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ABUJA, Dec 19: IMF chief Christine Lagarde warned on Monday that the European debt crisis posed a risk for “all economies of the world,” as she met officials in Nigeria on her first visit to Africa as head of the fund.
“What is happening in advanced economies, particularly in Europe, is obviously of concern for everybody around the world at the moment,” she said while meeting Nigerian Senate President David Mark.“Because the severity of the crisis and the difficulty that the Europeans have in dealing with the crisis will have a ripple effect in all economies of the world.”
The International Monetary Fund managing director said poorer nations, particularly those that rely heavily on Europe for trade and investment, should prepare themselves to endure any potential fallout.
“But what we are saying to all developing economies is beware of what is happening in advanced economies at the moment,” she said.
“Beware of the clouds that are accumulating at the European skies and make sure that you have enough reserves, enough resistance, enough cushion to actually weather the storm.” “From the IMF perspective, we try to understand what the connections are, and how inter-connected the countries can be,” Lagarde said when speaking of the risks to developing nations.
“And what we see is stalled growth in advanced economies with potential recession in some of the European Union countries, including my own country of course (France), and channels of contagions which can be different,” she said.
“They can be financial channels because the banking system of European countries has scattered all over the map and they have subsidiaries and counterpart risks that are present.”
The former French finance minister said the impact on trade and foreign direct investment were also areas of concern.
Lagarde also held talks with President Goodluck Jonathan after meeting Finance Minister Ngozi Okonjo-Iweala, a respected former World Bank managing director, and other Nigerian economic officials.
She said she was impressed with economic reform plans being pursued by the government in Nigeria, Africa's largest oil producer and the continent's most populous nation.
Lagarde is expected in the economic capital Lagos on Tuesday for a forum on Africa's future before moving on to the neighbouring nation of Niger.—AFP
