IMF downgrades Nigeria’s 2022 economic growth prospect by 0.2%
IMF headquarters

Adebayo Obajemu

The International Monetary Fund (IMF) has warned emerging economies to cut greenhouse gas emissions by 25% to achieve carbon neutrality.

According to IMF, the progress needed toward such a major shift would impose short-term economic costs. If the right measures were implemented immediately and phased in over the next eight years, the costs would be small. If the transition to renewables was delayed, the costs would be much greater.

IMF said it has developed a model that splits countries into four regions, including China, the Euro area, the United States, and a block representing the rest of the world.

The model assumed that each region introduced budget-neutral policies that include greenhouse gas taxes, which were increased gradually to achieve a 25 per cent reduction in emissions by 2030, combined with transfers to households, subsidies to low-emitting technologies, and labour tax cuts.

“A policy package could slow global economic growth by 0.15 percentage point to 0.25 percentage point annually from now until 2030, depending on how quickly regions can wean off fossil fuels for electricity generation.

“The more difficult the transition to clean electricity, the greater the greenhouse gas tax increase or equivalent regulations needed to incentivize change, and the larger the macroeconomic costs in terms of lost output and higher inflation.”

“That means countries must cooperate more on finance and technology needed to reduce costs and share more of the required know-how especially when it comes to low-income countries”, the global financial body advised.

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