African Caucus Meeting: Statement by the Chairman of the African Caucus and the Managing Director of the IMF
IMF News, October 24, 2023
Source details
- Canonical URL
- African Caucus Meeting: Statement by the Chairman of the African Caucus and the Managing Director of the IMF
Other formats
Bibliographic details
- Published: October 24, 2023
Meeting context
- Co-chairs: Mr. Olavo Correia (Cabo Verde’s Vice Prime Minister and Minister of Finance and the First Vice Chair of the African Caucus) and Ms. Kristalina Georgieva (Managing Director of the International Monetary Fund (IMF)).
- Meeting date and location: Tuesday, October 10, 2023, in Marrakech.
- Press Release No. 23/359.
Economic assessment of Africa
- “This year has been a difficult year for Africa.”
- Key challenges identified:
- Emergence from the COVID-19 pandemic.
- High borrowing costs (“funding squeeze”).
- A cost-of-living crisis.
- Increased political instability and deteriorating security in several countries, underscoring the need to address persistent fragility.
- Positive signals for 2024: “recent data, and the outlook for 2024 provide hopeful signals that economic activity is gradually strengthening with stronger growth, falling inflation, and narrowing fiscal imbalance.”
Policy priorities agreed by the Group
- Overarching aims:
- Solidify the ongoing economic recovery.
- Rebuild buffers.
- Invest in the future to improve living standards.
- Monetary and exchange rate policy:
- “In countries with elevated and rising inflation, policy settings should be sufficiently tight to bring it down.”
- “The exchange rate, where appropriate, should be allowed to play its shock absorber role while mitigating second-round effects of depreciation.”
- Fiscal policy:
- “Fiscal policy should continue consolidating public finances and reducing debt sustainability risks while providing targeted social assistance to the most vulnerable.”
- Structural and development priorities:
- In resource-intensive countries: “investing in education, managing better resource-based wealth, accelerating diversification will help improve living standards.”
- Domestic resource mobilization:
- “The Group also agreed to enhance domestic resource mobilization.”
- Emphasis on identifying international best practices, leveraging specific country experiences, and enhancing governance and accountability.
- Accelerate efforts to strengthen tax systems and to combating tax evasion and illicit financial flows.
Financing needs, concessional finance, and climate considerations
- Need to scale up concessional financing, including to support climate change adaptation and mitigation.
- Drivers of financing gaps:
- Large infrastructure financing needs.
- Social protection gaps.
- Exacerbation by climate change.
- Climate justice observation: “While the African continent had a minor contribution to the stocks of greenhouse gases in the atmosphere, it is already bearing and is deemed to bear the largest costs from climate change.”
- Fiscal constraints: “Fiscal space remains constrained as buffers have been depleted during the crisis.”
- Role of private sector: “Private sector participation will also be essential to fill the funding gaps.”
IMF instruments, reforms, and operational support
- Poverty Reduction and Growth Trust (PRGT):
- IMF is initiating “a comprehensive review of the Poverty Reduction and Growth Trust (PRGT) facilities and financing with the objectives of ensuring its long-term financial sustainability and meeting strong demand.”
- “After successfully reaching the fundraising target,” the review is being initiated.
- “Achieving additional pledges to replenish the Fund’s PRGT is also key to securing much-needed concessional resources and unifying access limits between the IMF general resource and the PRGT.”
- Resilience and Sustainability Trust (RST):
- “The Resilience and Sustainability Trust (RST) is operational, providing longer-term affordable financing to address longer-term challenges, including climate change and pandemic preparedness.”
- “To date, six out of the eleven countries benefiting from the RST are in Africa.”
- The Group “welcomed the substantial progress made on RST fundraising and urged potential contributors to go beyond the original target to meet growing needs.”
- Quotas and governance:
- “Completing the 16th General Review of Quotas by end-2023 is vital to preserve the IMF’s role at the center of the global financial safety net.”
- An increase in the overall size of the IMF’s quota resources would “reduce reliance on borrowed resources and strengthen the IMF as a truly quota-based institution.”
- The membership is committed to continue the process of quota realignment towards developing economies.
- The Group calls “for the creation of a 25 th chair on the IMF Executive Board to be attributed to Sub-Saharan Africa to improve voice and representation at the IMF.”
- Capacity development and analysis:
- “The IMF will continue to strengthen the analytical underpinnings of its policy advice, provide significant capacity development to its African members to help preserve macroeconomic and financial stability and build economic resilience.”
Statement issued at the conclusion of the African Consultative Group meeting in Marrakech; IMF Communications Department, October 24, 2023.