IMF Lauds Introduction Of ‘Eco’ Common Currency By Francophone West African Countries


The International Monetary Fund (IMF) has lauded the West African Economic and Monetary Union (WAEMU) for changing the common currency of French-speaking West African countries to Eco from the CFA francs.

Eight West African countries on Saturday (Benin, Burkina Faso, Guinea-Bissau, Ivory Coast, Mali, Niger, Senegal, and Togo) agreed to change the name of the currency with the exception of Guinea-Bissau.

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The statement by the Managing Director of IMF, Ms. Kristalina Georgieva, stated that the monetary organisation is ready to engage with the regional authorities, owing to its proven track record in the conduct of monetary policy and external reserve management.

“I welcome the reforms to the WAEMU’s CFA franc currency arrangement that were announced today by Presidents Ouattara and Macron in Abidjan. They constitute a key step in the modernization of long-standing arrangements between the West African Economic and Monetary Union and France.

In recent years, the WAEMU has recorded low inflation and high economic growth, the fiscal situation has improved, and the level of foreign exchange reserves has increased.

“The reforms also maintain key elements of stability that have served the region well, including the fixed exchange rate with the euro and the guarantee of unlimited convertibility provided by France.

“The IMF stands ready to engage with the regional authorities, as needed, and to support the implementation of this important initiative.”

The announcement for the change in currency was made on Saturday during a visit by French President Emmanuel Macron to Ivory Coast, the world’s top cocoa producer and France’s former main colony in West Africa.

Unemployment Fuels Unrest In Arab States – IMF


Unemployment and sluggish economic growth are fuelling social tension and popular protests in several Arab countries, the International Monetary Fund said Monday.

The unrest is in turn contributing to slower growth in the Middle East and North Africa (MENA) region, alongside global trade tensions, oil price volatility and a disorderly Brexit process, the IMF said in a report on the regional economic outlook.

Earlier this month it lowered the 2019 forecast for the region — taking in the Arab nations and Iran — to a meagre 0.1 percent from 1.1 percent last year.

The IMF slashed its outlook for the region’s three largest economies — Saudi Arabia, Iran and the United Arab Emirates.

The risks around the forecast of earlier this month “are skewed to the downside and are highly dependent on global factors,” the IMF said in its report on Monday.

“The level of growth that countries in the region are having is below what is needed to address unemployment,” said Jihad Azour, the IMF’s director for the Middle East and Central Asia.

“We are in a region where the rate of unemployment at the youth level exceeds 25-30 percent and this requires growth to be higher by 1-2 percent” in order to make a dent in joblessness, Azour told AFP in an interview.

The IMF report said that the high unemployment was worsening social tensions in Arab countries.

“Unemployment averages 11 percent throughout the region versus seven percent across other emerging market and developing economies,” it said.

“Women and young people are particularly likely to be out of work, with more than 18 percent of women… without jobs in 2018.”

Violent protests have broken out in several Arab countries since early 2010 and turned into bloody civil wars in Syria, Yemen and Libya.

A new wave of demonstrations erupted over the last year in Algeria, Sudan, Iraq and Lebanon, typically demanding economic reforms and action against corruption.

In Lebanon, where protesters have brought the country to a standstill with demands for a full overhaul of the political system, the economy grew at a very slow pace over the past few years, Azour noted.

“The government has to act firmly and swiftly in order to address those imbalances, bring confidence back by addressing the fiscal situation, and lower expenditure,” he said.

The IMF also said that public debt levels were very high in many Arab countries — exceeding 85 percent of gross domestic product (GDP) on average, with rates of more than 150 percent in Lebanon and Sudan.

“Having built over many years, the cost of public debt burdens has become sizeable, preventing investments critical to the region’s long-term economic future,” it said.

 Iran flounders 

The IMF said that Iran, which is subject to crippling US sanctions, has entered a steep economic recession and faces a battle against spiralling inflationary pressures.

The Islamic republic’s economy is projected to contract by 9.5 percent this year after posting negative growth of 4.8 percent in 2018.

Iranian authorities must align “the exchange rate close to the market rate and also reform the financial sector… and try to address some of the implications of the high level of inflation,” Azour said.

As a result of the sanctions, Tehran is believed to be exporting only around 500,000 barrels per day of crude, down from over two million bpd before the sanctions.

The IMF said that oil-rich Gulf Cooperation Council (GCC) states, led by Saudi Arabia, are expected to grow by just 0.7 percent this year from 2.0 percent in 2018 due to lower oil prices and output.

