By Zainab Joaque, Reporting from Washington DC
Washington DC, USA – At the unveiling of the Regional Economic Outlook for Sub-Saharan Africa, Abebe Aemro Selassie, Director of the IMF African Department, acknowledged signs of economic recovery across the region but cautioned against ongoing funding constraints faced by many countries.
During a press briefing at the International Monetary Fund/World Bank Spring Meetings in Washington, Selassie described the region’s economic revival as “Tepid and Pricey,” highlighting the complexities of the recovery process.
Despite challenges, Selassie noted a projected growth acceleration to 3.8 percent, up from 3.4 percent in the previous year, following a period of multiple shocks. He credited this improvement to decisive central bank actions, which have contributed to halving inflation rates, particularly in food prices.
Furthermore, Selassie highlighted positive outcomes from fiscal consolidation efforts, with median public debt stabilizing at around 60 percent of GDP. Additionally, easing global financial conditions have enabled some countries to access international markets after a two-year hiatus.
However, Selassie cautioned that significant hurdles persist, including high borrowing costs and limited funding sources. He expressed concern over rising government interest payments, diverting funds away from essential development investments and hindering the region’s growth potential.
To address these challenges, Selassie stressed the importance of sustained reforms to improve macroeconomic conditions. He outlined three policy priorities for governments in the region:
Enhancing Public Finances: Governments should prioritize domestic revenue mobilization to meet development spending needs amid limited concessional financing and high borrowing costs.
Combatting Inflation: Efforts to reduce inflation levels, particularly in regions where it remains above target, are essential to stabilize economies.
Implementing Structural Reforms: Policies aimed at enhancing skills development, fostering innovation, improving the business environment, and promoting trade integration are crucial for securing more affordable and stable financing.
Selassie emphasized that addressing these challenges requires international support in addition to domestic efforts. He reaffirmed the IMF’s commitment to assisting the region, citing $58 billion in financing provided since the onset of the pandemic.
Lastly, Selassie underscored the importance of collective action to ensure sustained economic recovery and resilience in Sub-Saharan Africa. He urged continued cooperation between governments and international partners to address funding gaps and promote inclusive growth across the region. ZIJ/22/4/2024