African Consultative Group Meeting: Statement by the Chairman of the African Caucus and the Managing Director of the IMF

IMF News, April 23, 2022

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Canonical URL: African Consultative Group Meeting: Statement by the Chairman of the African Caucus and the Managing Director of the IMF

Co-chairs: Moroccan Minister of Economy and Finance Ms. Nadia Fettah, Chair of the African Caucus, and Ms. Kristalina Georgieva, Managing Director of the International Monetary Fund (IMF).
Meeting date: April 21, 2022 (statement issued April 23, 2022).
Press Release: No. 22/130.
The African Consultative Group (ACG) comprises the Fund Governors of a subset of 12 African countries belonging to the African Caucus and Fund management; it was formed in 2007 to enhance IMF policy dialogue with the African Caucus and meets at the time of the Spring Meetings.

Recovery status:
- "Green shoots" of the recovery that started in 2021 are threatened by the war in Ukraine while the "war on COVID-19 is still not over."
Vaccination rates:
- Sub-Saharan Africa vaccination rate: 13.2 percent of its population.
- North Africa average vaccination rate: 28.1 percent.
- Both described as low and uneven; North Africa's average "is also still below the world average."
Impact of the war in Ukraine:
- Surge in commodity prices has destabilized global commodity markets.
- Consequences cited: exacerbated inflationary pressures and food security concerns, especially for the most vulnerable.
- Several countries in North Africa and the Sahel are identified as among the most vulnerable in the world to price increases or shortages of wheat due to high dependence on imports from Russia and Ukraine.

Commodity exporters:
- Will experience a windfall gain from higher fuel and commodity prices.
- Positive fiscal impact could be largely offset by additional energy and food subsidies.
Commodity importers:
- High food and energy prices are straining external and fiscal balances.
- Capital flows are likely to be disrupted.

Immediate priority:
- "Protect the most vulnerable households from the impact of high food and energy prices."
Recommended policy design for support:
- Targeted.
- Temporary.
- Transparent.
- Delivered using and further developing social safety nets.
Broader policy actions:
- Governments in the region, the international community, and the private sector should:
- Mobilize revenue and additional financing to support the recovery.
- Implement needed reforms to promote inclusive and sustainable growth.
- Achieve diversification.
- Tackle the climate crisis and transition to a green economy.

Concessional lending toolkit:
- The IMF "reformed its concessional lending toolkit for low-income countries to provide greater flexibility to the access levels."
Emergency financing and debt relief:
- Provided emergency financing to countries with urgent balance of payments needs.
- Provided debt service relief under the Catastrophe Containment and Relief Trust (CCRT) to the most vulnerable countries.
Special Drawing Rights (SDR) allocation:
- Described as "historical."
- "About US$34 billion were allocated to countries in Africa," with allocation "equivalent in some countries to as much as 6 percent of GDP."
Resilience and Sustainability Trust (RST):
- The IMF has established an RST, "which will be operationalized later this year, funded by SDRs voluntarily channeled from donor countries."
- Purpose: complement the IMF’s existing lending toolkit by providing longer-term affordable financing to address longer-term challenges, including climate change and pandemic preparedness.
- Initial financing pledges: "The ACG welcomed initial pledges of about $40 billion toward financing the RST" and "encouraged other contributors to make additional pledges" to position the RST to support African countries.

Observations:
- Rising debt vulnerabilities of developing countries, particularly in Africa, need to be addressed.
- There is a need to "find effective ways to alleviate the weight of the debt service."
Institutional and procedural priorities:
- Continue working together to strengthen the debt resolution architecture.
- Improve the Common Framework for debt treatments.
- Provide technical assistance within the Multipronged Approach (MPA) to address remaining capacity requirements.

Press Release No. 22/130, April 23, 2022