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.”
