During the ministerial press briefing on the outcome of the 2019 annual meetings of the International Monetary Fund (IMF) and the World Bank Group (WBG) in Washington DC, the United States, the Federal Government of Nigeria (FGN) had called for a well calibrated deployment of fiscal policies to stimulate productivity and continued momentum from trade truce for the peace that will enhance macroeconomic stability.
Considering the emerging market and developed economies (EMDEs), Zainab S. Ahmed, the Honourable Minister of Finance, Budget And National Planning, had noted the implications of the slowdown of systemic countries like China, India, Brazil, Turkey on the commodity exporters like Nigeria and South Africa, among others.
She had also called for strong push in structural reforms, and the pursuance of tight monetary policies to ensure price stability.
At a joint meeting of the International Monetary and Finance Committee (IMFC) and the G20 Countries, convened to discuss the issue of ‘IMF Resources and Governance Reform’, Ahmed spoke on behalf of the 23 member countries. While supporting the approach that would maintain the Funds current resources envelope, including doubling the New Arrangement to Borrow (NAB) and the extension of the Bilateral Borrowing Arrangements (BBA), the lack of adequate support for a quota increase during the 15th General Review of Quotas was found disappointing.
The need for a recommitment to address long standing governance reforms under the 16th General Review of Quotas was underlined. During the IMFC Plenary, she issued a statement on behalf of Africa Group I Constituency on the priorities of the countries and how the current global slowdown has impacted the economies.
Ahmed did not only draw the attention of the international community to the peculiarities of higher interest rates and high returns in the face of global ‘lower for longer rates,’ but also called on the investing public to consider investing in the constituent countries where returns are high.
She urged the Fund to consider proffering country specific policies that will address the issue of high interest rates in our countries.In her presentation to the IMFC, on behalf of the 23- member group, the focus was on the main policy dialogue paper on ‘Fiscal Policy Responses to Managing Climate Change and Natural Disasters in Sub-Saharan Africa.’ She then informed the Governors about a new Portal on disaster relief developed by the Commonwealth Secretariat of which member countries could explore and benefit from in the event of natural disaster.
Ahmed also informed the IMFC about the regional stabilisation project to help address climate change in the four countries of the Lake Chad Region comprising, Cameroon, Niger, Nigeria and Tchad, and equally underscored the imperative of recharging the lake region to restore the livelihood of the population that has been adversely impacted by the drying up of the Lake Chad.She at the meeting had represented Nigeria, Angola and South Africa, where it was not only the World Bank Group strategic vision for the countries that was discussed, but in particular, the jobs and economic transformation agenda of the World Bank was unveiled.
Specifically, she, among other African Governors, called on the Bank Group to help address the challenges of jobs and economic transformation in the region.They also examined the outcome of the World Development Report 2020 – an annual flagship report of the World Bank. Speaking on the report, she stated:
“The report finds that the rise of trade and global value chains (GVCs) accelerated economic growth and poverty reductions in the 1980s and 1990s. But growth slowed considerably in the aftermath of the financial crisis of 2008. Also, GVC growth has been concentrated in machinery, electronics, transportation, and in regions specialising in those sectors.
Meanwhile, Sub-Saharan Africa has played a minor role in the GVCs with participation limited to exports of raw materials and minerals. However, countries in Sub-Saharan Africa can still benefit from GVCs by having appropriate policies to attract FDIs (e.g. political stability, favourable business climate and investment promotion).”
At the G24 meetings, Ahmed spoke on the negative impact of the existing international corporate tax rules on the fiscal revenues and commended Organisation for Economic Co-operation and Development (OECD) for their on-going initiatives to ameliorate the problems and called for more information to help assess available options in a more pragmatic manner.
On the climate finance summit, apart from discussing the increasing threat to the global community by climate change and the need for countries to mainstream climate financing in their budgets, Ahmed also called for the meeting of the nationally determined contribution targets.There was a roundtable on Lake Chad region; at the end of the meeting of the four (4) countries bordering Lake Chad, convened by World Bank African Regional Vice-Presidency, to find ways of reducing the fragility through the WBG Regional intervention, Nigeria was included in the phase 1 of an integrated project that will address some of the drivers of fragility. According to Ahmed, “This is a major accomplishment because, the operation for the other three countries is far advanced in terms of design. A mission is due to visit Nigeria soon to discuss with the North East Development Commission and Ministry of Humanitarian Affairs to flesh out the details.”
There were bilateral meetings with the United Kingdom (UK) Minister of State for International Development and Island of Jersey, in addition to participating in the UK Investment Summit, to explore further areas of cooperation.
Disclosing the outcome of the meetings, she said: “I am happy to announce the willingness of UK Authorities to support our infrastructure financing through the possible issuance of jollof bonds. Already, a working group is being set up to work on Naira denominated, internationally traded bonds. CBN is leading this effort. We would explore all options on this at the next UK Investment Summit in January 2020.”
“We also met with the representatives of the Island of Jersey. We explored areas of mutual cooperation, including the possibility of signing an Agreement on ‘Avoidance of Double Taxation’ as well as asset repatriation; I also met with the President of the Islamic Development Bank where we discussed the impending mission to Nigeria, in November, 2019, that will put together a strategic framework to lay out the partnership and cooperation between Nigeria and the group,” she stated.
It was all very busy for Ahmed though, but she reasonably carried on; candidly engaging at the Commonwealth Finance Ministers Meeting, just like others where the issue of debt was discussed with the calls for responsible lending and borrowing on all sides. It was also more importantly about urging the debtor nations to have a comprehensive debt management strategy that is based on realistic debt data. She was very truthful with the facts and firm with her negotiations.
Another key area of interaction was on the Power Sector Recovery Programme (PSRP). According to the Honourable Minister, “We had very productive meetings with the World Bank Group Country Power Sector Team on Nigeria for the Power Sector Recovery Program (PSRP) wherein we received an update on the outstanding issues covering sustainable fiscal support, policy and regulatory environment, operational efficiency and infrastructure investment possibly under a programmatic approach.
“We identified the imperative of solving two critical problems, i.e. operational efficiency and revamping the associated infrastructure in the power sector to ensure the overall success of the interventions in the power sector. I made two sets of requests namely: • Technical Assistance (TA) from the Bank to implementing agencies such as National Electricity Regulatory Commission (NERC) on Performance Improvement Plans (PIP) Review, business continuity regulations, and TA to the Federal Ministry of Finance to help in the assessment of Contingent Liabilities in the power sector and options for dealing with them;• Financing of between US$1.5 billion to US$4 billion for the Power Sector. The World Bank indicated its readiness to provide the TA in the near-term and the funding in a programmatic manner.”
These talks are ungoing and the world bank team will visit Nigeria for more talks . The agreement for the loan is a long way off and there are many areas of interest between the two parties to resolve before a final document is signed.
*Yinusa Abdullahi is Special Adviser, Media & Communications to Minister of Finance, Budget & National Planning.