Transcript of April 2021 Sub-Saharan Africa Press Briefing
IMF News, April 15, 2021
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- Published: April 15, 2021
Pandemic trajectory, vaccines, and health implications
- Second wave outpaced the scale and speed of the first wave in Sub-Saharan Africa.
- Vaccine access is highly unequal: many advanced countries secured multiple times their needs; many Sub-Saharan African countries are struggling to vaccinate essential frontline workers.
- Few countries in the region will achieve widespread vaccine availability before 2023, on current trends.
- With scant access to vaccines, countries face risk of additional waves of infection.
- IMF stance:
- Ensuring vaccine coverage for Sub-Saharan Africa is a high-value global public good.
- International community should ramp up vaccine supply, ensure sufficient financing for facilities like COVAX, and quickly distribute excess vaccines from wealthy countries.
Macro outlook and key statistics
- Regional GDP and recovery:
- Region contracted by 1.9 percent in 2020.
- Region projected to expand by 3.4 percent in 2021.
- Per capita output is not expected to return to 2019 levels until after 2022 (region-wide statement).
- In many countries, per capita income will not return to pre-pandemic levels until 2025.
- Poverty, education, and social impact:
- Number of people living in extreme poverty in Sub-Saharan Africa projected to have increased by 32 million in 2020.
- Students in the region have missed more than four times the days missed by children in advanced countries.
- Regional divergences and examples:
- East African Community (EAC): contraction in 2020 estimated at -0.2 percent; recovery in 2021 expected to be closer to five and a half percent.
- South Africa: growth contracted by around 7 percent in 2020; recovery this year expected but medium-term requires structural reforms.
- Nigeria: IMF projection cited as 2.5 percent for 2021 (question referenced IMF projection); recovery driven partly by rebound as containment eases.
- Zimbabwe: IMF growth projection 3.1 percent for 2021 vs. government target 7.4 percent; inflation expectations noted upwards of 9 percent (government target 9 percent referenced).
- Ghana: IMF expects recovery around 4.5 percent in 2021; IMF noted differences with government projections can arise from timing and data vintage.
- Mozambique: insecurity in Cabo Delgado (Palma) threatens LNG project timelines and the country’s outlook.
- Debt and liquidity pressures:
- G20 Debt Service Suspension Initiative (DSSI) delivered alleviation of debt service pressures in excess of six and a half billion, from mid-2020 to what is in the pipeline through mid-2021.
- Additional external funding needs for Sub-Saharan Africa estimated at around $425 billion over the next five years.
Risks and scenarios
- Main risks to the outlook:
- Repeated COVID-19 episodes before widespread vaccination.
- Limited external concessional financing.
- Political instability and domestic security issues.
- Climate events.
- Upside scenario:
- Faster-than-expected vaccine supply or rollout could boost near-term growth prospects.
Policy priorities and recommendations
- Immediate priorities:
- Save lives: more spending to strengthen local health systems and containment efforts; accelerate vaccine rollout where needed.
- Vaccinating 60 percent of a country’s population will require, in some cases, increasing health spending by as much as 50 percent (phrasing from briefing: "in a few cases, by as much as 50 percent").
- Medium-term and structural priorities:
- Reinforce recovery and unlock growth potential through bold, transformative reforms:
- Strengthen social protection systems.
- Promote digitalization.
- Improve transparency in government.
- Mitigate climate change.
- Restore public sector balance-sheet health over the medium term where debt vulnerabilities exist.
- For the 17 countries in the region at high risk of debt distress or already in debt distress: mobilize domestic revenue, prioritize essential spending, and more effectively manage public debt.
- Fiscal-monetary calibration:
- Countries with limited fiscal space should pursue domestic revenue mobilization and prioritize spending to create room for recovery investments.
- Example recommendations by country:
- Nigeria: increase domestic revenue mobilization, reform the energy sector to reduce the cost of doing business, and create deep and liquid foreign exchange markets.
- South Africa: pursue reforms for more competitive product markets and ensure adequate energy supply.
- Kenya: adopt a medium-term fiscal framework to contain and reduce debt vulnerabilities while supporting near-term recovery.
International support, IMF actions, and financing mechanisms
- IMF emergency support over the past year included Emergency Funding Facilities, increased access under existing arrangements, and debt relief via the CCRT.
- Common Framework:
- Designed to tailor debt-treatment solutions to individual country circumstances.
- Implementation is at an early stage; country experiences will vary depending on debt structure and creditor composition (examples discussed: Chad, Ethiopia, Zambia).
- SDRs and liquidity:
- Once the IMF Executive Board decision is finalized, about 23 billion SDRs are expected to reach 45 countries in Sub-Saharan Africa (phrase used in briefing: "about 23 billion SDRs to reach 45 countries in the [sub-Saharan Africa] region").
- An SDR allocation would provide liquidity to vulnerable countries; additional mechanisms to channel unused SDRs from advanced countries to vulnerable countries are being explored.
- Historical timeline: between decision and crediting resources to countries took about 4.5-5 months in 2009; similar timeline is expected.
- Crediting of SDRs: resources credited to central banks in proportion to country quotas ("100 percent of a country's quota" phrasing used).
- Other sources: private capital flows, international financial institutions, ODA/debt relief, and capacity development will all be needed to meet the region’s $425 billion external funding needs over the next five years.
Transparency, governance, and accountability
- IMF emphasizes transparency, good governance, and fighting corruption as critical for effective use of all public resources, including SDRs and emergency financing.
- Measures in Fund engagements:
- Requesting audits of how emergency resources are used.
- Requiring publication of beneficial owners of contracts awarded with emergency resources.
- Supporting transparency in budget and procurement to strengthen the social contract and improve domestic revenue mobilization.
Transcript: IMF Communications Department, April 15, 2021.