IMF Predicts $11.4bn Drop In Nigeria’s Portfolio Investment

The International Monetary Fund (IMF) has projected that Nigeria’s portfolio investment may decline by at least $11.4 billion this financial year, as the coronavirus disease continues to take huge toll on the nation’s economy.

In the report, the multilateral development institution stated that the nation’s portfolio investment would drop from the $9 billion recorded in 2019 to a deficit of $2.4 billion by the end of 2020.

Portfolio investments are in the form of a group of assets, including transactions in equity, securities, such as common stock, and debt securities, such as banknotes, bonds, and debentures.

They are passive investments, as they do not entail active management or control of the issuing company.

Unlike, Foreign Direct Investment (FDI), foreign investors have a relatively short-term interest in the ownership of these passive investments.

The latest forecasts by the Fund came barely a week after it approved a sum of $3.4 billion under its Rapid Financial Instrument (RFI) to Nigeria to help the country in its ongoing measures to curb further spread of the COVID-19 pandemic in the country.

Also, the IMF projected that the nation’s oil and gas exports were expected to decline by at least $26.5 billion, as it warned that Nigeria remained exposed to rising risks, particularly in oil markets.

“Rising unsold cargoes could also impact oil production, which could decline further through OPEC agreed cuts or if prices persist below production costs,” the IMF stated.