G-24 Chair Edun to central banks: steer economies out of energy crisis
The Chairman of the Intergovernmental Group of Twenty-Four (G-24) Olawale Edun has called on central banks across the world to steer their economies out of energy crisis and geopolitical tensions.
The Chairman of the Intergovernmental Group of Twenty-Four (G-24) Olawale Edun has called on central banks across the world to steer their economies out of energy crisis and geopolitical tensions.
Edun, who is Minister of Finance and Coordinating Minister for the Economy, also urged the banks to support the poor and the vulnerable.
Speaking yesterday during the G-24 news briefing at the ongoing World Bank/IMF Spring Meetings in Washington DC, U.S., he said: “Whether oil exporting or importing countries, what is important is helping the vulnerable and poor to tackle the impact of rising oil prices.”
Edun called on the IMF to provide additional liquidity to support developing economies.
“In particularly concessional financing to developing countries. We would like them to do more. We would definitely like them to provide, particularly at this time, additional liquidity, risk management tools that bring down the cost of financing.
“I will say in particular that the elevated borrowing costs and the debt servicing burden that developing countries are paying is weighing heavily on their ability to transform their economies and to achieve sustainable development,” he said.
Speaking on the need for central banks to create balancing act in monetary policy management, Edun said: “central banks and monetary policy at this time, should conduct a balancing role, where if interest rates are raised too early and too high in an effort to curtail or see potentially rising inflation, that too can damage the transformations.
“So, the central banks have a balancing act. They have a really important role to play in calibrating and helping to steer economies safely through this current energy crisis and geopolitical tensions,” he said.
Read Also: Insecurity being sponsored to distract Tinubu ahead of elections — Akpabio
Edun said Nigeria has been able to transmit higher oil prices into higher revenues.
He said that Nigeria was able to move very rapidly under the present government who came in in 2023 to remove subsidies on petroleum products, and to also remove subsidies that were related to the foreign exchange markets.
He said that the gains of the subsidy removal on petrol and forex have now been negatively affected by an external shock, which had nothing to do with Nigeria or developing countries as a whole.
“Having made so much progress, it is important that we don’t have a return to generalized subsidies, a sort of relapse into policies that have not proven successful in the past. So, then clearly, whether oil importing or oil exporting country, the focus really should be on helping the poorest and most vulnerable to cope with the increased pricing regime that they will face.,” he said.
In a communiqué posted on IMF website, the G-24 noted that in the face of the ongoing Middle East crisis, the initiative taken by the OPEC Declaration of Cooperation (DoC) countries to ensure the continued availability of oil supplies, particularly through the use of alternative export routes, which have contributed to reducing oil price volatility.
The G-24 encouraged the IMF and the World Bank Group to provide support to strengthen the capacity of countries to undertake debt management.
The Group said: “Enhanced debt management frameworks, including transparency of debtor and creditor countries, as well as strengthened reporting standards and debt data compilation are key.
“We call for institutional mechanisms for crisis prevention and response to support vulnerable countries with sustainable debt positions that face short-term liquidity shocks, including through gold sales to bolster IMF capacity and closer coordination between the IMF and Regional Financing Arrangements.
“In the current uncertain environment, the Fund must remain proactive and agile through vigilant monitoring, timely spillover assessments, and robust scenario analysis.
“In that regard, we call on the Fund to be flexible in the programme engagement with well-timed programme recalibration or adjustments as needed.
“The World Bank Group’s (WBG) ongoing focus on accelerated job creation, job intensive sectors, infrastructure, and innovative financing is crucial to the achievement of its mission of a world free of poverty on a livable planet.”
The group maintained that adequate financing remains critical for the achievement of these and other goals, and the Bank should use the strength of its balance sheet, to the fullest extent possible, to boost lending capacity while carefully balancing increased risk tolerance with the preservation of its financial sustainability and credit rating.
The Group said: “In this regard, we call for faster progress in ongoing initiatives, including the Framework for Financial Incentives, hybrid capital, and portfolio guarantees, all of which are critical to mobilizing additional lending capacity at affordable cost. Collaboration with multilateral, regional, national banks and domestic nonbanking financial institutions could focus on mobilising private sector investment, deepening domestic capital markets, de-risking private investment, mitigating currency risks, and increasing access to credit for Micro, Small, and Medium Enterprises.”
