- If no action is taken, this funding shortfall could force countries to reduce financial resources for critical development such as health, education and infrastructure, hindering the realization of the region’s true potential. There is a nature.
- The IMF is playing its role. From 2020 to 2022, the IMF has provided more than $50 billion to the region, more than double the amount disbursed in the decade since the 1990s. And as of March 2023, the IMF has financing agreements with 21 countries, and more requests are under consideration.
- Sub-Saharan Africa is by no means powerless. Here are four of his policies to help you navigate the current turmoil. i) to consolidate public finances and strengthen fiscal management; ii) to curb inflation; iii) to allow exchange rate adjustments while mitigating adverse economic impact; to ensure. Climate change will not crowd out funding for basic needs like health and education.
In the midst of a global economic slowdown, Sub-Saharan Africa (SSA) growth expected to slow up to 3.6 percent The latest IMF Regional Economic Outlook for Sub-Saharan Africa, released today, shows that it will recover to 4.2% in 2024 as the global economy recovers, inflation subsides and monetary tightening eases. It will be the second year in a row that SSA has recorded a year-on-year growth rate.
“Growth across the region varies by country. Some countries, particularly those in the East African Community, or non-oil-intensive countries, are expected to thrive, but growth slows sharply to just 0.1%. Some major economies, like South Africa, are projected to reduce their average SSA growth rate by 2023,” said Abebe Aemro Selassie, Director of the IMF Africa Department.
Public debt and inflation are at levels not seen in decadesHalf of the countries are experiencing double-digit inflation, eroding household purchasing power and hitting the most vulnerable.
The rapid tightening of global monetary policy has increased borrowing costs in both domestic and international markets in SSA countries. All remote markets in Sub-Saharan Africa have been cut off from market access since spring 2022. Last year, the US dollar’s effective exchange rate hit a 20-year high, increasing the burden of servicing dollar-denominated debt. In his average SSA countries, he has doubled interest payments as a percentage of revenue over the past decade.
Shrinking aid budgets and declining inflows from partners have left the region severely underfunded.
“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. Told.
“Combined with the long-term decline in aid and the recent decline in investment from partners, this means that less money is being spent on critical services such as health, education and infrastructure. Otherwise, this financial crunch will hamper efforts in Sub-Saharan Africa to build a skilled and educated population and power the global economy for years to come,” he added.
The IMF is doing its part and stands ready to help its members. From 2020 to 2022, we have provided more than $50 billion through programs, emergency loans and special drawing right allocations. In just two years, the IMF has provided him with more than double what he has been paid in his decade since the 1990s. And as of last month, we have financing agreements in place with 21 countries and are considering more program requests.
Sub-Saharan Africa is by no means powerless.To address macroeconomic imbalances, Selassie identified four priorities
“First of all, it is important to restore fiscal health and strengthen fiscal management in the midst of severe fiscal conditions. This depends on continued revenue mobilization, better management of fiscal risks, and more active debt management. For countries in need of debt reprofiling or restructuring, a well-functioning debt settlement framework is essential to creating fiscal space.
“Second, contain inflation. Monetary policy should be managed prudently until inflation is projected to take a firm downward trajectory and return to the central bank’s target range.
“Third, it allows exchange rate adjustments while mitigating the negative economic impact of currency depreciation, such as inflation and rising debt.
“And finally, a key effort to tackle climate change is to ensure that it does not crowd out basic needs such as health and education. must be provided in addition to
Video and audio interview with Abebe Aemro Selassie, Director of the IMF Africa Department can be found here.