Transcript of April 2019 African Department Press Briefing
IMF News, April 12, 2019
Source details
- Canonical URL
- Transcript of April 2019 African Department Press Briefing
Other formats
Bibliographic details
- Published: April 12, 2019
Regional growth and divergence
- Regional average growth: "this year we are expecting growth to accelerate to 3.5 percent from 3 percent last year."
- Distributional split:
- "Some 21 countries are expected to grow at 5 percent or more this year" — these tend to be "more diversified economies" with "per capita income increases that are markedly larger than many countries in the rest of the world."
- "Around 24, mainly resource-dependent economies" are facing sluggish near-term growth; this group includes Angola, Nigeria, and South Africa, which "account for more than 50 percent of the region's output."
- Drivers and constraints:
- External: "volatility and global financial conditions" and "volatility in commodity prices."
- Domestic: "rising public debt vulnerabilities" that are "elevated in some countries." Causes vary by country: infrastructure financing, the 2014–2016 commodity price shock, and procyclical policies.
Policy implications and recommendations
- Two broad policy implications:
- Fast-growing economies (examples: Benin, Ethiopia, Ghana, Senegal)
- Need to "hand over the reins of growth from the public to the private sector."
- Balance public investment and rising public debt: "a need to strike a better balance between public debt increase on one hand, and the continued investments that are needed in public investment."
- Slower-growing, resource-dependent economies (examples: Angola, Nigeria, South Africa)
- "Pursue reforms to facilitate economic diversification, and address remaining economic imbalances."
- Focus on removing constraints to private investment.
- Cross-cutting advice:
- Invest in human capital (education, health).
- Strengthen public finance management and prioritize high-return public investment.
- Strengthen social protection to make adjustment "progressive and avoid adverse effects on the poor."
- Facilitate private-sector entry and growth (formalization, access to credit, reducing business constraints).
Trade integration (African Continental Free Trade Area) and diversification
- AfCFTA potential market: "1.2 billion people, with a combined GDP of $2.5 trillion."
- Composition of intraregional trade vs extra-regional exports:
- "40 percent of intraregional trade is accounted for by manufactured goods."
- "Whereas the region exports to the world 75 percent of such exports tend to be minerals, the likes of crude oil, and other commodities."
- Policy priorities to realize benefits:
- Tackle non-tariff bottlenecks, invest in infrastructure, lower logistical costs, and improve trade facilitation.
- Be mindful of adjustment costs of integration and move "swiftly to address those."
Shocks, IMF responses, and country-specific notes
- Security and conflict:
- Conflict levels "tend to be much lower than in the '90s, and even early 2000s" but the Sahel and Lake Chad Basin face "considerable security threats."
- IMF has work assessing "the economic impact that conflicts are having" and is "discussing with country authorities how best we can minimize their diversion of resources away from much needed development spending."
- Weather shocks and rapid IMF support:
- Cyclone Idai impact: "devastating impact in Southeast Africa."
- Mozambique rapid credit facility: "of the order of $120 million"; request sent to the Executive Board and "we hope the Board will consider it as early as next week."
- Zimbabwe: "we announced a staff-monitored program" to support government economic policies.
- Malawi: "in discussions with authorities to provide additional support through the existing ECF arrangement."
Country-specific summaries and priorities (as discussed)
- Mozambique
- Debt unsustainability following undisclosed borrowing; IMF stance: support dialogues to "ensure that debt becomes sustainable."
- Rapid credit facility: "$120 million" and expedited Board consideration.
- Judicial/extradition inquiries: "beyond my area of competence and cannot comment."
- Angola
- Program under an Extended Fund Facility: program "off to a very, very good start"; authorities "making very strong strides" addressing macroeconomic imbalances.
- Priorities: introduce and strengthen social protection; complete structural reforms to "facilitate much more competition in product markets."
- Ethiopia
- IMF projection referenced: "IMF projected 7.7 percent GDP gross for 2019."
- Growth driver: "significant public investment"; policy priority: shift toward private investment to sustain growth.
- Ghana
- Advice to sustain jobs-rich growth: invest in human capital, maintain sound macroeconomic management, facilitate private investment, remove barriers facing informal firms, and preserve newly strengthened institutions (e.g., fiscal council).
- Nigeria
- Damage from commodity price decline noted; need to increase revenue mobilization due to "fairly low level of revenue to GDP ratio."
- Emphasis on tackling corruption, improving governance, and directing public resources to infrastructure, health, and education to foster private-sector job creation.
- Gambia
- Political transition with increased transparency; IMF support via successive staff-monitored programs with the aim to transition to financing that balances investment needs and debt sustainability.
- Guinea-Bissau
- Fragile economy with deep development challenges; IMF dialogue focuses on improving the health of the financial sector and other reforms.
- CEMAC region
- Five out of six CEMAC countries are oil producers and were hit by the 2014–2016 oil price decline.
- IMF programs in four countries: Cameroon, Gabon, C.A.R., and Chad; focus shifting toward improving the business environment to spur private investment.
Governance, illicit flows, and nongovernmental concerns
- Illicit outflows and repatriation:
- IMF role: policy advice, governance and anti-corruption advice, strengthening public finance management and accountability institutions; primary responsibility for limiting illicit outflows rests with domestic policymakers.
- Debt transparency and creditor composition:
- Debt problems are "country specific" and arise from varied creditor types (bilateral, commercial, other). Debt transparency is critical and "is not unique to China"—applies to all borrowing.
- Civil-society concerns (Mozambique Credit Suisse debt, extradition of Manuel Chang): IMF emphasizes debt sustainability and creditor dialogues; judicial matters are outside IMF competence.
Data, projections, and cross-institution differences
- Regional growth projections and comparison:
- IMF: "3.5 percent" for the region this year.
- World Bank referenced: "3.6" (noted as a marginal difference due to country coverage and timing of projections).
- Poverty warning highlighted in Q&A: reference to a statement that "by 2030 nine out of ten extremely poor people in the world will be Africans" — discussed as a policy challenge requiring sustained, inclusive growth and job creation.
Transcript of April 2019 African Department Press Briefing, April 12, 2019, IMF Communications Department