“GCC economies need to diversify and grow out of oil and this requires them to accelerate the reforms that have been started in the last four to five years,” Azour said.

Over 13,000 People To Attend World Bank, IMF Meeting In US


No fewer than 13,000 people are expected at this year’s meeting of the World Bank and the International Monetary Fund.

The annual event, which opens on Tuesday, will take place in Washington D.C., the United States.

It will bring together governors of various central banks, ministers of finance and development, private sector executives, civil society, and academics.

Participants are expected to discuss issues of global concern including the world economic outlook, global financial stability, poverty eradication, jobs and growth, economic development, and aid effectiveness among others.

Top government officials from Nigeria are also expected at the meeting and would possibly share experiences on what the Federal Government has been doing to address income inequalities, job creation, and improve the nation’s human resources.

The meeting is also expected to offer an opportunity for civil society organisations to share their views and interact with policymakers in a global setting.

IMF Picks Kristalina Georgieva As New Managing Director

Newly selected International Monetary Fund (IMF) Managing Director Kristalina Georgieva arrives to speak at a press conference at the IMF headquarters on September 25, 2019, in Washington. 


The International Monetary Fund on Wednesday formally selected Kristalina Georgieva of Bulgaria to be only the second woman ever to lead the 189-member institution.

The selection had been all but guaranteed after the global crisis lender said earlier this month that Georgieva, a former World Bank CEO, was the sole candidate.

In acknowledging her selection, Georgieva spoke of tempestuous times for the global economy.

“It is a huge responsibility to be at the helm of the IMF at a time when global economic growth continues to disappoint, trade tensions persist, and debt is at historically high levels,” she said in a statement.

“This means also dealing with issues like inequalities, climate risks and rapid technological change.”

She is to take up her position as managing director on October 1, replacing Christine Lagarde, who is set to take over the European Central Bank later this year.

Georgieva’s rise perpetuates Europe’s long-standing control over the designation of the fund’s leadership.

She inherits the helm of an institution buffeted by the rise of populism in advanced economies and escalating trade conflicts — the largest of which has been driven by the United States, the fund’s single biggest shareholder.

Georgieva, who was championed by Paris, overcame a challenge within the divided European Union from Germany which had backed former Dutch Finance Minister Jeroen Dijsselbloem.

Under an unwritten rule, a European has led the IMF since its creation in the aftermath of World War II while the leader of the fund’s sister organization, the World Bank, has been designated by Washington.

David Malpass, a former US Treasury official who took office earlier this year as president of the World Bank, likewise faced no opposition.


IMF Warns Trump Against US Tariffs On China


US tariffs on China won’t fix the trade deficit, and neither will weakening the US dollar through interest rate cuts, International Monetary Fund economists said Wednesday.

In unusually blunt language, the blog post seemed targeted straight at President Donald Trump who has persistently demanded that the Federal Reserve cut interest rates to weaken the US dollar and juice the economy while imposing round after round of tariffs on China to reduce deficit he describes as theft.

But the US policy moves are counterproductive, won’t achieve the desired results, and will slow the global economy, IMF chief economist Gita Gopinath said.

“Higher bilateral tariffs are unlikely to reduce aggregate trade imbalances, as they mainly divert trade to other countries,” Gopinath warned in a blog titled “Taming the Currency Hype,” co-authored by fellow IMF researchers Gustavo Adler and Luis Cubeddu.

“Instead, they are likely to harm both domestic and global growth by sapping business confidence and investment and disrupting global supply chains, while raising costs for producers and consumers.”

And any plans to weaken a country’s own currency value “are cumbersome to implement and likely to be ineffective,” they said, adding that pressure on the central bank will not achieve that goal either.

The authors warned that “one should not put too much stock in the view that easing monetary policy can weaken a country’s currency enough to bring a lasting improvement in its trade balance.”

“Monetary policy alone is unlikely to induce the large and persistent devaluations that are needed to bring that result … especially within a 12-month period,” they said.

With the US presidential election coming in November 2020, Trump is especially focused on the next 12 months.

 ‘Bearing the burden’ 

Trump has slapped steep tariffs on $250 billion in Chinese, goods with the remaining $300 billion in imports targeted for new duties in two more rounds, September 1 and December 15.

With the IMF and others alerting that his trade war is slowing global growth, and as warning signs of a US recession have flashed red, Trump has doubled down on his attacks on the Federal Reserve and on China.

He and his advisors have been talking up the economy to counteract the increasing jitters on US financial markets.

At the same time, Trump has maintained his relentless attacks on the Fed, blaming Fed Chair Jerome Powell for failing to allow the economy to grow and for the strong US dollar.

