Thread by @kanmyexcellent

CONTROVERSY OVER $3.4bn IMF EMERGENCY SUPPORT

Is Nig Borrowing or Withdrawing?

What is SDR?
What is RFI?
What is BoP?

To prevent mistrust among citizens against the Govt, let discuss what happened

Short Thread: 1/

2) SDR = Special Drawing Right is a Reserve Assets created by IMF in form of Fixed Deposit for Member Countries to serve as a store of value to Govt that hold them & as a denominated currency basket. SDR was established in 1987 to relief countries from Global pressure on US$/

3) Purposes/Functions of SDR
-Serve as Int'l Reserve Asset or Fund
-Store of Value for Int'l Economy
-Serve as Int'l investment opportunity
-Platform for Short-term Loan
-To manage Int'l Exch Rate Risk
-Basis of Pricing, Interest Rate, Exch Rate
-To Monitor Countries Exch Policy/

4) RFI: Rapid Finance Instrument is a means IMF use to assist disaster-impacted countries' financing needs. It provides quick funding & with few requirements in instances where it is determined that a Disaster|Emergency Situation has resulted in urgent Balance-of-Payment problem/

5) BoP: Balance of Payment is a Transactions record that take place btwn residents, firms & Govt of one Nation (e.g Nig) and the entire countries of the world over a period of time. It's simply an Accounting record of International Transactions including reserve, loan, repayment/

6) finally, Nig is withdrawing her Fixed Deposit of SDR 2,454.5m ($3.4bn which is her 100% quota). The ideas is to adopt Prudent Management approach by taking from the country's saving instead of taking new debts. For Example, if Dangote Ltd has Annual Operations Budget of N530b/

7) and the Coy has fixed deposit with GTBank, now that Dangote's revenue shrank due to COVID-19, the budget become uncertain, instead of Dangote to borrow N530bn from GTbank, the Coy will simply ask GTbank for the withdrawal of her Fixed Deposit to finance the operations budget/

Therefore, Nig is not borrowing new Loan from IMF, what they simply does, is a withdrawal from the country's Saving Account (SDR) with IMF. In addition, Nig is not owing IMF any cent till date

Thank you

@iyaboawokoya @woye1 @ishakaa @sarnchos @IsuphJt @olusogaowoeye @KemiAsekun