## Transcript of African Department April 2024 Press Briefing

_IMF News, April 19, 2024_

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## Bibliographic details
- Published: April 19, 2024

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### Overall regional outlook (Regional Economic Outlook for Sub‑Saharan Africa — “Tepid and Pricey Recovery”)
- Growth expectations:
  - Growth expected to accelerate to 3.8 percent from 3.4 percent last year.
  - Growth peaked at almost 10 percent in late 2022.
- Inflation and monetary policy:
  - Inflation has been halved in the early months of this year, attributed to decisive central bank actions and slower food price increases.
  - Continued focus recommended on reducing inflation wherever inflation remains well above target.
- Public debt and fiscal dynamics:
  - Median public debt stabilizing at around 60 percent of GDP, halting a 10 year upward trend.
  - Government interest payments now account for about 12 percent of revenues, more than double the level a decade ago.
  - Official development assistance and concessional financing have become much more scarce.
- IMF financing and global conditions:
  - IMF has provided $58 billion in financing to the region since the start of the Pandemic.
  - Global financial conditions easing has allowed a few countries to return to international markets after a two‑year hiatus, but borrowing costs remain high for many.
  - Resilience and Sustainability Trust: about $40 billion coming from the re‑channeling of SDRs (as cited for climate/resilience financing).

### Key policy priorities and recommendations
- For national governments:
  - Continue to improve public finances, with emphasis on domestic revenue mobilization to meet development spending needs amid scarce concessional financing and high borrowing costs.
  - Sustain focus on reducing inflation where it remains well above target.
  - Implement reforms to enhance skills development, spur innovation, improve the business environment, and promote trade integration to secure more affordable and stable financing.
  - Prioritize spending and protect development outlays while pursuing fiscal consolidation (domestic revenue mobilization–based consolidation emphasized).
- On debt restructuring and creditor coordination:
  - The G20 Common Framework has enabled progress (e.g., Zambia), though restructurings remain time‑consuming and painful.
  - Negotiations with official bilateral and commercial creditors are ongoing in cases such as Ghana and Zambia; IMF staff‑level agreement remains the key component for program reviews and disbursements.
  - Preferred creditor status cannot be unilaterally declared; recognition depends on other official creditors and specific institutional characteristics.
- On concessional IMF support and lending policy:
  - IMF refines policies to support timely and efficient lending; recent reforms aim to preserve support capacity and are not targeted at any single creditor (China described as an important development partner).
  - PRGT facility cited as offering 0 percent interest borrowing for low‑income countries.

### Country‑specific points and questions addressed
- Malawi
  - IMF maintained Malawi’s growth focus for 2024 at 3.3 percent.
  - El Niño impacts (crop output reductions cited as “somewhere around 20 or 30 percent”) and flooding are significant shocks; IMF to send a team for assessment.
  - Debt situation: official creditors provided financing assurances, but other creditors have not; unresolved creditor issues impede IMF financing effectiveness.
- Ghana
  - As of the briefing, there is no MOU with bilateral creditors; intensive discussions ongoing and financing assurances remain in effect.
  - Staff‑level agreement reached for IMF review; disbursement of $360 million referenced as pending and not expected to be prevented by lack of agreement with Eurobond holders.
  - IMF provided input on commercial creditor terms shared by Ghana; government chose not to pursue a deal not consistent with program parameters.
- Zambia
  - Progress under the Common Framework noted; official creditors signed off and government announced a deal with Eurobond creditors.
- Nigeria
  - IMF emphasized role as countercyclical financier during 2020–2021; IMF exposure in the region cited as about 3 percent of GDP, 4 percent of GDP at most (median exposure).
  - Nigeria: tax revenue to GDP noted as only 8‑9 percent, implying need to increase non‑oil revenue and diversify the economy.
  - Subsidy reform: generalized fuel subsidies are highly regressive; IMF supports removal of broad subsidies coupled with social protection for vulnerable households.
- Cameroon and Cote d’Ivoire
  - Some countries have returned to markets; IMF cautions full recourse to high‑cost market financing is not ideal and advises keeping the weighted average cost of financing low.
  - Cameroon supported via IMF program; emphasis has been on concessional financing rather than market financing.
- Rwanda
  - Question noted projected debt increase by $8 billion between 2023 and 2028; IMF response: debt sustainability assessments consider growth, tax revenue performance, and other variables — IMF assessment cited that debt remains sustainable for Rwanda and fiscal policies are moving in the right direction.
  - IMF advocates transparency and governance in the use of resources.
- Democratic Republic of Congo (DRC)
  - DRC three‑year IMF program of $1.5 billion is concluding; program credited with contributing to macro stability. IMF open to new program discussions if requested.
- Ethiopia
  - No substantive update provided on negotiations; IMF speaker recused and indicated mission chief would follow up.

### Structural challenges highlighted
- Revenue mobilization constraints:
  - Multiple impediments: informality, technical capacity gaps in tax administration and payment systems, extensive tax expenditures and exemptions, and political constraints on taxation.
  - Recommendation: improve tax administration, digitize payment systems, reduce unwarranted tax expenditures, and broaden the tax base while protecting equity.
- Climate shocks and resilience:
  - Recent climate events (El Niño, floods) pose heightened risks and underscore need for resilience financing and support.
  - IMF’s Resilience and Sustainability Trust presented as a major concessional financing source for climate and resilience needs.

### Operational and institutional points
- Debt relief mechanisms:
  - Common Framework important for coordinating official creditors; restructurings require time and creditor cooperation.
  - No unilateral recognition of preferred creditor status for newly formed multilateral alliances; recognition depends on official creditor practice and institutional characteristics.
- IMF lending posture:
  - IMF stands ready to support countries and has adapted policies to provide financing when possible even if creditor negotiations are incomplete, subject to program parameters and staff‑level agreements.

*Transcript of African Department April 19, 2024 Press Briefing — IMF Communications Department*

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## References

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