In the middle of the Russian-Ukraine war, which has affected food and energy, World Bank President David Malpass has warned of global recession.
‘The Way Forward: A Conversation with David Malpass and Masood Ahmed,’ a virtual talk hosted by Malpass on YouTube on May 26, 2022, gave the warning.
He reveal, “There would be recessions in some countries, maybe many countries. The variables are how long is the war lasting with Russia and how does the world respond in terms of supplies. I am concerned about interest rate increases because we are running at a higher inflation rate. There are slowdowns in China and Europe and it is affecting developing countries.”
Malpass, who spoke with Masood Ahmed, President of the Center for Global Development, had an interesting conversation, advised poor countries to cease subsidizing energy and instead construct safety nets for their citizens to thrive.
“Economics is very clear that you don’t want to put a cap on the price surge,” he remarked. You want to raise the price and try to insulate consumers from the increased costs. Export regulations that prevent exports from leaving a country must be avoided.”
While Ahmed agreed that subsidizing fuel prices was not a smart idea, he suggested that the savings be used to assist low-income families in dealing with the expenditures.
The head of the World Bank stated his displeasure with several African emerging countries borrowing. Non-transparent contracts were one “poor practice” employed by industrialized countries to milk emerging economies of funding, he said. Many lenders, he claimed, write contracts with a non-disclosure clause that, in the long run, diminishes accountability.
China was one of the lenders he accused of abusing the clause, which he claimed started the process in 2014.
Economic and financial experts recently warned the Federal Government that if Nigeria defaulted on loans from China, which are presently valued at $3.48 billion, it risks losing vital national assets to China.
The experts spoke against the backdrop of Uganda’s only international airport and other important assets potentially being taken over due to the East African country’s inability to repay a $207 million loan secured from the Export-Import Bank of China on November 17, 2015.
The loan has a 20-year maturity duration, plus a seven-year grace period. After a default, Uganda would have to cede its only international airport, according to the agreement inked with Chinese financiers.
Nigeria’s former Minister of Transportation, Rotimi Amaechi, warned in August 2020 that in the case of a loan default, Nigeria could forfeit its assets to China.
According to reports, Amaechi stated that Nigeria had waived immunity on a loan, implying that China could take Nigeria to arbitration if the country defaulted.