Transcript

Transcript of Press Briefing: Regional Economic Outlook for Sub-Saharan Africa

October 13, 2023

PARTICIPANTS:

Abebe Aemro Selassie, Director, African Department, International Monetary Fund

Nicolas Mombrial, Communications Department, International Monetary Fund

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P R O C E E D I N G S

MR. MOMBRIAL: Okay. Good morning, good afternoon and welcome to the IMF Annual Meeting in Marrakech, including for our viewers around the world who are watching us online. I'm Nicolas Mombrial with the IMF Communications Department. I'm going to be your host today for this press briefing on the Sub-Saharan Africa Regional Economic Outlook. And I'm very pleased to have with me today Abebe Aemro Selassie, the Director of the IMF African Department. Welcome, Abe and good morning. Maybe before I turn to your questions, Abe, the Sub-Saharan Africa Economic Regional Economic Outlook is called “Light on the Horizon.” Can you tell us a bit more about it, what it is? Why are you calling it Light on the Horizon? What’s the IMF’s perspective?

MR. SELASSIE: Sure. Thank you, Nicolas. Good morning and welcome to this press briefing on the Economic Outlook for the Region. The Annual Meetings are back on the African continent and really give us great pleasure to be back here .

First time in 50 years, as many of you know, and we launched on Tuesday a special issue bringing together data for the whole of Africa. This morning I will be discussing the outlook for Sub-Saharan Africa. 2023 has been a difficult year for the region's economy, with growth slowing to 3.3 percent from 4 percent in 2022. But we are cautiously optimistic that there is light on the horizon.

Growth is expected to rebound to 4 percent in 2024 and is set to be broad based. Importantly, governments in many countries are working hard to address macroeconomic imbalances. Fiscal deficits, for example, have been narrowing, helping stabilize public debt in most countries. These outcomes are all the more encouraging given strong external headwinds, such as slower international demand, expensive and difficult access to finance. Still, it is too early to celebrate as many challenges lie ahead. The funding squeeze is not over, and while debt levels have stabilized, the cost of repayments has increased, and high debt service ratios to revenue risk crowding out vital development spending. Inflation still too high with one third of countries having double digit inflation. Policymakers in the region face some of the most daunting policy challenges in the world. They must continue to maintain macroeconomic stability amid limited resources and development needs as they continue to face frequent shocks and fragility. Against this backdrop, a strong focus on four interrelated policy priorities can help.

First, addressing inflation in countries with elevated and rising inflation. Further tightening might be warranted. Countries where inflation is both falling and on track to meet their target could pause monetary policy tightening. This matters, of course, because of the hugely adverse effect that high inflation has in eroding the incomes of the poorest people in society.

Second, reducing debt vulnerabilities while creating space for development spending. This requires a delicate balance between raising domestic revenues and reforms to foster growth.

Third, allowing the exchange rate to depreciate where needed. Avoiding depreciation pressures at the cost of exhausting scarce international reserves and eroding competitiveness often ends up causing more challenges later on.

And finally continuing to increase investment in priority areas: health, education, infrastructure - that's growth enhancing. Needless to say, our region is home to the fast growing and highly creative population, and we must invest in them now to allow them to reach their full potential and make this 21st century the African century. Thank you so much.

MR. MOMBRIAL: Thank you, Abe, for this very insightful introduction. So, before I turn to your questions, just a couple of ground rules. So, if you want to ask a question, please raise your hands and I'll call on you and one of the colleagues in the room will come and give you the microphone. When you ask a question, please identify yourself and also the outlet that you're working with. For colleagues on Webex, you can type your question on the chat box. And a reminder that we have interpretation in French and Portuguese for colleagues who want to use it. Before I take questions, I also had some colleagues joining sending us questions in advance. So, I just want to take one or two. I think I had Rachel Delacour from La Tribune Afrique. Rachel is there with the yellow jacket.

QUESTIONER: Hello. So, Rachel Delacour from La Tribune Afrique. My question is debt, inflation, budget deficits, taxation. What should we expect in 2024 in Sub-Saharan Africa, especially when we know that the continent is considered to be the future of the world, while countries of the region are still suffering from the development financing crisis? Thank you.

