G-24 director: No organisation knows your economy better than you
G-24 director Iyabo Masha says that developing countries should focus on domestic policies given falling overseas support.
Iyabo Masha, director of the Intergovernmental Group of Twenty-Four (G-24), emphasizes that no other organization comprehends a developing economy better than its own central bank. The primary mandate of a central bank is to combat inflation, which fosters economic growth and employment generation. Central banks must assess several factors before deciding to raise or lower the benchmark interest rate.
For instance, if the central bank perceives a temporary surge in oil prices, it may refrain from raising interest rates to avoid exacerbating the situation. Instead, they should observe the trend and act only if the spike proves persistent and threatens economic growth. Central banks possess abundant data to make informed decisions, weighing the impact of inflation on both prices and economic growth.
Furthermore, the high cost of borrowing for emerging markets and developing economies is a significant concern. Developing countries often bear interest rates up to three or four times higher than those of advanced economies. The G-24 seeks to address this issue by urging credit agencies to incorporate an economy's long-term potential and endowments into their rating methodologies.
This approach could result in lower interest rates for developing nations. The IMF and World Bank can play a crucial role by providing more financing to these countries, thereby reducing demand for loans from private market creditors. Some financing options, such as the World Bank's policy-based guarantee, offer loans at zero interest rates.
The G-24 strongly advocates against unilateral sanctions, tariffs, or non-tariff barriers, as they disrupt international trade and create uncertainties. Instead, they advocate for resolving trade-related issues within multilateral settings like the World Trade Organisation, ensuring stability and systematic solutions.
Written by urgent.news from Africa Business's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