In yet another Twitter outburst on Wednesday, Trump said of Powell, “Big U.S. growth if he does the right thing, BIG CUT – but don’t count on him! So far he has called it wrong, and only let us down.”

“Yesterday, ‘highest Dollar in U.S.History.’ No inflation. Wake up Federal Reserve. Such growth potential, almost like never before!”

Just last month, the IMF again downgraded its global growth forecast and said the trade tensions make for a “precarious” 2020, in which tariffs threaten to exacerbate the slowdown of China’s economy.

The IMF blog repeats much information released in separate reports, but highlights the key points and brings them together.

While economic theory states that a weaker currency tends to make a country’s exports cheaper and more competitive, the IMF notes that many products are priced in US dollars on the global marketplace.

So in reality, it argued, “US importers and consumers are bearing the burden of the tariffs. The reason: the stronger US currency has had a minimal impact thus far on the dollar prices Chinese exporters receive because of dollar invoicing.”


France To Lead Search For European Candidate To Head IMF


French Finance Minister Bruno Le Maire said Thursday he will lead talks on finding a single European candidate to succeed Christine Lagarde as head of the International Monetary Fund (IMF).

The post of IMF managing director, which by convention goes to a European, became vacant after Lagarde was tapped by EU leaders to head the European Central Bank.

Finance ministers of the four European members of the G7 — Germany, France, Britain and Italy — met informally on the sidelines of the meeting of the most developed nations in Chantilly outside Paris to discuss the issue.

Sources said after the meeting that the names of several candidates had been floated but no kind of selection had been made.

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“We agreed that it was important one European name was put forward. A number of names were informally discussed but no short list was established,” a European official, who asked not to be named, said.

– ‘Impartial role’ –
At the same time, the British, Italian and German ministers agreed that Le Maire, whose country currently leads the G7, should head informal discussions with all European countries to “foster a consensus” around a single name, the official added.

Le Maire, who has made clear he does not want the job himself, confirmed after the meeting he will take on the the search.

“What we will try and do in the next days is to coordinate positions so that we have a consensus on a candidate by the end of July,” he said.

Le Maire said it would “inelegant” to indulge in “name-dropping”.

Several high-profile names have already been floated as possible successors to Lagarde who has steered the IMF since 2011.

They include the Canadian-born Bank of England governor Mark Carney, who holds Canadian, British and Irish nationality, and former British finance minister George Osborne, who is now editor of the London Evening Standard newspaper.

Also in the frame are the former finance minister Jeroen Dijsselbloem of the Netherlands as well as Spanish Economy Minister Nadia Calvino.

– ‘Not official policy’ –
The IMF board tapped Lagarde’s number two, American David Lipton, to serve as interim managing director, but by tradition a European always leads the fund while an American runs its sister institution, the World Bank.

Critics of the system see it as a hangover of the last century that no longer reflects the globalised nature and diversity of the world economy.

US Treasury Secretary Steven Mnuchin emphasised that naming a European to head the IMF was a convention, “not an official policy”.

But he also acknowledged European support for the Trump administration’s choice for head of the World Bank, the former senior US treasury official David Malpass.

“The objective is to get the right leadership,” Mnuchin told reporters in Chantilly.

“That having been said, we very much appreciated the support we got for David Malpass across the world. So we will be working closely with the Europeans and the Japanese and others as we go through the process,” he said.

IMF Boss Lagarde Announces Resignation

The Managing Director, IMF, Christine Lagarde


Christine Lagarde will resign from the International Monetary Fund on September 12 as she awaits final word on her nomination to the presidency of the European Central Bank, she announced Tuesday.

Her departure allows the IMF board to begin the search for her replacement.

“With greater clarity now on the process for my nomination as ECB President and the time it will take, I have made this decision in the best interest of the fund, as it will expedite the selection process for my successor,” Lagarde said.

EU leaders early this month picked Lagarde to succeed ECB chief Mario Draghi, whose single, eight-year term ends in November.

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Lagarde stepped away from the IMF leadership post she has held since 2011, sparking a wave of speculation about who would replace her.

The IMF board tapped her number two, American David Lipton, to serve as interim managing director, but by tradition a European always leads the fund while an American runs its sister institution, the World Bank.

“With this decision by Managing Director Lagarde, the IMF Executive Board will initiate promptly the process of selecting the next managing director and will communicate in a timely fashion,” the IMF board said in a statement.

