An Unprecedented Threat to Development in Africa

IMF News, April 15, 2020

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Covid-19 threatens to exact a heavy human toll and the ensuing economic crisis risks reversing recent development gains.
The region’s economy is set to shrink by 1.6 percent in 2020.
Real per capita income is projected to fall by 3.9 percent on average.
The crisis arrives amid plummeting global growth, tighter financial conditions, a sharp decline in key export prices, and severe disruptions to economic activity from containment measures.
Shrinking incomes will worsen existing vulnerabilities and social distancing measures will jeopardize livelihoods, especially where many countries have little fiscal room to respond.

Immediate priority: ramp up public health spending to contain the outbreak, "regardless of a country’s budget."
Provide substantial and timely support to affected households and sectors:
- Cash transfers or in-kind support to vulnerable households, including informal workers.
- Targeted and temporary support to hard-hit sectors.
Ensure access to concessional funding from the international community to enable adequate responses.
Use monetary and financial policy to help sustain firms and jobs.
Coordinate efforts among development partners to maximize effectiveness of support.

The IMF is working closely with the World Bank, World Health Organization, the African Development Bank and the African Union to respond swiftly and effectively.
The Fund is set to provide some US$11 billion to 32 sub-Saharan countries that have requested assistance in recent weeks.
Disbursements have been made to Burkina Faso, Chad, Gabon, Ghana, Madagascar, Niger, Rwanda, Senegal, and Togo.
Immediate debt relief is being provided for the poorest and most vulnerable countries through the IMF’s Catastrophe Containment and Relief Trust to free up resources for health and social protection spending.
Together with the World Bank, the IMF is advocating for debt relief from official bilateral creditors for low-income countries that request forbearance.

The IMF characterizes the situation as "the worst outcome on record" for the region and calls the crisis "unprecedented."
Policymakers are urged to act decisively to limit both the human and economic costs so that lives and livelihoods are not "destroyed forever."

Press Release No. 20/154 — April 15, 2020 — IMF Communications Department