Business
G20 Policy Makers Express Fear For Economy
Leading policymakers were unusually candid on Friday in voicing fears that the euro zone’s financial and banking woes could derail the global economic recovery.
The troubles of Greece and other heavily indebted European governments dominated conversations ahead of a meeting of finance ministers and central bankers of the Group of 20 of the world’s top developed and emerging economies, Canadian Finance Minister Jim Flaherty said.
“It is essential to ensure continued recovery that Europe fix its banks. It is essential that certain vulnerable European nations follow through with major fiscal consolidation, and get the job done,” Flaherty told reporters in Busan, South Korea.
Gatherings such as the G20 are typically an opportunity for officials to radiate confidence, especially when financial markets are in a nervous state, as they are now.
But Flaherty was not alone in his warnings.
“We can’t afford to be complacent,” South Korean Finance Minister Yoon Jeung-hyun told the opening session.
“Without further and ongoing action from us, the recovery may not remain on track and we may not be able to achieve strong, sustainable and balanced growth,” he said.
South African Planning Minister Trevor Manuel said he could not think of a more challenging time than the present for the Group of 20. Decisions needed taking, he said, to banish the spectre of a double-dip recession.
“It’s important that we all understand just how fragile the recovery is,” Manuel, himself a former finance minister, said.
As ministers got down to work, police boats patrolled near the beach hotel where they are meeting.
Authorities have steeped up security in the southern port city in the face of war-like rhetoric on the divided peninsula after the South accused North Korea of sinking one of its warships.
The 16-nation euro zone is bailing Greece to the tune of 110 billion euros after Athens lost the confidence of bond markets and was unable to roll over its vast debts.
The euro zone, working with the International Monetary Fund, is also putting together a 750 billion euro (910 billion dollars) safety net for other member countries with big debts in case they too fail to find buyers for their bonds.
A forced debt restructuring would inflict heavy losses on euro zone banks.
Investors first responded enthusiastically to the May rescue package, but the euro has since slumped on doubts about the capacity of southern European states to plug holes in their budgets.
World stock markets have shuddered at the prospect that Europe’s woes could derail a recovery from the deepest financial crisis since the 1930s.
“Just when we thought we had turned the corner there are clouds on the horizon,” World Bank Managing Director Ngozi Okonjo-Iweala told Reuters.
But U.S. Treasury Secretary Timothy Geithner sounded a more optimistic note.
“The world economy came into this period of concern about Europe with stronger underlying momentum and growth than many people expected, and we’re in a much stronger position to get through this,” Geithner told CNBC television en route to Busan.
Edun made the call while speaking at the 2025 Fellowship Investiture of the Chartered Institute of Bankers of Nigeria (CIBN) in Lagos, where he reaffirmed the federal government’s commitment to sustaining ongoing reforms and expanding access to finance as key drivers of economic growth beyond four per cent.
“We all know that monetary policy under Cardoso has stabilised the financial system in a most commendable way. Of course, it is a team effort, and those eye-watering interest rates have to be paid by the fiscal side. But the fight against inflation is one we all have to participate in,” he said.
The minister stressed the need for banks to broaden credit access and finance innovation-driven enterprises that can create jobs for young Nigerians.
“The finance and banking industry has more work to do because we must finance their ideas, deepen the capital and credit markets down to SMEs. They should not have to go to Silicon Valley,” he said.
The minister who described the private sector as the engine of growth, said the government’s reform agenda aims to create an enabling environment where businesses can thrive, access funding, and contribute meaningfully to job creation.
The facility, known as the Nigeria Actions for Investment and Jobs Acceleration (P512892), is a Development Policy Financing (DPF) operation scheduled for World Bank Board consideration on December 16, 2025.
According to the Bank’s concept note , the financing would comprise $500m in International Development Association (IDA) credit and $500m in International Bank for Reconstruction and Development (IBRD) loan.
If approved, it would be the second-largest single loan Nigeria has received from the World Bank under President Bola Tinubu’s administration, following the $1.5 billion facility granted in June 2024 under the Reforms for Economic Stabilisation to Enable Transformation (RESET) initiative.
The World Bank said the new programme aims to support Nigeria’s shift from short-term macroeconomic stabilisation to sustainable, private sector–led growth.
“The proposed Development Policy Financing (DPF) supports Nigeria’s pivot from stabilization to inclusive growth and job creation. Structured as a two-tranche standalone operation of US$1.0 billion (US$500 million IDA credit and US$500 million IBRD loan), it seeks to catalyse private sector–led investment by expanding access to credit, deepening capital markets and digital services, easing inflationary pressures, and promoting export diversification,” the document read.
The document further stated that Nigeria’s private sector credit-to-GDP ratio stood at only 21.3 per cent in 2024, significantly below that of emerging-market peers, while capital markets remain shallow, with sovereign securities dominating the bond market.
To address these weaknesses, the DPF will support the implementation of the Investment and Securities Act 2025, operationalisation of credit-enhancement facilities, and introduction of a comprehensive Central Bank of Nigeria rulebook to strengthen risk-based regulation and consumer protection.
The operation also includes measures to deepen digital inclusion through the passage of the National Digital Economy and E-Governance Bill 2025, which will establish a legal framework for electronic transactions, authentication services, and digital records.
Beyond the financial and digital sectors, the programme targets reforms to lower production and living costs by tackling Nigeria’s restrictive trade regime. High tariffs and import bans have long driven up consumer prices and constrained competitiveness, particularly for manufacturers and farmers.
Under the proposed reforms, Nigeria would adopt AfCFTA tariff concessions, rationalise import restrictions, and simplify agricultural seed certification to increase the supply of high-quality varieties for maize, rice, and soybeans. The World Bank projects that these measures will help reduce food inflation, attract private investment, and enhance export potential.
The operation is part of a broader World Bank FY26 package that includes three complementary projects—Fostering Inclusive Finance for MSMEs (FINCLUDE), Building Resilient Digital Infrastructure for Growth (BRIDGE), and Nigeria Sustainable Agricultural Value-Chains for Growth (AGROW)—all focused on expanding access to finance, strengthening institutions, and mobilising private capital.