By Nse Anthony-Uko
(Sundiata Post) – The International Monetary Fund (IMF) has warned Nigeria against misusing borrowed fund saying the growth being experienced in the country and others will be at risk if the funds borrowed are not used judiciously.
IMF while unveiling the Global Financial Stability report at its headquarters in Washington, on Wednesday said, “External borrowing in emerging markets and low-income countries have increased,” Tobias Adiran, financial counsellor and director of monetary and capital market of the organisation said.
He said: “Portfolio inflows to emerging markets economies are on track to reach $300 billion in 2017, more than twice the totals over the past two years. This is broadly good news, supporting growth prospects in these countries. But this greater reliance on foreign borrowing may at some point become a vulnerability, if these resources are not put to good use.”
He said it is relatively easy for Sub-Saharan African countries to get funding and debt issuance in these countries have been at high levels.
“Funding for Sub Saharan African countries have very favourable conditions in fact debt issuance in Sub Saharan Africa has been at very high levels. The key question is how are those funds used by those countries? Are countries using those funds in order to ensure financial stability and ensure sustainable outlook?” he asked.
Also, IMF Managing Director Christine Lagarde has urged global leaders not to reject international trade as policy shifts by Washington and London force resets on major global commercial treaties.
Lagarde admitted that the rapid lowering of trade barriers in recent decades had caused significant dislocation, including job losses, downward pressure on wages and higher inequality in both developing and advanced economies.
“The best policy response to all these challenges is not to turn our back on trade,” Lagarde told a conference on globalization in Washington.
“Instead, we need to redouble our efforts to create a more inclusive global trading system that works for all.”
Speaking ahead of the annual International Monetary Fund and World Bank meetings on the global economy, Lagarde did not single out the views of any specific countries or leaders on trade.
But her remarks followed a year in which Britain acted to withdraw from the European Union and US President Donald Trump killed the nascent Trans Pacific Partnership treaty and ended talks on the ambitious Transatlantic Trade and Investment Partnership that were initiated by his predecessor Barack Obama.
Trump has also forced a renegotiation of the North American Free Trade Association with partners Mexico and Canada. A new round of talks on redoing NAFTA began Wednesday, with Washington pressing its partners for more benefits for US workers from the treaty.
Lagarde said that with stronger global economic growth, governments now have an opportunity to secure the benefits of international trade.
Globalization “has fostered a sharp decline in global income inequality — that is inequality between countries,” she said.
“Living standards have been boosted in all countries, including in advanced economies, where consumers and businesses are benefiting from lower prices and a greater variety of goods.”
She conceded that there are “negative side-effects” with globalization, as local industries get hit from competition, with some social upheaval the result.
“Despite these challenges, citizens in emerging economies generally take a more favorable view of trade and its labor market impact,” Lagarde said.
“Why? Because their incomes have been growing, even in the bottom deciles of the income distribution.”
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