International Economics: IB Economics

This article looks at the current state of the Nigerian economy - with inflation running at 30%, the naira having depreciated by two-thirds, with the pegging of the naira to the dollar having been abandoned and many households facing a cost of living crisis. 

However,  whilst President Tinubu is bearing the brunt of the blame, it's arguably the case that he's being blamed for the sins of his predecessors.

Prior to being scrapped, Nigeria's fuel subsidy accounted for 15% of government spending, more than was spent of education and healthcare. Equally, the pegging of the currency had a significant opportunity cost. Additionally, the previous Buhari government had stoked inflation by asking the central bank for a $19billion loan - financed by printing money.

As a result, the Tinubu camp are arguing that drastic measures, and a period of suffering are necessary to allow the economy to recover, and that greater emphasis on the free market will pay substantial dividends in future.

The IMF have spoken out, arguing that global governments should be subsidising food and energy to protect the world's poor from rising prices. It's not something that's normally advocated by this organisation, which generally proposes free market solutions as part of the broader so-called Washington Consensus. 

Are international institutions past their sell-by date?

Certainly, Nick Dearden thinks that the current impasse regarding vaccines and intellectual property rights and the lack of concerted action over global food prices suggests that the World Trade Organisation is no longer as relevant as it needs to be.