Sub-Saharan Africa: Navigating a Long Pandemic

IMF News, April 15, 2021

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Region projected to grow by 3.4 percent in 2021.
2020 recorded a ‑1.9 percent contraction—the worst on record.
Per capita output not expected to return to 2019 levels until after 2022.
In many countries, per capita income will not return to pre-crisis levels until 2025.
The number of extreme poor in sub-Saharan Africa is projected to have increased by more than 32 million.
Students missed 67 days of instruction, more than four times the level in advanced economies.
Sub-Saharan Africa will be the world’s slowest growing region in 2021.

Outlook subject to considerable uncertainty related to:
- the course of the pandemic,
- access to vaccines,
- the more challenging external financing environment.
Other risks that could jeopardize recovery:
- access to external financing,
- political instability,
- domestic security,
- climate shocks.
Positive contingent factor: faster‑than‑anticipated vaccine supply or rollout could boost near-term prospects.

Accelerated access to vaccines is critical to boost health and growth prospects.
Required actions:
- increased spending for vaccine rollouts,
- stronger local health systems,
- vigilant containment efforts.
Fiscal implication: for most countries, the cost of vaccinating 60 percent of the population will require up to 50 percent increase in health spending, and could exceed 2 percent of GDP in some countries.
International community role:
- ensure vaccine coverage for sub-Saharan Africa as a global public good,
- avoid restrictions on dissemination of vaccines or medical equipment,
- fully fund multilateral facilities such as COVAX,
- redistribute excess doses in wealthy countries quickly.

Three-pronged effort recommended:
- bold reforms to boost economic growth and diversification,
- fiscal measures to boost revenues and contain debt vulnerabilities,
- significant additional external concessional financing to support reform agenda.
Specific reform areas highlighted:
- digitalization,
- trade integration,
- competition,
- transparency and governance,
- climate-change mitigation.
Fiscal policy focus:
- mobilize domestic revenues,
- prioritize essential spending,
- more effectively manage public debt to create fiscal space for recovery investments and put debt on a sustainable footing.
Immediate priority emphasized: save lives through health spending and vaccine procurement/distribution.

Seventeen countries in the region are at high risk of, or already in, debt distress and will need deeper support.
G-20 Debt Service Suspension Initiative (DSSI) impact:
- delivered breathing space alleviating debt service pressures in the order of $1.8 billion through December 2020,
- potential for another $4.8 billion in the first half of 2021.
For deeper relief, the G-20 Common Framework for Debt Treatment can provide coordinated solutions tailored to each economy’s circumstances.
Additional external funding needs to help boost pandemic response, maintain reserves, and accelerate income convergence:
- sub-Saharan Africa’s low-income countries face about $245 billion over the next 5 years,
- $425 billion for the whole region over the next 5 years.
IMF role and liquidity support:
- a potential general allocation of special drawing rights from the IMF would help provide liquidity to most vulnerable sub-Saharan African countries.
These financing issues will be discussed at the High-Level International Summit on Financing for Africa in May.

Press Release No. 21/108 — Sub-Saharan Africa: Navigating a Long Pandemic (April 15, 2021), IMF Communications Department.