MR. SELASSIE: Thank you, Rachel. I mean indeed, this is a very difficult time for many countries from the macroeconomic sphere. And as you noted, debt levels are elevated in vast majority of countries. Inflation, as I noted just now, higher than we'd like to see, much higher than the previous past. And financing challenges continue to be quite stringent. But as we also noted, we are seeing signs of output beginning to recover. That's very encouraging. Growth decelerated from 4 percent to 3.3 percent. But if you actually look at the median growth rate, it was stable at 4.1 percent for the region and the slowdown in growth was because three, four large economies saw activity declining this year. So, for the vast majority of countries, we are seeing stability in the growth rate and even a broadening of the recovery into next year. That's encouraging.

Second, we are also very encouraged by the fact that policymakers have been grappling with these challenges, some of the fundamental factors behind the inflation pressures that we're seeing - the debt buildup has of course been high. The fiscal deficits and countries have been getting to grips with that. Fiscal deficits have narrowed, helping stabilize debt. Growth, of course, has also contributed.

So, we remain cautiously optimistic, as I said in my introductory remarks, that the region is seeing, is beginning to recover. Again, there has been a big fallout. Much remains to be done and the international community definitely needs to support the region. But we shouldn't underestimate also just how much work has been done over the last couple of years in difficult conditions.

MR. MOMBRIAL: Thank you Abe. So, let me take one more that I got before from Uche there and then what I'm going to do, I'll start on the right and go take two or three there. Two or three there, two or three there. Don't worry, we should have enough time to take everyone.

QUESTIONER: Hello Uche from China Global TV Network. So, can you give us some insight into those conversations that you're having with Africa's creditors such as China, of course, as you urge them to provide those financing assurances? And also, what concerns are these creditors like China giving you in these debt talks?

MR. SELASSIE: Actually, you know, the vast majority of discussions here take place of course with members directly and the discussion with creditors tends to be between the borrower countries and the creditors. We provide in general our assessment of the macroeconomic outlook, what kind of financing gaps are likely to be emerging, how countries can best avoid undue austerity where debt is unreasonably high. So, we engage and support the authorities rather than directly with creditors. But we of course from time to time do meet with creditors and the concerns of course are creditors are being asked to provide significant financing, significant debt relief right in some cases. And they of course have questions about the projections that we sometimes provide underpinning the numbers. This is a period of tremendous macroeconomic uncertainty, tremendous volatility, and economic variables, and sometimes we have questions about why we are projecting things the way we are and it's in that nature that some of the questions that are asked, and we try and address those questions.

MR. MOMBRIAL: Thank you Abe. As promised, I'm going to go there and take two or three. The lady in the front row with the yellow.

QUESTIONER: Good morning. Good afternoon. My name is Thando Maeko and I'm from Business Day in South Africa. Now the IMF has slightly raised its growth outlook for South Africa to 0.9 this year, up from 0.6 earlier this year, reflecting the economy which is hobbled by power outages. Does the IMF see a high risk that there will be continued delays in structural and governance reforms, that large scale energy shortages will persist reflecting Eskom's worsening operational and financial problems, and that South Africa might experience a higher than expected budget deficits and ballooning debt?

MR. MOMBRIAL: Thank you.

MR. SELASSIE: So, in general in the recent while, the calibration of macroeconomic policies has generally been well balanced and the surprises have come more on the structural side in South Africa, including of course the hugely disruptive things that are going on in Eskom and energy production in general. So, policies have had to be nimble. So, South Africa, beyond kind of the exogenous shocks been facing from outside, has also had this internal very disruptive shock. So, policies have had to be nimble, and I think both the SARB and Treasury have been doing what they can to address the implications of all of these shocks.

But I have to say that going forward, it will be important that South Africa does deep rooted reforms that will address the challenges. In the the network industries, we have seen them stifling exports. So, in some cases, country has lost out on the commodity price boom that had taken place in the last couple of years. And for an economy, for a country with tremendous potential, with such strong institutions and all that unemployment, really is disappointing that the country is not tapping into all of this potential and exploiting that. So, keeping macroeconomic policies as nimble as possible to address the emerging fiscal pressures will be very, very important, but also the structural reforms to underpin and facilitate higher growth.

