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1. Indentify the reasons why Nigeria need to emergency loan?

- Meet the urgent balance of payment needs of the country stemming not only
from the crash in crude oil prices but the outbreak of the COVID-19 pandemic.
- Help limit the decline in the external reserves and provide financing to the
budget for targeted and temporary spending increases aimed at containing and
mitigating the economic impact of the pandemic and of the sharp fall in
international oil prices.
- Ease some pressure on the foreign exchange market which has witnessed dollar
shortages lately.
- The COVID-19 pandemic also led to job losses in Nigeria. As businesses
closed and economic activity declined, many people lost their jobs. This led to
a decline in household income and spending.
2. Why IMF approve that loan?
Because the immediate economic impact of COVID-19 is expected to be severe in
Nigeria especially as things have been bad even before the twin calamity of the
coronavirus and the fall in oil prices. It also remarked that the pandemic along with
the sharp fall in oil prices has made Nigeria even more vulnerable and this could lead
to a recession and a huge funding gap.

In addition, the current situation could make the average Nigerian even poorer and so
the need to extend the financial assistance.

One other major reason for this loan, which we had mentioned above was to help the
government meet its balance of payment obligations.