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COVID-19: IMF lists road map for recovery in Nigeria, other emerging economies

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By Peter Egwuatu

In order to save lives, reduce the impact of the recession, and revive growth and job creation, the International Monetary Fund, IMF has listed some recovery measures to be taken by emerging countries which include Nigeria and other low income economies to include  reprioritizing spending and enhancing its efficiency for recovery.

The Fund disclosed this on Wednesday in its fiscal monitor policies for the recovery report stressing that there were countries often low-income developing countries, many in sub-Saharan Africa with no access to international financial markets. “These countries were facing binding constraints on their ability to put public finances and state capacity at the service of growth and development” The IMF added.

Commenting on the post-pandemic reset, the report states: “Looking ahead, countries will need to make it a priority to invest in health care systems and education. They should also strengthen social safety nets to ensure that all people have access to food and other basic goods and services. As economies begin to recover, governments should seize this moment to move away from the pre-crisis growth model and accelerate the transition to a low-carbon and digital economy.

“As economies begin to recover, governments should seize this moment to move away from the pre-crisis growth model and accelerate the transition to a low-carbon and digital economy.  Carbon pricing should be a key feature of this transition, because it encourages people to reduce energy use and shift to cleaner alternatives—and, moreover, it generates revenue that can be used in part to support the most vulnerable.”

Vitor Gaspar, Director of the Fiscal Affairs Department of the IMF said: “As economies tentatively reopen, but uncertainty about the course of the pandemic remains, governments should ensure that fiscal support is not withdrawn too rapidly. However, it should become more selective and avoid standing in the way of necessary sectoral reallocations as activity resumes. Support should shift gradually from protecting old jobs to getting people back to work for example, by reducing job retention programs (wage subsidies), reintroducing job search requirements, and training new skills and helping viable but still-vulnerable firms safely reopen. With low interest rates and high unemployment, boosting public investment—starting with maintenance and ramping up projects—can create jobs and spur economic growth.”

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Gaspar emphasized that “emerging market and low-income economies facing tight financing constraints will need to deliver more with less, by reprioritizing spending and enhancing its efficiency.”

“Some may need further official financial support and debt relief. Governments should also adopt measures to improve tax compliance and consider higher taxes for the more affluent groups and highly profitable firms. The ensuing revenues would help pay for critical services, such as health and social safety nets, during a crisis that has disproportionately hurt the poorer segments of society.”

The report noted that once the pandemic is under control, governments will need to foster the recovery while addressing the legacies of the crisis including the large fiscal deficits and high public debt levels.

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