pandemic. Whenever that happens, Nigeria has a real problem. Experiencing that during a period of national health emergency compounds the models.
- VAT & broad tax revenue was not coming because offices were shut down. Government was not having receivables because offices that were to process them were hibernating.
- Local & international capital markets were frozen. Not many private lenders would have been open to support Nigeria with capital due to the stochastic state of the world due to Covid-19. Our poor credit rating would not have helped. Only the IMF could have offered a way out, and it did.
So that triple whammy requires Nigeria borrowing since we do not have money for the rainy day to fight the virus and take care of the necessary urgent bills. That loan is for a health emergency and I do think it was a very necessary loan. Sure, while we all push against some of these loans, the recent $3.4 billion is a commendable one. My fear was that not many people would lend to Nigeria. But magically, the IMF, due to the virus, reversed its position and did the right thing.