## IMF Sets Out Policy Steps to Reduce Vulnerabilities and Raise Sub-Saharan Africa’s Medium-Term Growth

_IMF News, May 8, 2018_

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**Canonical URL:** [IMF Sets Out Policy Steps to Reduce Vulnerabilities and Raise Sub-Saharan Africa’s Medium-Term Growth](https://www.imf.org/en/news/articles/2018/05/08/pr18161-imf-sets-out-policy-steps-to-reduce-vulnerabilities-and-raise-sub-saharan-africa)

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## Bibliographic details
- Published: May 8, 2018

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### Growth outlook and country heterogeneity
- Growth in sub-Saharan Africa is projected to pick up modestly from 2⅔ percent in 2017 to 3½ percent in 2018.
- There is wide diversity in growth outcomes and prospects across countries in the region.
  - Several economies (such as Côte d’Ivoire, Ethiopia, Ghana, Senegal) are expected to maintain robust growth at about 6 percent or faster.
  - Many countries that saw per capita incomes fall in 2017 could witness a further decline in 2018.
- Drivers of the pickup:
  - Improved policies in some countries.
  - A more supportive external environment, including stronger global growth and higher commodity prices.
  - High volumes of capital inflows facilitating external adjustment and a buildup of reserves in some countries.

### Macroeconomic vulnerabilities and debt risks
- Macroeconomic vulnerabilities are rising in many countries as the required fiscal adjustment keeps getting delayed.
- Debt distress metrics:
  - 15 of the region’s 35 low income countries are now rated to be in debt distress or at high risk of debt distress.
- Higher debt levels have translated into a sharp increase in debt service in some countries, diverting resources from spending in health, education, and infrastructure.
- Based on current policies, average medium-term growth for the region is expected to plateau below 4 percent, falling far short of the levels envisaged five years ago and below what is needed for countries to achieve their Sustainable Development Goals.

### Policy recommendations and priorities
- Seize favorable external conditions to turn the current recovery into durable strong growth by implementing domestic policy steps to:
  - Reduce fiscal imbalances.
  - Raise medium-term growth potential.
- Fiscal policy:
  - Prudent fiscal policy, especially domestic revenue mobilization, is critical to make room for key infrastructure and social spending.
  - On average, there is scope to raise tax revenues by 3-5 percentage points of GDP over the next few years.
- Structural reforms to boost private investment and medium-term growth potential:
  - Nurture a dynamic private sector.
  - Boost intra-Africa trade.
  - Deepen access to credit.
- Harnessing demographic potential:
  - Sub-Saharan Africa remains a region with strong potential to harness its demographic dividend in the medium term—provided strong domestic policy measures are implemented.

### Key statements and contacts
- Abebe Aemro Selassie, Director of the IMF’s African Department:
  - “The growth pickup has been largely driven by improved policies in some countries, and a more supportive external environment, including stronger global growth and higher commodity prices.”
  - “Macroeconomic vulnerabilities are rising in many countries as the required fiscal adjustment keeps getting delayed.”
  - “Policy makers need to seize the opportunity provided by favorable external conditions to turn the current recovery into durable strong growth… Prudent fiscal policy, especially domestic revenue mobilization, is critical…”
- Press contact:
  - IMF Communications Department, MEDIA RELATIONS
  - PRESS OFFICER: Lucie Mboto Fouda
  - Phone: +1 202 623-7100
  - Email: MEDIA@IMF.org

*Press Release No. 18/161, May 8, 2018.*

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## References

- [Ghana and the IMF](http://www.imf.org/external/country/GHA/index.htm)
- [Senegal and the IMF](http://www.imf.org/external/country/SEN/index.htm)
- [The Federal Democratic Republic of Ethiopia and the IMF](http://www.imf.org/external/country/ETH/index.htm)
- [Press Releases](https://www.imf.org/en/news/searchnews)
- [PRESS CENTER](http://presscenter.imf.org/)
- [Regional Economic Outlook for sub-Saharan Africa](https://www.imf.org/en/publications/reo/ssa/issues/2018/04/30/sreo0518)
- [https://www.imf.org/en/home](https://www.imf.org/en/home)

_Source: https://www.imf.org/en/news/articles/2018/05/08/pr18161-imf-sets-out-policy-steps-to-reduce-vulnerabilities-and-raise-sub-saharan-africa_