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IMF, World Bank set date to decide on Morocco hosting their annual meeting

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The International Monetary Fund and the World Bank have set a date to decide if they would hold their next annual meetings in Morocco following the massive impact of the recent earthquake in the North African country.

The multilateral bodies will on Monday decide on the proposed Oct. 9-15 meeting after completing a “thorough review” of the country’s ability to host the meetings, IMF Managing Director, Kristalina Georgieva said.

“Stay tuned. By Monday, we will have made a decision in taking into account all factors. Obviously, physical capacity, how the logistics are going to work,” Georgieva said, adding that security for participants was not a major concern.

Reports emerged during the week that Morocco was not backing out of hosting the meeting despite Friday’s devastating earthquake. A source close to the Moroccan government quoted by Reuters said, “From the viewpoint of the Moroccan authorities, the annual meetings of the IMF and World Bank will take place as scheduled: October 9-15, 2023. There is no change of plan as of now.”

Georgieva further revealed that the IMF’s new Resilience and Sustainability Trust would provide a $1.3 billion loan to Morocco. This loan aims to enhance the country’s capacity to withstand climate-related disasters. This is a significant step towards building a more sustainable and resilient future for Morocco.

Georgieva stated that the IMF Executive Board would need to approve the $1.3 billion RST loan for Morocco, but that this would most likely happen in the two weeks prior to the start of the annual meetings.

Georgieva also expressed concern that the IMF and World Bank “don’t want to be a burden” to the country as it dealt with recovery efforts, in her account of conversations with Moroccan Prime Minister, Aziz Akhannouch.

Marrakech’s historic city centre sustained considerable damage, while the majority of the city’s more contemporary areas were spared.

The IMF and World Bank hold their annual meetings every three years in a developing country that has shown that its economic policies and system of government are effective and may be used as a model by other countries. Similar IMF meetings took place in Indonesia in 2018 and Peru in 2015.

Musings From Abroad

AfDB, IDB on $20bn IMF reserve asset donor drive

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In line with a global initiative to increase the efforts of leading multilateral development banks (MDBs) to address poverty and climate change, the African Development Bank (AfDB) and the Inter-American Development Banks (IDB) intend to convert each SDR into $4 in additional funding through the use of hybrid bonds and other financial instruments.

“All these countries have shown a lot of interest, and I think that with the approval from the IMF to use it (SDRs), it’s going to make that conversation a lot better,” AfDB President, Adesina said.

Japan has also pledged to help as a potential contributor of SDR, and in Europe, France has indicated interest in contributing some of its SDR for a simultaneous “liquidity guarantee” that would reimburse donors should they encounter difficulties.

“There are a lot of things that that bacon can feed – electricity, water sanitation, education,” Adesina stated, adding that he and Goldfajn have the remainder of the year to “bring the bacon home.”

The board of the AfDB separately approved a $117 billion capital increase earlier this month, and it is currently seeking an additional $25 billion for its concessional lending arm, the African Development Fund.

It aims to allocate a portion of the funds to projects like credit guarantees, which lower project financing costs by utilizing the bank’s triple-A credit rating as a halo.

It plans to use them similarly for debt-for-nature or climate swaps, which enable governments to reduce debt in exchange for safeguarding important ecosystems. Currently, Tanzania is employing them for railways linking Tanzania to the Democratic Republic of the Congo, Burundi, and Nigeria.

The AfDB’s almost-final year in leadership, Adesina, stated that acknowledging the economic and global significance of Africa’s savannahs, rainforests, rivers, and seas is also necessary.

According to his estimation, their worth is at least $6.8 trillion, and the bank plans to adjust the GDP calculations for the continent to account for this amount. For instance, the Congo Basin is thought to be larger than the Amazon to be the world’s greatest carbon sink.

“In a world of climate change and green growth that ought to matter,” he added, saying that if “properly valued” countries like Congo and Gabon would have much better debt metrics.

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Musings From Abroad

World Bank grants Nigeria’s request for a $2.25 billion loan

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According to a statement released by the World Bank on Thursday, Nigeria has been granted a $2.25 billion loan to help stabilize its economy after implementing reforms and increasing aid to the underprivileged.

Nigeria wants to borrow up to $2.25 billion from the World Bank, according to Finance Minister Wale Edun’s April announcement. The proposal is expected to be approved by the bank’s board in June.

The boldest reforms the nation has seen in decades were started by Nigerian President Bola Tinubu in May of last year. He eliminated a popular but expensive fuel subsidy and twice devalued the currency substantially in an attempt to spur economic growth. However, the actions exacerbated a situation caused by rising costs of living and increased inflation.

The International Monetary Fund predicted that gasoline subsidies could account for as much as 3% of GDP this year due to the devaluation since rises in pump prices have not kept pace with their dollar cost.

Additionally, labour unions have been putting pressure on Tinubu to undo changes. According to the World Bank, it has authorized two loans totalling $750 million to speed up tax mobilization and $1.5 billion to support Nigeria’s reforms.

Nigeria has taken “initial critical steps to restore macroeconomic stability, boost revenues, and create the conditions to reignite growth and poverty reduction have been taken.” Nigeria has also started important reforms to address economic distortions and strengthen its fiscal outlook.

According to the World Bank, the loan will aid Nigeria in its efforts to increase non-oil revenue and foster fiscal sustainability, both of which will enable the West African country to provide high-quality public services.

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