IMF: 90m people to enter extreme poverty in 2021

The International Monetary Fund (IMF) has estimated that 90 million people will slip into extreme poverty in 2021.

Gita Gopinath (pictured), IMF’s chief economist, was addressing the press on Tuesday while unveiling an update of the World Economic Outlook (WEO) report.

Gopinath said oil-exporting countries like Nigeria have been hit hard by the pandemic adding that the outlook is rough given that oil prices are still low.

“Oil exporters and tourism-dependent economies are particularly hard hit and their prospects are severe given that oil prices have a subdued outlook and cross border travel is not expected to resume anytime soon,” she said.

“Even within countries, the burden of the crisis has been felt unequally across different groups. Workers with less education, youth and women have suffered disproportionate income losses. 90 million individuals are expected to enter extreme poverty over 2020/2021 reversing the trends of the past two decades.”

The IMF revised the growth projection for Nigeria’s gross domestic product (GDP) in 2021 from the 1.7 percent initially projected in the October 2020 report to 1.5 percent.

Gopinath advised monetary policy authorities to pay attention to risks that will emerge from low interest rates.

“Given the highly uncertain times we live in, financial stability needs to be ensured,” she said.

“Monetary policy should remain accommodative where inflation is not at risk but at the same time, paying close attention to containing the risks that will emerge with historically low interest rates and easing financial conditions.

“When pandemic measures are withdrawn, we are likely to see an increase in bankruptcy which could have an impact on fragile banking systems. Therefore, it is very important to prepare now to have special out-of-court restructuring frameworks to deal with the problem of rising non-performing loans.”

In 2018, Brookings Institution reported that Nigeria had overtaken India as the poverty capital of the world.

A 2019 report on poverty and inequality released by the National Bureau of Statistics also reported that 89.2 million Nigerians are living in poverty; a figure that represents 40 percent of the country’s population.