SDGs are ambitious, but globally achievable, says Furusawa
Deputy Managing Director of the International Monetary Fund (IMF) Mitsuhiro Furusawa, in a chat with KAMAL TAYO OROPO during the Fund’s meeting held last month in Lima, Peru, explained why the Sustainable Development Goals (SDGs) have become a necessary tool to replace the Millennium Development Goals (MDGs), which lapses next month.
The MDGs have been adjudged, in some quarters, not to have achieved much. Would you agree with this standpoint?
AS you know the Millennium Development Goals are set to expire this year. Much has been accomplished in regard to growth and poverty reduction in developing countries since 2000—but around 1 billion people still live on less than $1.25 a day, while more than 800 million do not have enough food. Women are still fighting hard for their rights, and infant mortality remains high in many countries.
The Sustainable Development Goals are more comprehensive than the MDGs, in part because we have learned that a wider focus is needed to ensure economic, social, and environmental sustainability. I believe the goals are indeed ambitious— but achievable if supported by key policy reforms, at both national and international levels, to support growth, equity, and environmental objectives, including by boosting private financial flows to developing countries.
A sustained flow of Official Development Assistance (ODA) toward low-income countries coupled with financial assistance for climate mitigation and adaptation, will also be crucial for this agenda. To summarize much has been accomplished, but more needs to be done.
In terms of wealth distribution from richer nations to poorer ones, how sustainable is this, seeing that the rich countries sometimes experience serious financial hiccups? Is there anything recipient countries can do to reverse the dependence? What is IMF doing in this regard?
First, let me say that foreign financing is obviously an important supporting factor, including higher aid flows, prudent external borrowing, and attracting more direct investment. However, as is highlighted in the post-2015 development agenda, a lot more of the financing need has to be met through domestic resources. We also have the less obvious sources of external assistance that can be equally important in mobilising resources for development. This includes, for instance, expanded technical assistance on tax policy and administration—an area where many African policymakers have been calling for IMF assistance. With the help of the five regional technical assistance centers that we have in the region, this is an area which we at the IMF will be prioritising in the years ahead as part of the capacity building support to African countries.
The African continent has been characterised by unequal access to social services, high unemployment and vulnerability to both internal and external shocks. What can be done to get them out of this entanglement?
You are right. Africa has made a lot of progress during the last decade, but growth needs to be more inclusive. In the medium term, efforts to diversify the economy and increase fiscal resilience remain critical. In particular, strengthening revenue mobilization—that is, exploiting the region’s significant untapped tax potential—will be the most durable way to create fiscal space, continue to finance much-needed infrastructure, job creation and other development needs, and reduce reliance on public debt. In addition, policies will need to be geared toward boosting the region’s competitiveness to nurture new sources of growth.
Fiscal policy should focus on redressing regressive taxes and spending, while scaling up well-targeted expenditures on healthcare and education. Across-the-board subsidies should be replaced with targeted social transfers.
Many African countries, from Burundi, Rwanda to Burkina Faso, Congo, Central African Republic, are currently enmeshed in various leadership crises. Of what impact would these crises have on developmental goals of these nations in particular, and the continent in general?
Security risks and issues concerning governance still prevail in a number of countries. Civil wars and acts of violence perpetrated by insurgency groups in the region, are causing widespread suffering. They are also weighing on economic activity, straining fiscal budgets, and diminishing the prospects for investment. Moreover, the violence sparked by the general elections in Burundi and the recent developments in Burkina Faso are reminders that political cycles can still cause economic turmoil.
The new administration in Nigeria has been trying to chat fresh path for the country’s economic sustainability. What are the areas that need immediate intervention of this government?
Nigeria’s economic performance in recent years has been positive overall. Nigeria’s economy continued to grow strongly in 2014 –– supported by robust performances in the non-oil economy (agriculture, trade, and services). Growth is expected to decline in 2015 to less than 5 percent on account of the oil price shock. The initial response to the oil price collapse — tightening of fiscal policy, exchange rate depreciation, use of some of the reserves—has been appropriate, but further adjustment may be needed in 2016.
Challenges remain in reducing Nigeria’s dependence on volatile oil receipts, diversifying the fiscal revenue base, boosting resources for critical infrastructure investments, managing capital flow reversals, fostering inclusive growth, and containing the heightened insecurity driven by the Boko Haram insurgency in the north east. Efforts aimed at investing in infrastructure, especially in power, and promoting access to credit for small and medium enterprises would go a long way to boost growth and further enhance Nigeria’s economic outlook.
In terms of collaborating with the Nigerian government, in what specific areas could the government benefit from the Fund’s expertise?
As you may know, the IMF works with its member countries to provide advice, financial support and technical assistance. In the case of Nigeria, we hold regular discussions on economic developments with the authorities, and provide technical assistance as part of the Fund’s capacity building efforts. We also have a resident representative office in Abuja that ensures ongoing dialogue and engagement.
Through our regional technical assistance centers’ we plan to provide more training that is focused on the design and implementation of policies that promote growth, increased revenue mobilization and reduced poverty. These are all areas in which we are stand ready to work on with the authorities.