Nigeria will receive $3.38 billion from the International Monetary Fund (IMF)’s Special Drawing Rights to help shore up external reserves and ensure foreign exchange stability, according to an estimate by Chapel Hill Denham.
The research house said the SDR allocation is based on a quota of 52 percent to support external reserves considering the irksome effect of the coronavirus pandemic.
SDRs are international reserve holdings of member countries of the IMF. The Fund disburses the money when there are global economic disruptions like the 2008/2009 financial crisis.
The SDR allocation of $650 billion approved on August 2 and to be disbursed on August 23 is the most significant.
South Africa will receive the largest allocation of $4.16 billion; 2.80 billion; Libya, N2.15 billion, and Congo, N1.43 billion, according to data from Chapel Hill Denham.
In April 2020, the Nigeria economy had begun an unprecedented deterioration as the coronavirus pandemic forced the government to impose a sit at home orders that paralyzed business activities.
Of course, for a country that relies on crude oil for 90 percent of foreign exchange earnings, the blow dealt on energy prices as by the virus tipped the country into its second recession in less than five years in the second third quarter of 2020.
It was not surprising that the external reserves dipped by 3.22 percent to $35.41 billion in the nine months to December 2020 from $35.59 billion in April 2020.
It had dropped to $33.33 billion as at June 2021 as the central bank has embarked on several policies to underpin foreign exchange and pop up liquidity.
Analysts at CSL Stockbrokers Limited led by Gloria Fadipe see more Eurobond issuance in the third and fourth quarter of 2021 as the government seeks the implement the right policies necessary to accelerate economic recovery.