MR. MOMBRIAL: Thank you, Abe. I think I'll take the gentleman in the second row on the right, please.
QUESIONER: Hello. My name is Francis Sinto. I write for the Ghanaian News Agency. I would like to know Ghana added creditors assurance somewhere in May yet has not had any agreement on debt treatment. The Fund is also expecting that to be completed soon. How soon is the Fund expecting this to be completed? And will the Fund progress with the second tranche expected in December should the debt treatment agreement not be reached?

MR. MOMBRIAL: Okay, just before I go to Abe, anyone else has a question on Ghana? I know there are a couple of you. Okay, gentleme, in the first floor there. I'll take two in a row and then go back to Abe.

QUESTIONER: The IMF boss, Kristalina, indicated a prosperous global economy in the 21st century requires Africa which has a booming youthful population that is growing to be invested in by capital unlocked from the advanced economies. What can the Fund do to encourage the advanced economies which are experiencing aging population to unlock such funds to help build the human capital of Africa?

MR. MOMBRIAL: Okay, can I take the lady in red, on the fourth row?

QUESTIONER: Thank you. My name is Vivian Kai Lokko, I work for City FM and City TV in Ghana. Just to follow up on my colleague’s question on the bilateral creditors, in case they are not able to reach a deal anytime soon, what are the alternative measures the IMF would want Ghana to consider in getting the $600 million for the second tranche? And also, what is the latest with Ghana's request for an IMF technical assistance to conduct a governance corruption diagnostic assessment and addressing weakness in existing asset declaration system for public officials. Thank you.

MR. SELASSIE: Thank you. On Ghana, we are very pleased with the progress that has been made in implementing the program since it was approved by the Board and even a little before because there were quite a number of important steps that had been taken, which are the process of arresting the very large macroeconomic imbalances that were the root cause behind the recent crisis and beginning to correct them.

Action is also needed from creditor side, of course, and I have to tell you that whereas it took I think something like nine months or more for Zambia to get the official creditor committee to be created, in Ghana's case, it was fairly rapid. So, that's what allowed us to go to the Board and get the program approved. And we're very, very hopeful that the ongoing discussions amongst official creditors will also expeditiously allow us to conclude the upcoming review. Again, the most recent mission reached agreement with the government on policies that are needed to tackle the most recent issues and also put in place an important budget for next year.

So, Ghana has done its fair share and it's for creditors to take steps and we're not going to be asking the government to do more adjustment because creditors haven't asked either. So, we will provide all the information necessary so creditors can move, allowing us to go to the Board as soon as possible.

On the governance diagnostic report. I think the request has been made. I'm not sure kind of where we are in terms of being able to provide that TA, but as soon as we have the resources, we will do that. And it's just a matter of time, I believe. Thank you.

MR. MOMBRIAL: Thank you, Abe. So, as promised, I'm going to go back here. I already had two people, so I'll take two more. Lady, you've been waiting for a while and I'll come to you here on the right, on the front row. Sorry, the gentleman here.

QUESTIONER: Hello, I'm Mohamed Ben-Madani. I live in London. I run the Maghreb Review. Given the fact that the conflict in Libya, war in Sudan, terrorism everywhere in Africa, one wonder whether any sensible commercial businessmen will invest in those areas. So, I'm also wondering about your sources. How reliable are your facts? That's the question. The second question, can you tell us, what do you think about BRICS? Has it any future? Thank you.

MR. MOMBRIAL: Thank you.

MR. SELASSIE: Thank you. You asked about the conflicts in the region, and I don't need to tell you that it's not just in the Sahel, but a number of other areas where there are conflicts in the region. Also at the same time, I think it's completely misguided to see the region, the entire region, 54 countries in Africa, 45 in Sub-Saharan Africa as being conflict affected and there's no economic activity taking place. Extremely heterogeneous and there are parts of the continent that are extremely peaceful without any conflict either, or conflicts are being resolved peacefully.

Our heart goes out, of course, to the displacement that's happening in the Sahel on top of the huge development challenges. Having these conflicts was really awful, of course. And it is clearly a region which is grappling with all of these challenges, including, of course, fragility, instability. But we do have a framework, we do have a way of thinking and supporting countries even in the context of conflict.

So, we just recently approved, for example, a program with Burkina Faso. It's important in the context of conflicts like this also, that state institutions, central governments do not collapse, that they are supported to continue providing basic services to their people. So, we are trying to do the best we can, even in those regions, as much as conditions will allow. So, it's not just Burkina. We have a program with Central African Republic. We have a program with Chad, and we try and support those countries on those issues.