Early candidates mentioned as possible successors to Lagarde include Mark Carney, a Canadian who also holds British and Irish citizenship and whose term as leader of the Bank of England is up in January; French politician Pierre Moscovici, who is the EU finance commissioner, and former British finance minister George Osborne.

Inequality: IMF Chief Wants ‘Inherent Flaw’ In Capitalism Fixed

International Monetary Fund (IMF) Acting Managing Director David Lipton takes part in the conference on the theme “Bretton Woods: 75 years later – Thinking about the next 75 years” at the Banque de France headquarters in Paris on July 16, 2019. ERIC PIERMONT / AFP


Rising anger at the increasing inequality blamed on globalization calls for a change of directions, acting IMF chief David Lipton said Tuesday.

But he said, that does not mean there is an “inherent flaw in capitalism,” Lipton said in a speech celebrating the 75th anniversary of the creation of the International Monetary Fund and World Bank.

While capitalism “has been the engine behind so much of the success we have experienced,” Lipton said, “it is an imperfect system in need of a course correction.”

He noted that much of the anger is because of concerns about the fairness of the system.

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“Part of the problem is the rise of excessive inequality,” he said. “Although poverty rates have declined worldwide since 1980, the top tenth of the top one per cent worldwide has garnered roughly the same economic benefits that have accrued to the bottom 50 per cent.”

Governments should respond by increasing spending to address inequalities, and close corporate tax loopholes and work to prevent corporations from shopping for countries with lower taxes, he said.

The changes from trade, globalization and technology are fueling “rising anger, political polarization and populism,” Lipton warned.

And while allies at the end of World War II gathered at the Bretton Woods conference to create the institutions that would use economic cooperation to prevent future conflicts, “We are at risk of what one could call a reverse Bretton Woods moment.”


Removing Fuel Subsidies Is The Right Way To Go, IMF Tells Nigeria

The Managing Director, IMF, Christine Lagarde at a press conference on Thursday, during the on-going joint annual spring meetings with the World Bank in Washington DC.


The International Monetary Funds (IMF) has asked the Nigerian Government to consider the complete removal of fuel subsidy.

IMF Managing Director, Christine Lagarde, who said this at a press conference on Thursday, noted that it was the right way to go.

Addressing a joint annual spring meeting of the World Bank in Washington DC, United State, she explained that the move would save a lot fiscally and in terms of human lives.

“We believe that removing fossil fuel subsidies is the right way to go,” Lagarde affirmed.

She added, “If that was to happen, then there would be more public spending available to build hospitals, to build roads, to build schools, and to support education and health for the people.”

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The IMF boss revealed that the figures spent on subsidy from 2015 were staggering.

She, however, urged the government to put in place a social protection safety net while the subsidy was being removed, to reduce its effect on the people.

“If you look at our numbers from 2015, it is no less than about $5.2 trillion that is spent on fuel subsidies and the consequences thereof,” she said.

Lagarde added, “And the Fiscal Affairs Department has actually identified; you know how much would have been saved fiscally but also in terms of human life if there had been the right price on carbon emission as of 2015. The numbers are quite staggering.

“Now, how this is done is more complicated because there has to be a social protection safety net that is in place so that the most exposed in the population do not take the brunt of the removal of subsidies principle. So that is the position we take.”

According to the IMF boss, with the low revenue mobilisation that exists in Nigeria in terms of tax-to-GDP, the nation is amongst the lowest.

She said there was a need for “a real effort” to maintain a good public finance situation for the country and in order to direct investment towards health, education, and infrastructure.

The IMF had in a recent ‘Staff Article IV consultation report on Nigeria’ made recommendations that the fuel subsidy should be removed.

IMF, World Bank Urge Caution With China Loans


Increased lending by China to developing nations is increasingly under the spotlight amid concerns that growing debt burdens and onerous conditions could sow the seeds of a crisis.

The global development lenders, the International Monetary Fund and World Bank, are calling for more transparency about loan amounts and terms, and cautioning governments against relying too much on debt.

At the spring meetings of the institutions on Thursday, newly-installed World Bank President David Malpass warned that “17 African countries are already at high risk of debt distress, and that number is just growing as the new contracts come in and aren’t sufficiently transparent.”

IMF chief Christine Lagarde said the high debt levels and number of lenders, who do not all conform to international norms, also complicate any future efforts to restructure a country’s debt.

“Both the bank and the IMF are working together in order to bring about more transparency and be better able to identify debt out there, terms and conditions, volumes and maturities,” she said at a news briefing.

“We are constantly encouraging both borrowers and lenders to align as much as possible with the debt principles” set by international organizations such as the Paris Club and Group of 20.

