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World Bank, IMF to Undertake Joint Action Plan On Debt Reduction For IDA Countries

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The World Bank and International Monetary Fund (IMF), have proposed to undertake a joint action plan on debt reduction for the most indebted International Development Association (IDA) countries.

Mr David Malpass, the President, the World Bank Group, said this on Wednesday during a virtual meeting with the G20 Finance Ministers and Central Bank Governors at the ongoing IMF/World Bank annual meetings in at Washington D. C.

Malpass said that it was urgent to make rapid progress on a framework because the risk of disorderly defaults was rising.

He said that the bank’s latest economic and poverty data showed that desperate inequality was being caused by the COVID pandemic and economic shutdowns.

“The recession in advanced economies is less severe than had been feared but in most developing economies, it has become a depression, especially for the poorest and extreme poverty may rise by 150 million by 2021.

“Soon after our spring meetings, we were able to launch health emergency programmes in 111 countries and began a surge in our grants and highly concessional lending that will reach the limits of our capital structure and commitment authority.

“As part of this effort, we expect to provide over 50 billion dollars in grants or highly concessional credits by June 2021, helping provide large net positive flows to the poorest and most fragile countries and people.”

The president recalled that in March, the G20 endorsed a vital debt relief programme for the poorest countries, giving people a ray of hope.

He said that the Debt Service Suspension Initiative (DSSI) helped increase fiscal resources for over 40 countries and created more transparency on the overwhelming debt burden.

According to him, the goals for debt relief are fiscal savings for the poorest countries, greater debt transparency and a path forward for countries in debt distress.

“We are making progress but not nearly enough. The DSSI extension being agreed today is welcome and the term sheet has been strengthened in important ways.

“However, some core DSSI-related problems are still unresolved, notably a lack of participation by private creditors and incomplete participation by some official bilateral creditors.

“The bigger challenge is the need to look beyond DSSI. It is important to note that the DSSI defers payments into the future but doesn’t reduce them.

“Interest charges compound quickly on the deferred amounts, leaving countries with even more debt.

“The DSSI has been a stopgap to provide fiscal resources and greater transparency while a longer-term solution for the debt crisis can be developed,” he said.

Malpass said that the tendency in past debt crises was for countries in debt distress to go through a series of “ineffective debt reschedulings that leaves them weaker’.

He said that creditors might eventually allow them to get to a debt reduction process but at a tremendous cost to the poor, adding that they needed to work better and faster this time.

“On a positive note, I am happy to announce that yesterday afternoon, our board approved a package of up to 12 billion dollars to expand and fast-track COVID response for the purchase and distribution of COVID-19 vaccines, tests and treatments.

“The scale of the challenges ahead is staggering, so we need to do more. With the strong support of its shareholders, IDA has frontloaded IDA-19 resources to the fullest possible extent as a key part of the surge in our commitments this fiscal year.”

He, however said that IDA lending would have to decline in the next two years even though the latest forecasts, including those just announced by the IMF, suggests that the reduction in economic activity would extend well into subsequent years.

Malpass said that the bank was proposing to IDA deputies later in October, a 25 billion dollar supplemental COVID Emergency Financing Package.

The News Agency of Nigeria (NAN) reports that the IDA, a member of the World Bank Group, is an international financial institution with 173 member countries.

It offers concessional loans and grants to the world’s poorest developing countries.

The 2020 Annual Meetings of the IMF and the World Bank Group holding in Washington D. C. began on Oct. 12 and will end on Dec. 16. (NAN)

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Banks’ CEOs Hold Emergency Meeting Over BDCs’ Forex Ban 

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Bank Chief Executive Officers on Thursday, held an emergency meeting on how to ensure compliance with the new forex directive of the Central Bank of Nigeria.

After the meeting, they spoke during a webinar organised to give an update on the banks’ preparedness to be the main channel of forex distribution, following the recent discontinuity of forex supply to the BDC operators by the CBN.

The executives assured the public that banks would make forex available to customers in accordance with the CBN’s directives.

After the last Monetary Policy Committee meeting, the Central Bank Governor, Godwin Emefiele, had ordered all Deposit Money Banks to set up teller points at designated branches across the country to fulfil legitimate FX request for personal travel allowance, business travel allowance, tuition fees, medical payments and SMEs transactions, among others.

Speaking at the webinar, the Group Managing Director/Chief Executive Officer, Access Bank Plc, Herbert Wigwe, said, “The banking industry as a whole was willing and ready to carry out this function. The banks have very strict compliance measures, in terms of verification and making sure that people who do apply are eligible.

“All Nigerian banks will be able to meet these requirements. If you look at all the branches nationwide, you will know that the banks have more than enough capacity to do this.”

He said if the banks saw any compliance issues, or people attempting to do things cunning, they would be reported to the CBN because the banks would ensure full compliance with the order.

The Group Chief Executive Officer, Guaranty Trust Holding Company Plc, Mr Segun Agbaje, while speaking on the capacity of the banks to meet the customers demand, said, “It is not only the CBN that has the ability to fund the market; the banks also have the resources to meet the demand, and we have agreed collectively that it will start immediately.”

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NERC: Over 1m Electricity Consumers Have Received Prepaid Meters

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Labour Warns FG Against Electricity Tariff Hike 

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The Nigeria Labour Congress faulted plans to allegedly sell the Transmission Company of Nigeria, saying it will lead to an increase in electricity tariff.

The NLC President, Mr Ayuba Wabba, said this in a statement titled, “This Kite will not Fly’’ on Friday.

Wabba explained that instead of allegedly planning to sell the transmission company, FG should focus on improving the electricity supply.

He described the attempt to hand over the TCN to a few ‘privileged’ Nigerians as self-serving, obtuse, odious, morally reprehensible and criminal.

The NLC president said, “The TCN is a strategic economic asset of immense national security implications. This is because the TCN traverses all nooks and crannies of Nigeria.

“It will be wrong that our country will be deliberately exposed to an avoidable vulnerability and thus, provide an opportunity to others to restrain the Nigerian state.

“We apprehend that the planned sale of the TCN is only an attempt to further confound the people and concurrently raise electricity tariff. Unfortunately, this time around, Nigerians have had enough.

“The government cannot promise improved power supply to consumers by the planned sale of TCN. The under-the-table scheming as transparent privatisation cannot pass muster.

“It is an unsavoury narrative for our country, that even the privatised assets, which have survived the rapacity of the new owners, have been turned into unrealisable collaterals for unpayable loans.

“This constitutes a bone stuck in the throat of financial institutions and sundry creditors.”

Wabba explained that the plan would “fundamentally weaken the security of the nation and above all, deprive the people of their age-old investments in the commanding heights of the Nigerian economy”.

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