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The International Monetary Fund (IMF) warned in its report on the region’s economic outlook that Sub-Saharan Africa is facing a major financing shortage that would affect the region’s growth.
The International Monetary Fund (IMF) warned in its report on the region’s economic outlook that Sub-Saharan Africa is facing a major financing shortage that would affect the region’s growth. Also, the multilateral organization said that accumulating public debt is further delaying the region’s economic recovery. The IMF called for prudent monetary policy tightening to come out of the difficult situation.
The Outlook report said that growth in sub-Saharan Africa is expected to slow to 3.6 percent on account of the big funding squeeze, which is on account of the drying up of aid and lack of access to private finance. The report highlighted that this is the second consecutive year of an aggregate decline in the region’s growth.
If no measures are taken, this shortage of funding may force countries to reduce fiscal resources for critical development like health, education, and infrastructure, holding the region back from developing its true potential, the report warned.
Between 2020 and 2022 the IMF provided more than US$50 billion to the region. It is more than twice the amount disbursed in any 10-year period since the 1990s. The IMF has lending arrangements with more than 21 countries in the region as of March 2023. The IMF is in the process of considering more countries from the region for financial help and bailing them out of financial distress.
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The IMF exhorted the region to consolidate public finances and strengthen public financial management, contain inflation, allow exchange rates to adjust, and ensure tackling climate change as the way forward to come out of the difficult situation.
