## Sub-Saharan Africa: A Cautious Reopening

_IMF News, June 29, 2020_

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**Canonical URL:** [Sub-Saharan Africa: A Cautious Reopening](https://www.imf.org/en/news/articles/2020/06/27/pr20249-sub-saharan-africa-a-cautious-reopening)

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## Bibliographic details
- Published: June 29, 2020

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### Economic outlook and impact
- Regional growth is now expected to contract by 3.2 percent in 2020; double the contraction expected in April.
- The contraction is "set to be the worst outcome on record."
- The downturn has deteriorated sharply since the April 2020 Regional Economic Outlook report release.
- The crisis will contribute to poverty increase this year.
- Countries in the region have announced COVID-related fiscal packages averaging 3 percent of GDP.
- Fiscal responses have often come at the expense of other priorities, such as public investment, and are markedly less than the response seen in other emerging markets or advanced economies.

### Pandemic status and health system constraints
- The growth rate of new COVID infections has slowed somewhat since April, allowing some countries to gradually ease containment measures.
- Regionwide, the pandemic is still in its exponential phase—Sub-Saharan Africa has recently exceeded more than a quarter of a million confirmed cases, and new cases are still doubling every 2-3 weeks.
- Given the region’s already-stretched healthcare capacity, the immediate priority is to protect lives and to strengthen local health systems and contain the outbreak.

### Labor market and social protection challenges
- Around ninety percent of non-agricultural employment is in the informal sector, where participants are usually not covered by the social safety net.
- A large proportion of informal activity centers on the provision of services, which have been particularly hard hit by the crisis.
- Informal workers typically have few savings and limited access to finance, making sustained lockdowns especially difficult.
- Many authorities have temporarily expanded safety nets using home-grown, often innovative approaches to ensure transfers reach as much of their population as possible, but resources are limited and cannot offset the full impact of the crisis.

### Policy responses to date
- Monetary and prudential policies have been eased, including a mix of reduced policy rates, added injections of liquidity, greater exchange-rate flexibility, and temporary relaxation of regulatory and prudential norms, depending on country circumstances.
- On the fiscal side, collapsing tax revenues and elevated pre-crisis debt levels have constrained the ability of governments to increase spending.

### Policy priorities and recommendations
- Immediate priority: preservation of health and lives; strengthen local health systems and containment efforts.
- As recovery begins, shift from broad fiscal support to more affordable, targeted policies concentrating on:
  - The poorest households.
  - Sectors hit hardest by the crisis.
- Once the crisis wanes, refocus on transforming economies, creating jobs, and boosting living standards.
- Restore fiscal positions to a path consistent with debt sustainability through:
  - Revenue-mobilization reforms.
  - Debt-management reforms.
  - Public financial management reforms.
- Promote private-sector investment and a business environment conducive to new ideas and opportunities (including the digital revolution).

### International support, lending, and financing gaps
- The IMF modified the Catastrophe Containment and Relief Trust (CCRT) to provide immediate debt service relief for its poorest and most vulnerable members, and doubled its emergency lending facilities.
- So far, 29 countries in the region have received around $10 billion in funding through these facilities, or through expanded access under existing programs.
- In April, the G20 announced the Debt Service Suspension Initiative (DSSI), which allows the world’s poorest countries—most of them in Africa—to suspend up to US$14 billion of debt service payments due between May and December this year.
- Despite these measures, more international support is needed urgently:
  - Countries in the region face additional financing needs of over $110 billion this year.
  - $44 billion of this financing has yet to be financed.

*Source: Sub-Saharan Africa: A Cautious Reopening, Press Release No. 20/249 (June 29, 2020), IMF Communications Department.*

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## References

- [Abebe Aemro Selassie](https://www.imf.org/en/About/senior-officials/Bios/abebe-selassie)
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_Source: https://www.imf.org/en/news/articles/2020/06/27/pr20249-sub-saharan-africa-a-cautious-reopening_