Middle East Crisis: IMF plans $50bn lifeline for Nigeria, others

*Urges prudent use of oil windfall to rebuild buffers

By Babajide Komolafe, Economy Editor

The International Monetary Fund, IMF, has indicated plans to provide up to $50 billion in financial support to Nigeria and other countries affected by the biting impact of the ongoing Middle East crisis.

Managing Director of the IMF, Kristalina Georgieva, disclosed this at the unveiling of the Fund’s Global Policy Agenda during the ongoing Spring Meetings of the International Monetary Fund and World Bank in Washington DC.

She said: “We have been closely watching the events in the Middle East. This is an asymmetric shock, with the biggest burden falling on countries that import energy and have limited policy space. In many cases, these are low-income or fragile economies, and they need attention.

“We anticipate near-term demand for IMF financial support to range from $20-50 billion. This represents prospective demand for new programmes from at least a dozen countries, most of them in Sub-Saharan Africa.”

She noted that the IMF, in collaboration with global partners, is working to coordinate a comprehensive response to cushion the impact of the crisis on vulnerable economies.

“We serve as the firefighter for our member countries, and we are committed to helping them navigate this complex landscape,” she added, stressing that early engagement by countries in need of financial assistance would enhance the effectiveness of intervention efforts.

On policy response, the IMF boss cautioned against hasty fiscal and monetary measures, urging authorities to adopt a balanced approach in managing the shock.

“On monetary policy, for countries where policy was well calibrated before the shock and expectations remain anchored, ‘wait and see’ is the right approach. In other countries, early policy action may be required.

“On fiscal policy, public debt is already constraining fiscal space. Global public debt is projected to exceed 100 per cent of GDP by 2029, a level not seen since after World War II. Policymakers must strike a balance between maintaining fiscal sustainability and protecting the most vulnerable,” she said.

She further disclosed that most Sub-Saharan African countries fall within the highly vulnerable category due to their dependence on imports and weak fiscal buffers.

“I have in my office a map of countries showing their dependency on imports and fiscal space, and it is concerning that many African countries are in the quadrant of vulnerability. We are determined to identify those most in need and support them,” she added.

Georgieva also revealed that African policymakers are increasingly prioritising structural reforms over direct financial assistance.

“I met with the African Consultative Group, and interestingly, ministers and central bank governors did not ask for money. They asked for policy advice and support to deepen local currency markets,” she said.

However, she emphasised that the Fund stands ready to provide rapid financial support where necessary.

“My message is clear: if you need help financially, don’t hesitate. The sooner we act, the more we can protect economies and livelihoods.”

Meanwhile, the IMF has warned that fiscal pressures arising from rising energy, fertiliser and shipping costs could dampen growth, worsen poverty and heighten food insecurity across the continent.

Providing further insight, Davide Furceri noted that while oil-exporting countries like Nigeria may benefit from higher crude prices, such gains must be prudently managed.

He said: “There is a clear divergence between oil-importing and oil-exporting countries. For oil exporters such as Nigeria, higher oil prices may generate temporary windfalls, but it is important to use these gains to rebuild fiscal buffers and reduce debt vulnerabilities.”

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