An IMF report issued this week warned that rising debt levels around the world — government and corporate borrowing — poses a risk to the global economy.

China has been lending throughout the developing world as part of its “belt and road” initiative, especially focusing on resource-rich nations.

Debt drags down economies

But the loans have come under increasing scrutiny. Mozambique has been engulfed in scandal over $2 billion in fraudulent loans that were hidden from the public.

And Lagarde said, “It’s clear that any debt restructuring programs going forward in the years to come will be more complicated than debt restructuring programs that were conducted 10 years ago, simply because of the multiplicity of lenders, and the fact that not all public debt is offered by members of the Paris Club.”

Malpass acknowledged that lending can help economies grow “but if it’s not done in a transparent way, with good outcome from the build-up of debt, then you end up having it be a drag on economies.”

He cautioned that “history is full of those situations where too much debt dragged down economies.”

The G20 has called on the two Washington-based lenders to collect data on debt to get a better handle on the amounts and loan conditions.

“I’ll be reporting to the G20 on the progress during our meetings coming up this week, and the keys are to have transparent disclosure of the debt as it is being created, and also then have the focus on good outcomes in terms of quality projects,” Malpass said.

“This is critical for poor countries as they try to move forward to have the projects associated with good quality programs and full disclosure of the debt.”

China also has a growing role as a donor to the World Bank fund that provides low-cost loans to the poorest countries.


IMF Awaits Decision On Venezuela Govt Recognition

US Seeks UN Draft Resolution Calling For Venezuela Elections
Juan Guaido (L)                                                                 President Nicolas Maduro (R)/ AFP



World governments are working on recognizing a Venezuelan government, a key step before international aid can flow into the crisis-stricken country, IMF chief Christine Lagarde said Thursday.

The South American oil-producer is facing an economic and humanitarian crisis that resembles the collapse of a country at war.

But without a recognized government, after Venezuela’s national assembly leader Juan Guaido in late January challenged the legitimacy of embattled leader Nicolas Maduro, the IMF, World Bank and other institutions cannot help with financing.

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“We are really very, very concerned about the humanitarian crisis that is unfolding in front of our eyes in Venezuela,” Lagarde said.

“We are waiting to be guided by our membership and I know that it is in process at the moment as we speak from quite a few members. As soon as that happens we will follow through.”

The IMF has had no direct access to events on the ground as the global crisis-lender had not been welcome in Venezuela for about 15 years, she said.

However, “We have done as much preparatory work as we could… in order to be prepared to act as quickly and as swiftly as we can,” Lagarde said.

The IMF estimates that Venezuela’s economy will contract by one-fourth in 2019, and a further 10 per cent in 2020 — a greater collapse than projected in the October 2018, along with unprecedented hyperinflation of 10 million per cent.

She stressed that the international response to the Venezuela crisis — which is facing shortages of food and medicine, power outages, and an exodus of its citizens — would have to be a “multi-pronged effort” by many institutions.

Her comments echoed those of newly-installed World Bank President David Malpass, who also told reporters that the institution’s shareholders would decide when and how to engage with Caracas.

Malpass also said Venezuela was of “deep concern” and was facing a “humanitarian crisis.”

“As far as the political side, we will be guided by the international community and the views of our shareholders,” he added. “This is something that is not chosen by the bank but by the shareholders of the bank.”

The IMF said Wednesday it would have no contact with Caracas, and would not allow the country access to its IMF-held reserves until the international community recognized a government in Caracas.

The United States is among about four dozen countries to recognize Guaido, and Vice President Mike Pence on Wednesday called on the UN to do so as well.

The Organization of American States’ permanent council and the Inter-American Development Bank have recognized Guaido’s representative.


Nigeria’s Economy Is Recovering, Needs Strengthened Domestic Revenue Mobilization – IMF



The International Monetary Fund (IMF) says Nigeria’s economy is recovering, but persistent structural and policy challenges continue to constrain growth to levels that cannot reduce poverty and improve issues such as health and education.

This is according to the latest IMF executive board report released on Wednesday, April 3.

The report says Nigeria’s economic growth will hover around 2.5 percent over the medium term, but with no growth in per capita income if current policies fail to give way to strong reforms.

The IMF, therefore, advised the need for revenue-based consolidation, the shifting of expenditure mix toward priority areas, while welcoming ”significant increase in public investment.

Meantime, the IMF commends Nigeria’s commitment to unify its exchange rate, while recommending credible time bound recapitalisation plan for weak banks, and the phase-out of the asset management corporation or AMCON.

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Below is the full report as published by the IMF.