Mr Abebe Selassie, the Director, International Monetary Fund (IMF), African Department, says tackling food insecurity should be the first policy priority for governments in Sub-Saharan Africa (SSA).
Selassie said this in his opening remarks at the News Conference on the October Regional Economic Outlook for SSA at the IMF/World Bank Annual Meetings held in Washington DC on Friday.
According to him, the region’s economic outlook showed that growth is expected to slow down sharply from 4.7 per cent in 2021 to 3.6 per cent in 2022.
He said that growth is expected to remain subdued in 2023, averaging only 3.7 per cent.
“The most recent turmoil is just the latest in a series of shocks over the past few years, all of which have taken a toll on the region’s policy space. Rising food and energy prices are striking the region’s most vulnerable. ”
Selassie said public debt had reached almost 60 per cent of Gross Domestic Product (GDP), leaving the region with debt levels last seen in the early 2000s.
“In fact, 19 of the region’s 35 low-income countries are now in debt distress or at high risk of distress, and inflation rates are in double digits for 40 per cent of the region’s economies.”
“Against this backdrop, and with limited options, many countries find themselves pushed closer to the edge.”
He said for authorities, this was the most challenging policy environment in years, adding that policymakers in SSA need to deal immediately with economic and humanitarian crises as they emerge.
Selassie said policymakers should do this while also building buffers and reducing vulnerability to future shocks as best they could.
In addition, he said the region’s prosperity would require high-quality growth, so policies must also set the stage for a sustainable recovery.
“With these goals in mind, the October Regional Outlook emphasises four policy priorities.
“The first priority is to tackle food insecurity, protecting the most vulnerable with a focus on channelling scarce resources to those who need them the most.
“Next, authorities will need to continue consolidating public finances amid more difficult funding conditions.”
Selassie said this would require continued revenue mobilisation; a tighter focus on critical spending priorities, increased efficiency, and prudent debt management within credible medium-term fiscal frameworks.
He said the next priority was for authorities to take steps to contain inflation, by cautiously and gradually increasing interest rates, without jeopardising the economic recovery or undermining longer-term credibility.
Selassie said lastly, policymakers should continue setting the stage for high-quality growth, in the context of accelerating climate change.
“Investment in resilient and green infrastructure is critical, not least to take advantage of the region’s formidable endowment of renewable energy resources.
He stressed the critical importance of international assistance, saying budget support including official development financing and humanitarian assistance had been declining over the past two decades.
Selassie said this had been going on while the region’s immediate and longer-term development needs had been rising, particularly in areas such as food security and climate change.
“More is needed, and as we look forward to the forthcoming UN Climate Change Conference in Egypt (COP-27), it should be noted that increased support including more concessional finance is necessary.
“This is for SSA to pursue a low-carbon and climate-resilient growth path.”
He said the IMF was helping to catalyse new capital inflows by boosting local capacity on climate strategy issues while flexibly expanding its lending facilities.
Selassie said the IMF was expanding its lending facilities with its Resilience and Sustainability Trust to provide affordable financing to address longer-term structural challenges, including climate change.
“I will note in this regard that we have recently come to a Staff Level Agreement with Rwanda on a potential arrangement under this facility.
” Most recently, we have inaugurated a new food shock window under our emergency lending facilities, which will help qualifying members mitigate the impact of the current emergency.
He said the IMF had also provided close to 50 billion dollars in financial support to SSA since the beginning of the pandemic.
“With help, SSA will be poised to fulfil the promise of the African century, contributing to a more prosperous, greener future for the region and the world.