Africa’s Public Debt and Inflation Are at Levels Not Seen in Decades – Half of Countries in Double Digits, IMF Says – BitcoinKE

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Public debt and inflation across the African continent are at levels not seen in decades, with half of the countries seeing double-digit inflation, declining household purchasing power and hitting the most vulnerable. says the latest IMF Regional Economic Outlook (SSA) for Sub-Saharan Africa.

According to the outlook, there will be a sharp tightening of global monetary policy, cutting off all frontier markets in sub-Saharan Africa from market access from spring 2022 onwards, driving up borrowing costs for SSA countries in both domestic and international markets. is rising.

“Last year, the effective exchange rate of the US dollar reached a 20-year high, increasing the burden of servicing dollar-denominated debt. It’s doubled.”

Shrinking aid budgets and reduced inflows from partners have resulted in significant pressure on resources in the region.

“People in sub-Saharan Africa are feeling the effects of the financial crisis. Since Russia’s invasion of Ukraine, the cost of living has skyrocketed, borrowing costs have risen and access to cheaper finance has declined.” Selassie said.

This comes after Kenyan President William Ruto said African governments were already forced to cut funding for areas such as education and health. Mr. Ruto called for reform of the international financial system and accused African countries and the global South of charging 100 times more for development funds.

The IMF has said it has provided more than $50 billion to African countries between 2021 and 2022 and calls for more prudent financial management by African governments to weather the current turmoil.

  • Consolidate finances and strengthen financial management in a difficult financial situation
  • Inflation Contained – Monetary policy should be steered cautiously until inflation is projected to follow a definitive downward trajectory and return to central bank target ranges
  • Allow exchange rates to adjust while mitigating the negative economic impact of currency depreciation, such as inflation and rising debt

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Growth is expected to slow to an average of 3.6% in 2023 due to the financial crunch affecting the African continent, marking the second consecutive year of declining SSA growth.

However, according to the IMF, growth is expected to pick up to 4.2% in 2024, in line with a global recovery, subdued inflation and less tightening of monetary policy.

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