You asked about the facts. Of course, we work with country authorities to develop the best understanding that we can about how economies are evolving. And in terms of the private sector, of course, when a country is driven by conflict, it's difficult to envisage a lot of FDI, a lot of private investment happening. But that still does not stop domestic investors who make in every country, in every country in the world, the lion's share of investment is done by domestic businesses, by domestic agents. That doesn't stop them from continuing to invest and you know, the reports we produce are as much for Africans as they are for investors from London.

On BRICS, I don't think I'm the authority that you want to hear from. It's a fantastic initiative. It looks like they're expanding it and it's very important, of course, for countries to create groups that make sense for them economically, politically, and I think it's a great initiative.

MR. MOMBRIAL: Thank you, Abe. I'll go to the lady in the third row because she had the mic, and we took it away from her. And I'll take two at the same time. Then I'll go to the lady in the first row.

QUESTIONER: Okay, thank you. My name is Nume [inaudible]. I write for [inaudible] Newspaper, Nigeria. My question is on Nigeria. Can you speak on Nigeria's debt stance right now? Are there talks with Nigeria on debt restructuring? Especially as a lot of our income and revenues are being used to service debt. Also, inflation is something that we're grappling with right now, and inflation keeps going up. And this is coming after IMF's recommendations on recent reforms, on exchange rates, and energy subsidies. But of course, it's taking its toll on the citizens on inflation. How best can we manage inflation? What would be your advice to Nigeria to manage inflation? And then could you also speak on Nigeria's recent foreign exchange reforms? There was some devaluation there, as you mentioned earlier, that it's important to devalue in some instances, but trying to harmonize it. There's now another arbitrage, a big arbitrage, again, with official and the parallel market. What best way can we have a sustainable way to manage this? Thank you.

MR. SELASSIE: Thank you. I am not aware of any debt discussions that are going on debt profiling, restructuring discussions that are going on in Nigeria. There are, of course, like elsewhere in the region, debt pressures. And I think in Nigeria, by far the most important cause of the pressures is the fact that the government doesn't generate enough tax revenues for all the services it needs to provide. So, interest payment as a share of revenues is very high and not leaving much room to spend on other issues. I think that is the key issue and the one that needs to be worked on.

Why are there not enough tax revenues? I think in the past, over reliance on oil, it was when prices were high. Second, of course, also the subsidy regime, which also implies, entails, quite a lot of loss of, government resources being directed where they perhaps should not be. So, I think these are all interlinked issues, including causing some of the inflation that you're seeing, because given the difficulty to tap international capital markets, the government has had to rely more on domestic financing, which has either crowded out the private sector or of course caused the monetary injection, which again has weakened the exchange rate.

So, you have a medley of things mainly rooted in the fiscal challenges that Nigeria has faced, not having tax revenues. At the same time, this is a country with incredible potential, incredible potential. And we have seen reforms moving in the right direction in recent months. What is needed, we feel, is making the reforms holistic and help reinforce each other. Just as things are not reinforced, were not reinforcing each other in the past, I think there is scope to make the reforms reinforce each other. So, the exchange rate reforms that the government did was very, very welcome, trying to unify the rate, similarly the fuel subsidy. But that will not help and will not stick unless you also are tightening monetary policy, unless you're also doing something to mobilize more tax revenues. So, a holistic package of reforms is what's needed, and I think we have to give a bit of time to the new administration also, right? I mean, Central Bank Governor has just been appointed. Minister of Finance has only been in office a few weeks. So, we're hopeful that they will move in the right direction, and we stand there to provide any policy advice the government needs.

MR. MOMBRIAL: Thank you. I actually wanted to go to the lady in black in front, but let's adapt. Since you have the mic, ask a question. I'll take you both at the same time before I go back to her, because she's been waiting for so long. I'll give her the mic.

QUESTIONER: It's fine, I mean, we're friends.

MR. MOMBRIAL: You're friends? Also, from Nigeria?

