Sub-Saharan Africa will need hundreds of billions of dollars and reforms that bring change for a resilient recovery from the damage wrought by the coronavirus pandemic, according to the International Monetary Fund (IMF).
Support from the international community that includes stepped-up debt relief, financing and capacity development will be needed, MD Kristalina Georgieva and Abebe Aemro Selassie, director of the lender’s Africa department, said on Tuesday in a blog post.
The IMF has approved more than $15 billion in financial assistance and debt-service relief to sub-Saharan African countries to offset the impact of the pandemic and “certainly will be doing more in the years ahead,” they said.
The regional economy will probably contract by 3.2% this year, before rebounding to grow by 3.4% in 2021, the IMF said in its World Economic Outlook published in June.
In addition to assistance from multilateral lenders, many African nations have taken advantage of the Group of 20 leading economies’ Debt-Service Suspension Initiative to free up funds to finance the fight against the pandemic.
While countries including South Africa and Ivory Coast announced fiscal-support packages, very little of that was new spending – and, as a ratio of GDP, it lagged advanced economies.
Policymakers must ensure that the fiscal support deployed to fight the virus also works toward building a smarter, greener and more equitable future, and implement reforms that encourage investment from the private sector, Georgieva and Selassie said.
“Important as external support will be, it will be neither effective nor sufficient unless policy-induced distortions that stymie private investment are eliminated or public finance management systems improve,” they said.
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