Nigeria, other African economies on brink of collapse, says IMF

The International Monetary Fund (IMF) says the economies of Nigeria and some other African countries are on the verge of collapse as a result of inflation, debt and food crisis.

The IMF also said most of these countries could raise money from the global financial markets and do not have large domestic markets to turn to.

The Managing Director, IMF, Kristalina Georgieva, disclosed this in a report titled: “Facing a Darkening Economic Outlook: How the G20 Can Respond.”

She said as an immediate step, African countries must reverse recently imposed restrictions on food exports, noting that such restrictions are both harmful and ineffective in stabilising domestic prices.

“Further measures are also needed to strengthen supply chains and to help vulnerable countries adapt food production to cope with climate change.

“The particularly difficult conditions in many African countries at this moment are important to consider. In my meeting with Ministers of Finance and Central Bank Governors from the continent this week, many highlighted how the effects of this, entirely exogenous, shock was pushing their economies to the brink,” she said.

Georgieva added that the effect of higher food prices is being felt acutely as food accounts for a higher share of income. Inflation, fiscal, debt and balance of payments pressures are all intensifying.

“Most are now completely shut out from global financial markets, and unlike other regions don’t have large domestic markets to turn to. Against this backdrop, they are calling on the international community to come up with bold measures to support their people.”

She opined that the impact of the conflict in Ukraine on people and the economy has gotten worse, with shocks to commodity prices and an increase in the cost of living creating a crisis for hundreds of millions of people.

The IMF chief further stated that inflation has risen above expectations and has affected more than just the price of food and energy, leading major central banks to announce additional monetary tightening.

Further measures are also needed to strengthen supply chains and to help vulnerable countries adapt food production to cope with climate change.

Discontinue trade measures

Meanwhile, the Food and Agricultural Organisation (FAO) has advised countries to discontinue trade measures fuelling food price volatility.

FAO Director-General, Qu Dongyu, said this on Thursday at the opening of the 75th session of the committee on commodity problems (CCP).

The CCP is FAO’s longest-established technical committee. It reviews global issues that affect the production, trade, distribution, consumption, and prices of food and agricultural products.

It deliberates key issues, examines the effects on food security, and makes policy recommendations.

Trade sanctions from Russia’s invasion of Ukraine are causing global disruptions to trade and investment, including the devastating effect on food and fuel prices.

Dongyu said global food security is threatened in many and often overlapping ways, including the COVID-19 pandemic, multiple conflicts around the world and persistent extreme climate conditions.

According to him, market transparency and policy coordination are critical to reducing uncertainty in agrifood markets.

“It is essential that countries stop using trade measures that add to price increases and extreme price volatility and harm those that depend on global markets for their food security,” he said.

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