The new vision of the International Monetary Fund (IMF) - to be in a more effective position to attend to global post-crisis challenges - may not impact equally on all its 186 member countries, as they have been hit by the crisis in various ways and may require varying recovery response, said Samir Gadio, an economist and finance analyst at Renaissance Capital, an international finance firm. Mr. Gadio said some of the IMF's member countries like Nigeria suffered domestic financial issues and that the international fund may have to fine-tune policies while dealing with member countries individually. In the case of Nigeria, the crisis is not really integrated into the economy in terms of financial leakages.
The financial risks and issues in Nigeria are more of domestic than international, mainly because the banks had their capital eroded," he told NEXT in Lagos on Wednesday. "Even in the worst stage of the crisis, Nigeria had about $42 billion in the foreign reserves. It was only marginal, it didn't really change the entire picture of the state of the Nigerian economy.
It is true that Nigeria got about $500 million from the World Bank, but these amounts are very marginal, because Nigeria as a country does not depend on foreign inflows. So, 98 percent of the budget is based on domestic inflows (oil and non-oil revenues), unlike some countries in Africa, where you have 80 percent of their budgets are funded by foreign donors.
So, at this point, I don't think these approaches would really apply to Nigeria," Mr. Gadio argued. Re-tooling visionDominique Strauss-Kahn, the Managing Director, International Monetary Fund, said the body is exploring a renewed vision that would enable it become more effective in meeting the challenges its 186 members are facing in this post- crisis era. He said this at the Bretton Woods Committee Annual Meeting in Washington D.C. last week in a speech posted on the IMF's website, adding that the vision is timely to meet the future role of the fund."Today, as the global community slowly emerges from the worst financial disaster since the Great Depression, and as we work to shape the post-crisis world, it is timely that we meet to discuss the future role of the Fund."
A turning point
Stating that the world is at a turning point, the IMF Chief said, "The crisis has put at risk so much of what we have all worked for: less poverty; more prosperity for all; a better, safer world. During the crisis, the Fund responded to the deteriorating situation; we made the case for coordinated policy stimulus, and put forward our concerns about the health of major banks. "We supported the global policy response, led by the G-20, with our monitoring and analysis.
We rapidly reformed our lending instruments and boosted our resources, making available a record amount of Fund support.Despite aids given globally, the IMF management believes that they can still build on this positive momentum: to transform the Fund into an institution, even better equipped to meet the challenges of the post-crisis era."It's a new IMF, but still the IMF. This objective remains as current today as it was at the IMF's creation in 1944. That was the genius of Keynes, White and the other original visionaries. I see three priorities.
First, a central lesson of the crisis has been that surveillance for crisis prevention needs to be much more rigorous-with greater coverage of the financial sector and regulatory issues, and better appreciation of systemic risks."Second, if the Fund is to serve as a reliable provider of crisis financing, our lending for crisis response must be of a speed, coverage and size far beyond previous assumptions. And finally, we must do more to strengthen the long-term stability of the international monetary system-in particular by bolstering the stability of reserves," he said.
The Nigerian Monetary Policy Committee (MPC) at its meeting early in the week, reviewed domestic economic conditions for the first two months of 2010 and the challenges faced by the economy against the backdrop of developments in the international economic and financial environments.
The committee noted that the rebound in global economic activity, which started in the second half of 2009, has continued. Sanusi Lamido Sanusi, the Central Bank Governor, said key concerns, however, remain the strength and sustainability of the recovery process which is proceeding at varying speeds across the different regions.
"In the advanced economies, the recovery is still expected to be weak by historical standards, with real output projected to remain below its pre-crisis level until late 2011. Given their stronger initial economic conditions and swift policy responses, growth in the emerging and developing economies is expected to recover faster," he said.
The IMF chief stated that the first priority would be on crisis prevention."We need to improve our oversight of systemic and financial risks. For this reason, there may be a need for a clearer mandate to pursue risks to global economic and - I stress - financial stability." He said the Fund will also need to focus on crisis response,"It is critical that a multilateral institution be ready to answer the call.
In this context, we are currently exploring various options-including for short-term, multi-country credit lines that the Fund might extend in a systemic crisis."The third area of the Funds mandate review is the stability of the international monetary system.