Central Bank of Nigeria collaborates with IMF to address climate change through fiscal policies
2023.09.26 02:00
The Central Bank of Nigeria (CBN) has partnered with the International Monetary Fund (IMF) and other global institutions to develop strategies that integrate climate change into monetary and fiscal policies. This collaboration was disclosed on Tuesday at the inaugural African Training Institute/IMF workshop on “Climate Change and Macro Financial Policies” held in Abuja, attended by 44 participants from six countries.
The workshop highlighted the urgent need for climate action, particularly in Africa. Eva Jenkner, the Director of the Second African Regional Technical Assistance Centre in West Africa (AFRITAC West 2), reminded attendees of a recent United Nations Framework Convention on Climate Change (UNFCCC) report issued in May, which warned that global temperatures could rise above 1.5 degrees Celsius by 2027.
Jenkner underscored the importance of unlocking financing opportunities for African countries, especially given the constrained fiscal space and elevated vulnerabilities. She emphasized that “in most of the climate vulnerable countries, the main focus is on adaptation. We need to support policy reforms that enhance long-term resilience to climate change.”
Vimal Thakoor, IMF’s Resident Advisor on Macroeconomics and Climate, echoed these sentiments on Monday, emphasizing the pivotal role that central banks and finance ministries can play in integrating climate policies into economic frameworks.
Thakoor explained that once an economic or climate policy has been identified by the Ministry of Environment, it is crucial to ensure that resources are allocated to finance and implement these policies effectively. He also stressed that central banks should be aware of the risks posed by climate change to price stability and financial stability so they can formulate policies that mitigate these risks and maintain economic stability.
He acknowledged that “the pace at which countries can implement climate policies varies due to factors like capacity and access to financing,” emphasizing the importance of securing funds for accelerating climate policy implementation.
On Monday, Thakoor had advised that the IMF wants both the Ministry of Finance and the Central Bank of Nigeria to play active roles in addressing climate change by integrating climate policies into the nation’s economic frameworks. He highlighted the potential negative impact of climate change on economic stability, particularly through inflation and financial sector instability.
Jenkner also noted that the IMF is increasing its engagement with member countries on addressing the macroeconomic dimensions of climate change, including supporting policy reforms that enhance resilience. This includes the creation of The Resilience and Sustainability Trust, a tool to support these efforts. She emphasized that dealing with climate change requires global coordination, including financing and technology transfer.
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