IMF: Climate Change Poses Risks to Financial, Price Stability

James Emejo in Abuja

The International Monetary Fund (IMF), yesterday warned that unless addressed, climate change constitutes risks to price and financial stability in Nigeria and other regional economies.

IMF Resident Advisor, Macroeconomics and Climate, Mr. Vimal Thakoor, disclosed this at the opening of the African Training Institute International Monetary Fund (ATI/IMF) workshop with the theme: “Climate Change and Macro-Financial Policies”, which was organised by the Central Bank of Nigeria (CBN) International Training Institute (ITI) in Abuja.

He said being cognisant of these risks would allow the central bank to better formulate policies that promote financial stability, curtail inflation, and better withstand climate shocks as well as sustain development.

Thakoor, said though countries have ambitious policies, the pace of implementation reflects a combination of factors and capacity which differs from respective jurisdictions.

Specifically, pointed out that access to financing remained crucial to accelerating implementation of climate policies in Nigeria and the region at large.

The IMF advisor also said both the Ministry of Finance and the central bank have greater roles to play towards the integration of climate policies into economic frameworks going forward.

Therefore, he explained that the objective of the training was to engage with government officials both in Nigeria and the region in order to have an exchange on the importance of climate change and the risks it poses to economic policies and economic development.

He said, “During the course of this week, we are going to look at the main climate risks that the region faces, the policies they are implementing in the context of their nationally determined contribution which aligns with the Paris Agreement, and how they are financing these policies to build more resilient economies that can better withstand climate shocks and sustain development.”

He added, “Once the Ministry of Environment has identified an economic policy, a climate policy, you want to ensure that the resources are available to finance that policy.

“So, the budget allocates resources so the policies can be implemented to build resilience.”

Director, African Regional Technical Assistance Centre in West Africa (AFRITAC West 2), Eva Jenkner, said addressing climate change required a collaborative approach among countries.

She said with the anticipated increase in temperatures exceeding 1.5 degrees by 2027, the “urgency for climate action reflects the effects of climate change across the globe”.

AFRITAC is a collaborative effort between the IMF recipient countries and several bilateral and multilateral partners and originated from the IMF’s response to African leaders’ call on the international community to increase technical assistance (TA) to Africa and focus it more sharply on capacity building in core macroeconomic and financial management areas.

AFRITAC West 2 provides TA and training to Cabo Verde, The Gambia, Ghana, Liberia, Nigeria, and Sierra Leone.