Ukraine War May Reverse Economic Gains Made By Nigeria, Others From Covid-19—IMF

The current war between Russia and Ukraine may reverse some of the economic gains made by Nigeria and other African countries from the damage of the coronavirus pandemic.

The Managing Director of International Monetary Fund, Kristalina Georgieva, gave the warning a statement released on Thursday

She warned that the war in Ukraine may reverse Africa’s progress in recovering from the damage of the COVID-19 pandemic and presents new challenges for the continent.

According to her, Africa is particularly vulnerable to the impact of the Ukraine war through four main channels — increased food prices, higher fuel costs, lower tourism revenues and potentially more difficult access to international capital markets.

She expressed the IMF’s readiness to assist African countries to reduce the cost of any needed policy adjustments through policy advice, capacity development and lending.

According to her, recent reforms to the Fund’s lending toolkit provide greater flexibility to help meet financing needs.

The IMF Boss in the statement said that policy makers at a meeting of African finance ministers and central bankers expressed concerns about their domestic policy space to address the ongoing crisis.

She said: “A recalibration of policies appears inevitable in many countries.At this difficult moment, the fund stands ready to help African countries reduce the cost of any needed policy adjustments through policy advice, capacity development and lending. Recent reforms to the fund’s lending toolkit provide greater flexibility to help meet financing needs.”

The IMF in 2020 provided 13 times its average annual lending to sub-Saharan Africa and increased access limits to its zero-interest lending that comes mostly without the fund’s traditional conditions.

The IMF also disclosed that its executive board has approved $1.4bn in emergency financing to support Ukraine amid the ongoing war with Russia.

The institution said the executive board gave its approval on Wednesday night.

According to the IMF, the support comes from its rapid financing instrument.

The RFI provides rapid financial assistance available to all IMF member countries facing an urgent balance of payments need.

Expressing its strong support for the Ukrainian people, the IMF said the economic consequences of the war are already very serious, with refugee flows of over two million persons in just 13 days and large-scale destruction of key infrastructure in Ukraine.

It said: “This disbursement under the RFI, equivalent to 50 per cent of Ukraine’s quota in the IMF, will help meet urgent balance of payment needs arising from the impacts of the ongoing war and will provide critical support in the short term while playing a catalytic role for financing from other partners.”

According to the global lender, Ukrainian authorities had cancelled an existing stand-by lending arrangement with the IMF but would work with the fund to design an appropriate economic programme focused on rehabilitation and growth when conditions permit.