IMF Sets Out Policy Steps to Reduce Vulnerabilities and Raise Sub-Saharan Africa’s Medium-Term Growth

IMF News, May 8, 2018

Source details

Canonical URL: IMF Sets Out Policy Steps to Reduce Vulnerabilities and Raise Sub-Saharan Africa’s Medium-Term Growth

Growth in sub-Saharan Africa is projected to pick up modestly from 2⅔ percent in 2017 to 3½ percent in 2018.
There is wide diversity in growth outcomes and prospects across countries in the region.
- Several economies (such as Côte d’Ivoire, Ethiopia, Ghana, Senegal) are expected to maintain robust growth at about 6 percent or faster.
- Many countries that saw per capita incomes fall in 2017 could witness a further decline in 2018.
Drivers of the pickup:
- Improved policies in some countries.
- A more supportive external environment, including stronger global growth and higher commodity prices.
- High volumes of capital inflows facilitating external adjustment and a buildup of reserves in some countries.

Macroeconomic vulnerabilities are rising in many countries as the required fiscal adjustment keeps getting delayed.
Debt distress metrics:
- 15 of the region’s 35 low income countries are now rated to be in debt distress or at high risk of debt distress.
Higher debt levels have translated into a sharp increase in debt service in some countries, diverting resources from spending in health, education, and infrastructure.
Based on current policies, average medium-term growth for the region is expected to plateau below 4 percent, falling far short of the levels envisaged five years ago and below what is needed for countries to achieve their Sustainable Development Goals.

Seize favorable external conditions to turn the current recovery into durable strong growth by implementing domestic policy steps to:
- Reduce fiscal imbalances.
- Raise medium-term growth potential.
Fiscal policy:
- Prudent fiscal policy, especially domestic revenue mobilization, is critical to make room for key infrastructure and social spending.
- On average, there is scope to raise tax revenues by 3-5 percentage points of GDP over the next few years.
Structural reforms to boost private investment and medium-term growth potential:
- Nurture a dynamic private sector.
- Boost intra-Africa trade.
- Deepen access to credit.
Harnessing demographic potential:
- Sub-Saharan Africa remains a region with strong potential to harness its demographic dividend in the medium term—provided strong domestic policy measures are implemented.

Abebe Aemro Selassie, Director of the IMF’s African Department:
- “The growth pickup has been largely driven by improved policies in some countries, and a more supportive external environment, including stronger global growth and higher commodity prices.”
- “Macroeconomic vulnerabilities are rising in many countries as the required fiscal adjustment keeps getting delayed.”
- “Policy makers need to seize the opportunity provided by favorable external conditions to turn the current recovery into durable strong growth… Prudent fiscal policy, especially domestic revenue mobilization, is critical…”
Press contact:
- IMF Communications Department, MEDIA RELATIONS
- PRESS OFFICER: Lucie Mboto Fouda
- Phone: +1 202 623-7100
- Email: MEDIA@IMF.org

Press Release No. 18/161, May 8, 2018.