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Growth in sub-Saharan Africa is expected to slow down to 3.6 percent in 2023, due to the drying up of aid and access to private finance. This was announced by the IMF recently at a press briefing.
The IMF warned that If measures are not taken, the shortage of funding may force countries to reduce fiscal resources for critical development like health, education, and infrastructure.
The IMF expects growth in the region to decelerate from 3.9 percent to 3.6 percent in 2023. This to a large extent reflects the big funding squeeze on the anvil, said Abebe Aemro Selassie, Director of the IMF’s African Department.
Sub-Saharan African countries lag significantly in revenue collections. The median tax ratio is only 13 percent of GDP in 2022, as compared to 18 percent in other emerging economies and developing countries. In developed economies, this ratio is 27 percent.
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The IMF official said that a number of reforms needed to be pursued to up the tax ratio such as strengthening the resilience of economies, evolving policies to insulate domestic economies from the external environment, and allowing exchange rates to adjust and interest rates to be recalibrated to address inflation.
He also pointed out that the IMF has provided the region with around US$50 billion dollar in financing since the start of the pandemic. He assured that the IMF would continue to work with the region to put in place the right type of policies that are suitable for each country’s needs.
