Wale Edun warns interest rate hikes could weaken economic reforms in developing countries

Nigeria's Minister of Finance and Coordinating Minister of the Economy, Wale Edun, cautioned that aggressive interest rate increases could undermine ongoing economic reforms in developing nations, including Nigeria. Speaking at a G24 news conference during the International Monetary Fund meeting in Washington, D.C., Edun stated that premature or excessive hikes could weaken reforms, while delayed responses risk fueling inflation. He urged central banks to balance responding to inflationary pressures with maintaining reform momentum, noting that policy responses vary based on economic structures. Edun highlighted that while oil-producing countries like Nigeria might benefit from higher crude prices, oil-importing nations face rising import bills, and both battle inflation driven by volatile energy markets. He emphasized the need for resilience, urging governments to use fiscal buffers and targeted support for vulnerable populations instead of reversing reforms or returning to subsidy regimes. The Minister also discussed challenges in external financing due to declining aid and rising debt-servicing costs, calling for increased liquidity support from multilateral institutions. He advocated for stronger domestic resource mobilization, improved tax systems, and private sector participation for sustainable economic stability. Edun also noted that while AI could initially widen inequality, it offers opportunities for revenue generation through automation and digitalization. Iyabo M