SAN FRANCISCO October 07, (THEWILL) – The International Monetary Fund, IMF, says it was offering zero-interest rate on its lending facilities between 2016 and 2018 to Nigeria and other low-income countries that are in dire need of financial support to boost their economies.
The IMF Managing Director, Ms. Christine Lagarde, who disclosed this to the press at the ongoing World Bank/IMF annual meetings, said the policy was expected to help countries that are members of the donor institution absorb future shocks and continue their efforts to achieve deeper and more sustainable economic growth in line with sustainable development goals.
She stated that the IMF board took the decision on the zero interest rate, which is in alignment with most developed economies, in view of the challenges facing some low income countries, including Nigeria.
According to her, “If we must improve the inequality issue, we must have a strong international safety net. In this context, I am pleased to reveal that our board recently approved the extension of zero interest rate on all concessional facilities from 2016 to 2018, and thereafter, if there is need for extension.
“That is really important for low-income countries to be able to actually absorb the shocks without necessarily going to the international markets or relying on bilateral lending capacity of close to a trillion dollars by extending access to bilateral borrowing agreements.
“The new agreements that are being signed this week will run at least through the end of 2019, and will continue to serve as a third line of defence.
“As you know, the first line of defence is the quota, second line are new arrangements to borrow, and the third line of defence will be those bilateral loans.
“We have so far received pledges of $344 billion from 26 members. We look forward to others joining this effort. We will provide more details shortly, and there will be some signing sessions organised in the course of the next two days,” she explained.
Lagarde continued that the outlook for advanced economies remained subdued, while the outlook for developing economies provide some guarded optimism with great diversities within the various economies.
Her words, “We also believe that each country has something to offer. My hope is that at the end of these meetings, each finance minister, each governor of central banks will go back home thinking of what to fuel growth.
“For example, when the monetary policy has been over-stretched, fiscal policy can step up. This will also put in place the structural reforms that are much needed, which have been sorted out in some countries, but which are still lacking in other places.”
At a separate media briefing also on Thursday, the President of the World Bank Group, Jim Yong Kim, noted that a lot of countries had been hit by falling commodity prices and stagnating global trade, observing that a lot of developing countries continue to struggle amidst a sluggish global economy.
He pointed out that “we now have the highest number of developing countries in recession since 2009”, adding that the World Bank had been working to meet rising demand for assistance to help countries manage the global challenges.
Kim, who disclosed that the World Bank was playing a strong counter-cyclical role in the global economy, said: “But multiple risks threaten hard-fought gains in many countries and can hamper progress on our goals of ending extreme poverty by 2030 and boosting shared prosperity”.
He added, “Our research shows that inequality is still far too high, both globally and within countries, constraining growth and breeding instability.
“We need to focus on growth and continue to reduce inequality – and we have to make growth more equitable, and more sustainable. Because of the multiple, overlapping global shocks – including climate change, forced displacement, and pandemics – we have to scale up our efforts dramatically.”