QUESTIONER: Yeah, sure. Okay, so thank you so much Nicolas. Good morning [inaudible] from Business Day in Nigeria. I think my colleague has taken some questions, but still on debt. So, Mr. Abebe, what's your assessment, really, IMF assessment on Nigeria's debt, I mean, at 87 trillion naira, the highest we've seen. And then with debt to GDP estimated to reach 37 percent this year, do you think Nigeria is approaching or is already in debt distress or approaching that situation? Then two, just yesterday, the CBN lifted the restrictions on 43 items banned in the foreign exchange on the official market. Can you please comment on that?

MR. MOMBRIAL: Okay, can you give her the mic? Then I'll take two and continue.

QUESTION: Hi, good morning everyone. My name is Nkechi Nnanna and I'm with Arise News from Nigeria as well. And I think my colleague already asked some of my questions, but I just wanted a more specific IMF recommendation on some of the coordinated policy you'd like to see between the monetary and fiscal policy, especially when it comes to exchange rate pressures, the move to unify the naira. The IMF has said it's a necessary one, but it's not sufficient in itself. So, what sort of specific coordinated policy reforms would you like to see Nigeria embark on just to make that move sustainable? Thank you.

MR. SELASSIE: Thank you. Debt. So, the assessment of debt should not be based on the nominal value of a debt stock, but rather how it relates to many other economic variables. So, yes, it's at the highest level because you're measuring it in naira terms, but as a ratio to GDP, as a ratio to many other indicators, is what you have to look at.

When we look at the debt in Nigeria, our sense is that the stock is manageable, in general. It's the debt servicing that is much, much more difficult. And the debt servicing is hampered, as I said earlier, by the country not generating enough non-oil tax revenues. And I think that is by far the most important area of reform, by far the most important area of work that there is for any administration in Nigeria.

On the trade restrictions, our view has always been in Nigeria in many other cases, our economies now are so sophisticated, so complex, I don't think that these kind of restrictions work. The best way to manage modern economies for government authorities, they have fiscal policy lever, monetary policy lever, is to try and use those to affect the kind of outcomes you have, rather than going in and saying, I don't like this good, so I don't want it to come in, et cetera. That tends to create unhelpful distortion. Of course, you have tax policy that you can also use, like if you really want to lean against certain types of import, et cetera. But in general, I think the direction that CBN has moved in, I think is helpful one.

Lastly on monetary policy coordination. I mean, it's a very technical issue, so I don't know why you want to go into it, but what I think we were saying when we pointed out that the adjustment was the correction to the exchange rate gap was necessary, that's not sufficient is unless you underpin it with tighter monetary policy conditions. If monetary policy is loose, it's creating a lot of liquidity, then it's going to create inflation. And of course, the exchange rate will inevitably move, and the official rate has to move. So, unless you are tightening monetary conditions, it will not be enough. As well, you have to, of course, support monetary policy with some fiscal policy tightening.

Again, as I said earlier, it's the fact that the government is absorbing a lot of the liquidity to finance the large deficit that it has, that's causing monetary policy to be loose. So, that's the type of holistic and coordinated reform package that Nigeria is going to need. And again, Nigeria has incredibly able politicians, incredibly able policymakers. It's something that can be done. It's just the political will and the decision to move in that direction that's needed.

MR. MOMBRIAL: Okay. Thank you, Abe. So, as promised, I'm going to go to the left side of the room before taking a couple of questions online. Please raise your hands. I don't really see okay; can I take the lady with the laptop?

QUESTION: Hello, Rachel Savage from Reuters. Thanks as always for these engagements. They're much appreciated. So, Kenya's Central Bank Governor told us that it's asking for a third enhancement of its existing ECF/EFF IMF program, potentially exceptional access as well. Is the IMF willing to grant exceptional access, and if so, how much? Thank you. And just very quickly, on Ghana, has there been an agreement yet on the cutoff date for Ghana's debt restructuring among official creditors, the IMF, et cetera, in line with the DSA, and also on the inclusion or exclusion of the 2022 Afreximbank loan? Thank you.

MR. SELASSIE: Thanks. So, Kenya is one of these economies that has been trying to do all the right things in the wake of the pandemic, and as it's been assailed by all of these very difficult exogenous shocks. We've been really very encouraged to see policies remaining in the right direction, particularly fiscal policy, where the primary balance has moved to a level that will help stabilize debt. And yet, because of things that government has not caused, but rather exogenous circumstances, capital markets remain shut out and has created uncertainty.

