…kicks against imposing new taxes
The Chairman of the Intergovernmental Group of Twenty-Four (G-24), Taiwo Oyedele, has faulted the high borrowing costs charged by the International Monetary Fund (IMF) and the World Bank Group when lending to developing economies.
Oyedele, Nigeria’s Minister of Finance and Coordinating Minister for the Economy, spoke yesterday during the G-24 press briefing at the ongoing World Bank/IMF Annual Meetings in Bangkok, Thailand.
He said some estimates indicate that developing countries are paying about $500 billion more than they should compared to developed countries.
Oyedele advised that developing countries should look inward for areas of savings and revenue mobilisation. According to him, countries should also bear in mind that this is not the time to impose new taxes or increase the tax burden, particularly on vulnerable populations and productive sectors of the economy.
“Our charge to both the IMF and the World Bank is to find means of making particularly short-term, more affordable concessional borrowing available to particularly the vulnerable countries, and on a more long-term basis. Find means, framework and policies to mobilise private capital so that public capital that is always constrained is applied only to, for example, social services,” he said.
He, however, said borrowing and debt financing are necessary conditions for growth.
According to him, every country, emerging, developed, or developing, must be able to apply debt financing in a way that has an overall positive impact, particularly to stimulate jobs and achieve rich and inclusive growth.
He explained that members of the G24, particularly developing countries in Africa, have seen an increasing burden of not just high debt, but also high debt costs.
Head of the G-24 Secretariat, Iyabo Masha, said pursuing macroeconomic stability is not a bad policy line.
“It is the foundation of growth. So, if a country does not have a stable macroeconomic environment, then it’s not even possible to build on structural policies, job-related policies, infrastructure, and all of that. So the emphasis on macroeconomic stability by the IMF and indeed by economists all over the world is an important one, and that is a complementary one to other policies that are fostered,” she said.
Oyedele said it’s not macro stability or job-rich growth. Stability is the foundation on which you can build the growth and prosperity you want for your people.
Again, for the world, for example, the focus is on creating jobs in a livable world, and the same is true for all of us. There’s a particular focus and interest at D24 on the potential impact of AI, such that if we are not intentional in how we regulate and adopt AI, we can also have growth and more unemployment.
Oyedele said geopolitical conflicts, shifting trade policies, monetary policy uncertainties, volatile commodity prices, and increasingly frequent climate shocks are interacting to create significant headwinds for global growth.
“These developments impact emerging markets and developing economies. Project progress towards achieving inclusive and job-rich economic transformation. Considering the challenges, a strong global financial safety net centred on a well-resourced and quota-based International Monetary Fund is more important than ever,” he stated.
“We call for progress in the implementation of quota realignments to reflect members’ relative positions in the global economy and protect the voice and representation of emerging markets and developing economies and the more vulnerable members,” he said.
Oyedele welcomed the IMF program and policy reviews that are responsive to members’ macroeconomic challenges.
He advised that the program design and conditionality review should support growth, protect social spending and investment, reflect political economy and distributional effects, and avoid front-loaded adjustment that could undermine recovery.
“We welcome the World Bank’s Group 2030 Strategic Target Map and the ongoing discussion on industrial policy efforts on innovative financing should continue, and further collaboration with multilateral, regional, and national development institutions to support domestic aftermarket development is necessary,” he added.
According to Oyedele, debt vulnerability is a major barrier to inclusive growth in many developing countries.
He called for promotion of predictable, timely, orderly, and coordinated sovereign debt treatment, greater transparency, and better credit rating assessments.
Continuing, Oyedele said climate action must remain guided by equity and the principle of common but differentiated responsibilities and respective capabilities.
“We expect the World Bank Group, regional development banks, and other stakeholders to deliver on the target of at least $300 billion in climate finance per year by 2035, as established at COP 29. Cooperation on international tax reforms must curb profit shifting, tax avoidance, and illicit financial flows. We welcome progress under the United Nations Framework Convention on International Tax Cooperation and the OECD G20 Inclusive Framework,” he said.
