Transcript of October 2021 African Sub-Saharan Press Briefing
IMF News, October 21, 2021
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- Published: October 21, 2021
Pandemic, vaccination, and global context
- Two divergent realities: advanced economies with plentiful vaccine supply and faster recovery; vulnerable emerging and developing economies with slower vaccine rollouts and constrained policy space.
- Third wave driven by delta variant hit Sub-Saharan Africa since April; infections rose to "triple, quadruple" earlier rates and this wave "has now eased over the past month or so" but repeated waves are likely.
- Vaccination status:
- "only around 3 percent of the population of Sub-Saharan Africa has been fully vaccinated"
- Many advanced economies "are close to the 60 percent or more level of vaccination"
- IMF vaccination plan goals:
- "vaccinate at least 40 percent of the total population of all countries by the end of 2021"
- "70 percent by the first half of 2022"
- Causes of slow vaccine rollout cited: stockpiling by advanced countries, export restrictions by major vaccine manufacturing countries, demands for booster shots in advanced economies.
Regional economic outlook and key statistics
- Growth projections:
- Sub-Saharan Africa growth "will grow by 3.7 percent this year"
- "3.8 percent in 2022"
- Recovery drivers: favorable external conditions on trade and commodity prices, improved harvests and increased agricultural production.
- Relative performance: recovery is "the slowest growth relative to most other regions of the world"; advanced economies projected to return to pre-crisis paths by 2023.
- Durable income loss: pandemic "looks to have durably lowered the path of real GDP in Sub-Saharan Africa, suggesting a loss of real per capita income of close to 5.5 percent relative to the pre-crisis path."
- Poverty and inequality:
- "The pandemic has thrown some 30 million people back into extreme poverty"
- Rising food and fuel prices threaten further erosion of poverty reduction, health, and food security gains.
- Country-specific highlights and figures:
- Botswana: projected growth "9.2 percent for 2021" (partly a bounce from a significant 2020 contraction; medium-term growth expected to revert toward pre-crisis path).
- Nigeria: remittances "dropped by 28 percent" (regional remittances expected to increase, but Nigeria affected by economic conditions abroad and FX market uncertainty).
- SDR allocation to Sub-Saharan Africa: "About $23 billion of this allocation will go to [sub-Saharan] Africa."
- Regional opportunity: global population growth next three decades "about two billion people with about half of that increase coming from Sub-Saharan Africa."
- Distribution of recovery: "a good40 percent or so of countries in the region" have recovered close to or back to pre-crisis trajectories; many others lag, especially commodity exporters with narrow economic bases.
Policy challenges, the "trilemma", and reform priorities
- The trilemma facing policymakers: need to balance
- "pressing spending needs to address the many social and human capital and infrastructure needs",
- "limited borrowing capacity given the already high public debt levels",
- "the time-consuming and politically difficult nature of mobilizing tax revenues."
- Policy priorities and recommended reforms:
- Mobilize more domestic revenues (tax mobilization) instead of relying on debt financing; develop clear medium-term revenue mobilization road maps (country-specific).
- Prioritize spending toward projects with highest rates of return and on social protection to avoid scarring (e.g., education recovery for children).
- Reprioritize and improve spending efficiency; reduce leakages and strengthen public financial management and transparency.
- Pursue economic diversification (e.g., away from diamonds in Botswana; away from narrow commodity reliance in commodity exporters).
- Upgrade institutions and industries to sustain medium-term growth (prepare for supply-chain shifts post-pandemic).
- Combine external financing (including concessional resources) with domestic reforms to enable a durable recovery.
Debt pressures, restructuring, and financing mechanisms
- Elevated debt pressures: increase in countries seeking restructuring (Zambia, Chad, Ethiopia cited).
- Country cases:
- Zambia: discussions of a new program underway; mission expected to define program parameters and facilitate official and private creditor restructuring.
- Chad: official sector provided assurances for disbursements, but private creditors have not committed to restructuring in good faith, delaying critical financing amid serious food insecurity and drought-like rainfall conditions.
- Ethiopia: authorities requested support under the Common Framework; Director recused himself and staff will provide detailed updates; IMF omitted medium-term GDP projections due to "extremely high degree of uncertainty" and pending program discussions (similar precedent with Argentina and Lebanon).
- Role of SDRs and IMF facilities in rechanneling resources:
- Rechanneling paths:
- Additional SDRs to the PRGT to provide zero interest rate loans with 10-year maturity.
- A proposed Resilience and Sustainability Trust to provide longer-maturity financing for major transformations (e.g., climate change).
- SDRs are one of multiple vehicles needed; IMF committed to rechanneling and supporting countries with elevated financing needs.
- Requested financing scale cited by questioner: "$250 billion needed in the next five years" (presented as part of the questioner’s framing).
Governance, transparency, and program implementation
- Rapid emergency financing during the pandemic required faster disbursements; IMF asked countries to "spend the money but keep the receipts":
- Requirements emphasized: audits of COVID-related spending, disclosure of beneficial ownership for contracting firms.
- IMF following up and holding countries to commitments; program discussions may be delayed if audits or reforms are not completed.
- Cameroon: IMF engagement emphasizes increasing transparency and public accountability; follow-up on audits and beneficial ownership listings is ongoing.
- Angola and Equatorial Guinea:
- Angola: pandemic and oil price slump delayed recovery; authorities credited for continuing reforms since 2018; outlook depends on pandemic waning and global oil price recovery.
- Equatorial Guinea: EFF (approved end-2019) implementation hindered by weak capacity and the pandemic; recent Bata explosion worsened conditions; emergency financing provided and discussions continue to complete structural benchmarks.
Security, medium-term risks, and outlook uncertainty
- Insecurity (Sahel, Mozambique, Nigeria, eastern DRC) exacerbates economic challenges and can negatively affect activity and policy environments; uptick in violence noted, particularly in the Sahel and Mozambique.
- High uncertainty justifies cautious forecasting in specific cases and the need for flexible policy responses.
- IMF stance: institution "remains committed to supporting Sub-Saharan Africa" including through SDR allocation and facilitating rechanneling mechanisms to bolster resilience.
Transcript of October 2021 African Sub-Saharan Press Briefing — IMF Communications Department