We've shown in the past that for countries that continue to implement policies as envisaged, that are moving policies in the right direction, we do what we can to provide them with the financing they need. We're very encouraged that the government is very proactively working on a number of options to address the maturities that they have falling due next year. I think they've been communicating around that. And of course, we will do whatever we can to support them. We have a team going out next week that will engage in very proactive discussions, and we'll be forward leaning to make sure that Kenya continues to be on the right track.

MR. MOMBRIAL: Thank you. To make your life easier, can I go to the gentleman who was just there behind?

QUESTION: My name is John Daniel Obioma from Nigeria. I want to address the issue of brain drain in Nigeria and also as effects on other parts of Africa. Does it bother IMF and World Bank that those who are supposed to develop Africa are running away on daily basis in their thousands to other parts of the world? What can we do about brain drain in Africa so that development can exist? Thank you.

MR. SELASSIE: Very important question. What can we do? I think ultimately, it's making sure that our economies are as attractive, as robust as possible. Right. And that goes back to the point I was making earlier that the reforms that we need to do are not so much for attracting businesses from outside but making it possible for our own people to flourish, right? To do the best and to get the best out of it.

Second, yes, it is a drain, but I think we also need to see ways in which we can have people outside the continent contributing back to the continent. So, even you cannot stop from leaving if they have better opportunities outside. But once they're outside, I think finding ways in which they can continue to contribute, of course, how important remittances are for our countries right now, but also finding ways in which you can attract more investment perhaps is also another way that we can work on once people have left the continent.

MR. MOMBRIAL: Thank you, Abe. Could you raise your hand? I think the gentleman there with the white shirt. And then I'll go online.

QUESTIONER: Hi, thank you for having us. My name is Mario Batista, I'm a journalist from the Portuguese News Agency Lusa. I'd like to know what would release immediate fiscal space right now that the countries can do with immediate results.

Also, on Equatorial Guinea, I'd like to know what is the new engagement strategy that the IMF has referred to. And also, the African countries have been requesting a third constituency in the IMF. I would like to know what is your opinion on that and how the process is evolving. And the last question on you said yesterday on an interview with Bloomberg that eight African countries were already in debt distress or very close to it. I would like to know if you could name those countries. Thank you.

MR. SELASSIE: Sorry, remind me, what was your first question again?

QUESTIONER: Fiscal space.

MR. SELASSIE: Fiscal space. So, I think it is difficult to identify a single measure that's going to cut across all countries. So, that's going to be very country specific. I can tell you that in some countries it's something like removing fiscal subsidies. Oil subsidies, which we've argued again and again and again, is something that tends to accrue to the richest segments of society rather than the poorest. So, I think using that fiscal space created by removing fiscal oil subsidies to health investment, education investment would be one. But again, it's country specific, what you can do to create fiscal space. In other countries, there are a lot of tax exemptions, for example, again, that tends to narrow the tax space. So, maybe revisiting the exemptions if they still make sense, those kind of reforms.

Equatorial Guinea, we just had an Article IV mission recently. The government has shown some interest in a program, so we'll see if we can move forward and how quickly in that respect. But we just had an Article IV and are waiting to see the assessment. On the third chair for Sub-Saharan Africa, you know, we're very excited to see the membership. This is a membership issue now recognizing the need for Africa to have more representation at the Board. It looks like it's something that's garnering a lot of attention and we're excited to see. But this is above my pay grade and so waiting for the final decision and how it will play out.

The seven, eight countries - it's actually in the Regional Economic Outlook, which countries are in debt distress and be taxing my recollection memories and I don't want to get things wrong. So, if I could please ask you to refer to the report.

MR. MOMBRIAL: Okay, thank you. Abe, I'm now going to take one of the questions online. I think I have Julians Amboko. Julians, can you hear us?

QUESTIONER: Can you hear me?

MR. MOMBRIAL: Yes.

QUESTIONER: Thank you so much. Thank you, Abe, for this opportunity. Quick question. There has been a growing push for the dollarization of trade, given the hard currency crunch, many countries in this region are facing. What's IMF's thought around that push and is there any support being extended in any way or another towards the Pan-African Payment Settlement System, which seeks essentially to bolster cross border trade on local currency?

