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IMF Boss Cautions Nigeria on Impending EuroZone Recession

By on December 20, 2011

Managing Director of the International Monetary Fund (IMF), Christine Lagarde has called on developing economies like Nigeria to build a firewall against the financial crisis in developed countries, specifically in Europe.

Speaking at the Eko Hotel and Suites in a presentation entitled, Africa’s Future: Responding to Today’s Global Economic Challenges, Ms. Lagarde said, ““These are challenging times for the global economy. The dark clouds of risk are gathering, and Nigeria and others in Africa will need to watch them carefully,” Ms. Lagarde said. “While these problems might seem a world away, without action, the world economy could be swept into a downward spiral of collapsing confidence, weaker growth, and fewer jobs. And in today’s interconnected global economy, no country and no region is immune to these risks.”

Ms. Lagarde also expressed gratitude to Ngozi Okonji Iweala, and Sanusi Lamido, Coordinating Minister of the Economy and Central Bank Governor respectively for being instrumental in pursuing Nigeria’s economic transformation.

A transformation she said had helped Nigeria and other sub-Saharan African countries face the food and fuel crisis of 2008. She called for caution due to volatility in Europe and America that could further affect commodity prices and therefore disrupt economic cycles in countries like Nigeria where the economy is dependent on one commodity – oil.

She added, ““The potential for greater volatility in commodity markets could cause further disruptions, with winners and losers within the region,” Ms. Lagarde said. “Faced with these risks, my main worry is that many countries do not have as much capacity to absorb shocks as they did three years ago. Added to that, the global slowdown could be more pronounced this time around. Policies need to tread a fine line between defending against the global slowdown in the near-term, while also preserving fiscal resources for investment in much-needed infrastructure that will help promote employment and growth.”

The IMF leader called on Nigeria to ensure that there is enough ammunition in the foreign reserves coffers in order to mitigate the effects of a recession in Europe next year.