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2/7/2016 Oil nations face years of pain, says IMF chief Christine Lagarde - Telegraph

http://www.telegraph.co.uk/finance/newsbysector/energy/oilandgas/12141428/Oil-nations-face-years-of-pain-says-IMF-chief-Christine-Lagarde.html

Oil nations face years of pain, says IMF chief Christine Lagarde

Christine Lagarde says International Monetary Fund stands read y to help countries indistress

Christine Lagarde said the IMF stood ready to help struggling countries cope with a renewed drop in oil prices Photo:

Alamy

By Szu Ping Chan

9:23PM GMT 04 Feb 2016

Oil-producing nations face years of pain as prices remain lower for longer, the managing director

the International Monetary Fund (IMF) has warned.

Christine Lagarde said the Fund stood ready to help struggling countries such as Azerbaijan andigeria 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 likel

to stay low for quite some time," she said in a speech at the University of Maryland. "As a result,

many commodity-exporting emerging economies are under severe stress, and some currencies hav

already seen very large depreciations."

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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.

Christine Lagarde speaks at the University of Maryland on Thursday Photo: EPA

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", bu

that this would lead to more sustainable growth.


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Ms Lagarde repeated the IMF's call for substantial debt relief for Greece, as she suggested that the

country may need more relief if pension reforms are not deemed sustainable.

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.

"I have always said that the Greek programme has to walk on two legs," she said.

"One is significant reforms and the other is debt relief, and we persist in that view. If the pension

reform cannot be as significant as needed it will [need] more debt relief on the other side. But no

matter how big the debt relief is [we have to make] the pensions system sustainable."

Ms Lagarde also said the perception that the IMF was acting in a "draconian" or "terrible" way onreforms was unfair.

"Greece has made a lot of sacrifices; [austerity] should not be excessive but it needs to add up," sh

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."

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oil nations face years of pain, says imf chief christine lagarde - telegraph

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