MR. SELASSIE: So, you know, I think the de facto dollarization we've seen is as a result of the dollar being the general medium for transaction across the world. And any initiative that of course minimizes the demand for dollars that can provide facilities for countries to settle with each other in local currency, we see as something that's helpful. And we don't know for the full details about this initiative but looks like something that's encouraging and we're happy to look at it and provide ways in which it can be improved. So, generally a positive development, I think.

MR. MOMBRIAL: Okay, thank you. I think we have about 7 minutes left. So, what I'm going to do now is more bit of a speed dating and I know Abe is good at this. I'll take two or three questions at a time. The lady in the second row there.

QUESTIONER: Hello, thank you and good morning. I'm Zainab Joaque and I write for Awoko newspaper in Sierra Leone. There's the issue of currency depreciation and redenomination challenges in Sierra Leone. As you are aware, we are currently having two currencies in circulation. What policy advice does the Fund have for our currency situation? Also, can you throw a light on our current debt situation? Is it still sustainable?

MR. MOMBRIAL: Okay, wait, I'd like to take two.

QUESTIONER: Thank you very much. I'm from Ethiopia and I would like to ask Mr. Abebe about the Common Framework related to the case of Ethiopia and what is the current status? The second one is about inflation and the cost of living is almost tripled in the past one year, especially related to the commodities which are produced locally, including food items. So, what do you think is the cause and what possible policy actions can the government take? Thank you.

MR. MOMBRIAL: Okay, and then one more. I think there were hands raised. The gentleman right there.

QUESTIONER: Good morning. Omar Benyedder from African Business. So, I came a bit late. Hopefully you haven't talked about this yet, but are there any external shocks or any red flags that we should be anticipating for the year ahead 2024? We've got Kenya that's got a large debt maturing, we've got the WTO said slowing global trade, rising nationalism, China drag. So, what are the potential red flags that we should be paying attention to that could add further distress? Thank you.

MR. SELASSIE: Thanks, on Sierra Leone, I think the country suffering from many of the same pressures has been, of course, with the exogenous shocks, but also domestically in the government having a fiscal deficit that's somewhat too high for the size of the financial market. So, working on that will be very important.

Second, on the fact that you have two currencies circulating with each other. When governments are doing such redenomination, it's not unusual to have two currencies circulating at one time. Otherwise, the government has to pull out all of the old currencies very quickly, and that can be disruptive. And we've seen that a bit in other cases, so it's not unusual, but of course needs to be transparency around it and making sure that the process is orderly and as old currency comes into banks, that they are taken out. So, I think that's the process that's going on there. We have a program with Sierra Leone and just recently actually had a team that held discussions for the 6th Program Review. I think it's coming to the end. And the team found policy challenges, heard from the authorities how they were going to resolve them, and we have hoped to find a way forward that will address that. Hopefully they will take the measures and we can go to the Board soon with the Program Review.

On Ethiopia, you asked a question about Common Framework. I'll answer that for you. On other things, Annalisa Fedelino, my deputies here, you can ask her more. On the common framework, of course, the way the process works is countries apply to the Common Framework usually at or when they have Staff Level of Agreement with staff. We don't have one yet. The government, I think, is still working on its reform program, so there's no Staff Level Agreement there. But that's when I think the process goes in earnest. But as I said, my Colleague Annalisa Fedelino will answer questions there for you. Omar, all the questions on external shocks, I mean, by definition, particularly forward, it's difficult to foresee what might be coming down the pike.

On Kenya question, I think that's not so much a shock, but something that is in the baseline and the government is working on a plan on how to address that. And we're, of course, supporting them.

MR. MOMBRIAL: Okay, so we do have to close, but I promise I take two more on this side and then we close. And I have a colleague that follow up with you later. The gentleman in the first row and then the gentleman in third, and then we'll close.

QUESTIONER: Thank you very much, Ramah Nyang from Bloomberg. Two questions for you, Abe. So, debt clearly is a problem, but where do debt for nature swaps payment for environmental services fit into these conversations on debt relief or debt restructuring? A lot of the countries that we're talking about are acting essentially as enormous carbon sinks for the rest of the world. If we're in an economy in a world where we could collateralize mortgages about a decade ago, surely, we should be able to put a dollar value right on these environmental services and help find the money that we need for climate adaptation. Finally, we did see quite a few arguments around superseniority of debt from the IMF and in some cases, the World Bank, coming up in debates around the treatment of debt issued to countries like Zambia. Was this matter definitively sorted in yesterday's sovereign roundtable meeting?

