Christine Lagarde said the Fund stood ready to help struggling countries such as Azerbaijan and Nigeria cope with a renewed drop in oil prices, amid reports that the African nation has sought support from the World Bank.
“Oil and metals prices have fallen by around two-thirds from their most recent peaks, and are likely to stay low for quite some time, As a result, many commodity-exporting emerging economies are under severe stress, and some currencies have already seen very large depreciations,” said Christine Lagarde.
Ms Lagarde called on policymakers to boost the global “safety net” to cope with future financial shocks.
The managing director called for more co-operation between central banks as well as better planning for countries to access credit in times of stress.
In separate comments on Thursday, Ms Lagarde praised Azerbaijan for taking steps to reassess spending and use its exchange rate as a “buffer”.
However, she said Nigeria was still wasting money on subsidies and suggested that the country’s woes were being exacerbated by the naira’s peg to the US dollar.
Ms Lagarde also sought to calm fears about China, as she said a slowdown in growth would not lead to a “hard landing” for the world’s second largest economy.
She said the transition towards consumption from investment-led growth would “create spillover effects – through trade and lower demand for commodities, and amplified by financial markets”, but that this would lead to more sustainable growth.
As tens of thousands of Greeks took to the streets to protest against government pension reforms needed to meet demands of international creditors, Ms Lagarde said spending on pensions in the country remained well above the European average, but added that reform demands had to be realistic.
Ms Lagarde also said the perception that the IMF was acting in a “draconian” or “terrible” way on reforms was unfair.
“Greece has made a lot of sacrifices; [austerity] should not be excessive but it needs to add up,” she said. “[Greece’s] tax collection system needs to be improved so revenues come in and evasion is stopped and debt relief from other European countries must accompany this process. We want the programme to be a success, but it has to succeed in real life, not just on paper.”
