The latest IMF report on Sub-Saharan Africa makes grim reading with the regional outlook deteriorating sharply since the April 2020 Regional Economic Outlook report release.
Sub-Saharan Africa’s economy is now expected to contract by 3.2% this year, double the contraction expected in April. This is set to be the worst outcome on record.
“This is a fast-moving crisis,” said Abebe Aemro Selassie, director of the IMF’s African Department.
“And recent developments suggest that the downturn will be significantly larger than we had anticipated only 10 weeks ago.”
“On the pandemic, the growth rate of new cases has slowed slightly since April, and a number of countries have cautiously eased some of their containment measures. But region-wide the pandemic is still in its exponential phase—Sub-Saharan Africa has recently exceeded more than a quarter of a million confirmed cases, and new cases are still doubling every 2-3 weeks. Given the region’s already-stretched healthcare capacity, the immediate priority is still to protect lives and to do whatever it takes to strengthen local health systems and contain the outbreak.”
Against this backdrop, Selassie said the immediate priority was the preservation of health and lives.
“But looking even further forward, and once the crisis has waned, countries should refocus their attention on transforming their economies, creating jobs, and boosting living standards—clawing back some of the ground lost during the current crisis.”
The IMF has modified the Catastrophe Containment and Relief Trust (CCRT) to provide immediate debt service relief for its poorest and most vulnerable members, and has also doubled its emergency lending facilities. So far, 29 countries in the region have received around $10 billion in funding through these facilities, or through expanded access under existing programmes. In April, the G20 also announced the Debt Service Suspension Initiative (DSSI), which allows the world’s poorest countries—most of them in Africa—to suspend up to US$14 billion of debt service payments due between May and December this year.
“Nonetheless, more international support is needed urgently. This year alone countries in the region will face additional financing needs of over $110 billion, and despite the efforts outlined above, $44 billion of this has yet to be financed.”