MR. MOMBRIAL: Gentlemen in the third row, but then we'll close.

QUESTIONER: Thank you, Nico. Thank you, Abe. In part, my question is related to climate financing. I'm making the point that I'm hearing a lot of talk about how the private sector has to be integrated in financing the climate transition. But at the same time, we know that on the continent, our private sector is not as equipped, nor is it as adaptable as perhaps other developed countries. And I wanted to ask the question, when the Fund says you look into the private sector, what are the chances that African businesses will be equal participants in that transition, given our challenges around funding and our challenges around capacity?

MR. MOMBRIAL: Okay, Ekow, I saw you jump there a couple of times. Can you keep it to 1 minute, please?

QUESTIONER: Okay, thank you. What are the risks of a protracted Hamas Israeli war on Sub-Saharan Africa? And two, how effective is the Common Framework, given the seeming delays of the MoU for Ghana and Zambia? And how does that speak about the effectiveness of the Common Framework? Thank you.

MR. SELASSIE: Thanks. Ramah, on debt for nature swaps and the like, I think by far the most direct, the most linear way for working with this is probably things like carbon credits, right? So, countries that are making contribution as a sink for greenhouse gases, of course, should be getting carbon credits for the contribution that they're making. The problem arises when there are countries, say you're an arid country in our region and you're not contributing in a positive way to that. How do you help a country like that with the challenges that it's facing with climate change? So, I think this is still kind of -- we can see the kind of a path forward for helping DRC, but perhaps not for helping Chad. So, it's not as easy as you're making it seem. I don't think. It is also a little bit outside the mandate and responsibility of the IMF, but we, of course, see the need for the huge financing need countries have to adapt to all of this climate change, and we work with them to identify that what they can do themselves and are encouraging the international community to continue to providing through traditional means while things like debt for nature swaps and other creative solutions are being sought.

Super seniority point you said? I mean, this is one of the nice things about this creditor debtor roundtable that we've spearheaded as an institution. It's nice because those have been among the reasons that have been brought up when we've had specific country cases discussed with creditors, these architectural issues around debt restructuring. So, they have facilitated a debate and a response by the MDBs in particular on these issues. And I think there's now a broad understanding that exactly because it's at the time of need that MDBs in particular come forward with concessional financing, why they need to be excluded, why their obligations need to be considered differently to other entities. And so, I think there is progress and understanding on this area.

On climate finance, we are, I think, helping countries most by of course supporting them through the Resilience and Sustainability Trust. We now have six programs on the continent, five in Sub-Saharan Africa under the RST, and we're using that to leverage more private finance to come into the countries. Because there is a premium on external financing at the moment, I think there's been a lot more emphasis on trying to see what can be done to attract external investors financiers into climate projects in the country. But I think going forward I have no doubt we will also be working with domestic private sector in this area also.

On the conflict in Gaza and Israel, I think the human toll that is exacting is really what's foremost on our minds and we've not done any economic assessment on that.

Lastly, on the common framework that it's been challenging, again, I think the Common Framework is getting a really bad name. It did not exist just two years ago. It did not exist. We didn't have a way to bring official bilateral creditors together in one room to discuss ways in which they can work together to address the debt burden that our countries have. So, it's been less than two years already. We've had one case which has been done and completed, Chad. Second case where there's been enough progress for us to not be disrupted in the disbursements that we've been making some delay, yes, but not disruption in the steps; and that's Zambia, of course. So, program was approved in the context of the program framework a year and some months ago. First review was concluded in the context of the program framework. No issue there. Now it's a second review and the memorandum of understanding we understand is near finalization and that will happen. And given that we're not expecting to go to the Board for another few weeks, hopefully it will be done and will happen. So, again, there have been delays reaching agreements, but the support that countries need from us, from the World Bank, has continued to happen. So, I think it's really important to recognize that process is working, and the headlines do not quite meet what's been happening on the ground. Thank you.

MR. MOMBRIAL: Thank you, Abe. Thank you, everyone, for attending. As I said, if you have any follow up question, you know where to find me at the Press Center. For colleagues who want to talk about Ethiopia, please go to my Colleague Andrew, on the left of the room. With this, thank you, shukran, merci and have a good day.

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