The 2018 International Monetary Fund (IMF) and World Bank Group (WBG) Spring meetings, which usually hold in Washington D.C, have come and gone with participation from 187 countries. The meetings brought together central bankers, ministers of finance and development, parliamentarians, private sector executives, representatives from civil society organizations and academics to discuss issues of global concern, including the world economic outlook, poverty eradication, economic development, and aid effectiveness. It also featured seminars, regional briefings, press conferences, and many other events focused on the global economy, international development, and the world’s financial system. It afforded the participants the opportunity to go through the early warning exercise where people are free to express the challenges that they are going through and get a lot of advice. It is described as very engaging and fruitful.
Nigeria attends the meeting each year because of the quantum of investments and assistance it receives from both the IMF and the World Bank.
Although Nigeria currently has zero loans with the IMF, it enjoys technical support from the organisation.
The World Bank Group on the other hand is helping to fight poverty and improve living standards in the country through 33 Core Knowledge Product Reports and 29 ongoing National and Regional projects. This is in addition to about 60 Trust Funds.
The World Bank Group, since 1958, supported Nigeria with loans and International Development Association (IDA) credits worth about 14.2 billion dollars.
The group in 2017 fiscal year alone committed 1.51 billion dollars to the country and so far in 2018, it already spent 486 million dollars on different development projects across the country.
Some of the projects include Electricity Transmission Project, Agro-Processing, Productivity Enhancement and Livelihood Improvement Support Project, Polio Eradication Support Project and Housing Finance Development Programme, among others.
The meeting got under gear proper when the International Monetary Fund (IMF) released the “World Economic outlook” report wherein it tasked emerging and developing economies to diversify their economies to boost future growth and resilience.
The Economic Counsellor and Director of Research department of the IMF, Maurice Obstefeld, said while some of the emerging economies could expect longer term growth rates comparable to pre-crises rates, many commodity exporters would not be so lucky, despite some improvement in the outlook for commodity prices.
He said: “at the IMF, we have been saying for a while, that the current cyclical upswing offers policy makers an ideal opportunity to make long term growth stronger, more resilient, and more inclusive. The present good time will not last for long, but sound policies can extend upswing while reducing the risk of a disruptive unwinding.”
He further posited that countries need to rebuild fiscal buffers, enact structural reforms, and steer monetary policy cautiously in an environment that is already complex and challenging.
Activities further peaked with the release of the Global Financial Sustainability report and the Fiscal Monitor report.
It had warned that about 40 percent of the low income countries were at a high risk of distress following increase in public debt.
Anna Ilyina, who heads the Emerging Economies Regional Studies Division in the IMF’s European Department, said easy financial conditions continue to fuel financial vulnerability, leaving the global economy exposed to the risk of a sharp tightening in financial conditions. “Countries that are building up high debt levels and currency mismatch are going to be exposed to financial stability issues,” she stressed.
When our reporter met with the Governor of the Central Bank of Nigeria (CBN), Godwin Emefiele, to get the Nigerian story about our participation at this year’s spring meeting. He was quick to calm nerves over some of the frightening estimations that have come out of the Spring meetings with regards to Nigeria and Sub Saharan Africa.
He said the global outlook remained very good at this time. There was broad based growth all over the world. With growth in 3.8 per cent and projected at 3.9 per cent in 2019.
“In Saharan Africa, 2.8 per cent in 2017 and 3.4 in 2019, not too far from what is projected in Nigeria at 3.5 per cent, even though the IMF and the World Bank projects a 2.5 per cent for Nigeria. This is a very positive development compared to last year when Nigeria, South Africa and Angola dragged the entire sub Saharan Africa into the negative territory.” he added.
The Governor expressed delight that the result from Nigeria, though still weak, had helped to pull the sub Saharan result. “A lot of work still needs to be done around inflation, but we have achieved a lot of positive result in the area of inflation, exchange rate and growth. The growth still looks fragile, and that is why the money and fiscal authorities are determined to see that we are able to grow aggressively, the numbers we project.”
The CBN Governor further revealed that one of the important issues that was discussed was the need for countries to save for a rainy day.
“We must continue to rebuild reserves. That means that Nigeria’s decision to rebuild its reserves from as low as $23 billion in 2016, to almost $48 billion today was a decision in the right direction and we are going to continue to do so,” he further pledged.
He said: “If we had reserves when we were hit by the exogenous shocks, we would not suffer the recession that we suffered. And there is a very strong likelihood that there could also be reversals.
The Minister of Finance talked about U.S Fed normalisation -interest rate would go up. And when interest rate goes up in that environment, what happens is the emerging and frontier markets would lose those monies. So, we need to be able to prepare ourselves in case of reversal, so that when it happens we should be able to withstand the shocks and not be caught pants down again. “We would love as much as possible to have inflation as low as possible. Last month, inflation was 13.43 per cent. We are hoping that in 2018, we should achieve a very low double digit inflation level and if we are lucky, high single-digit. And I think with that we should be seen to be moving in the right direction.”
Addressing concerns around when the MPC is likely to drop interest rate, the Apex bank Chief said the MPC had the primary mandate for monetary and price stability. It is a meeting of 12 eminent persons who come in, take data, analyse them and they take the decision. At this time, we are still in the mode of tightening. Indeed, even the IMF had reported that our position to tighten is the right one at this time, when we are working very hard to rein inflation in.”
He, however, assured that the bankers’ bank will not tighten in perpetuity, adding that “at some point, we would begin to loosen and I bet that financial accommodation period is coming very soon.”
The CBN Governor, along with the Minister of Finance, also held a couple of meetings with existing and potential investors, international credit rating agencies, assets managers and portfolio investors. “We also held meeting with Queen Maxima of the Netherlands where we discussed issues of mobile money and financial inclusion. The target of achieving 80 per cent financial inclusion in 2020 from the 49 per cent where we are now looks very but we are on course towards ensuring that we achieve this numbers,” Emefiele assured.
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