The International Monetary Fund (IMF) has urged the Federal Ministry of Finance and the Central Bank of Nigeria (CBN) to assume significant roles in combating climate change by incorporating climate policies into the country’s economic strategies.
During the Africa Training Institute/IMF (ATI/IMF) workshop on climate change and macroeconomic policies in Abuja held yesterday, Vimal Thakoor, the IMF’s Resident Advisor for Macroeconomics and Climate, made this plea.
- “There is a big role for ministries of Finance and central banks to play. A lot has to do with the integration of the climate policies in economic frameworks.”
- “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. The budget allocates these resources so that the policies can be implemented to build resilience.”
Central banks should acknowledge the risks of climate change
At the Central Bank level, Thakoor emphasized that climate change could potentially harm the economy’s stability by causing inflation and financial sector instability.
He pointed out that the Central Bank needed to acknowledge these risks and formulate policies aimed at mitigating the potential adverse consequences, thereby upholding economic stability.
Thakoor further highlighted that by proactively addressing climate change risks, the Central Bank could contribute to preserving both long-term price stability and financial system stability.
Incorporation of climate change factors into economic strategy
Also speaking during the event was the Director of AFRITAC West 2, Eva Jenkner who said, nations must incorporate climate change factors into their economic strategies by comprehending climate-related risks, customizing policies to bolster resilience, and ensuring that climate initiatives are in harmony with fiscal and debt sustainability objectives.
She emphasized that insufficient action on climate can result in substantial long-term expenses.
She went on to mention that the International Monetary Fund (IMF) is actively expanding its involvement with member nations to tackle the macroeconomic aspects of climate change.
This entails endorsing policy reforms aimed at strengthening resilience, particularly through the establishment of The Resilience and Sustainability Trust, which serves as a mechanism to bolster these endeavours.