Sub-Sahara Africa is headed for its worst economic decline on record, the IMF reported Thursday (Oct. 22) in Washington, DC.
The IMF forecasts a 3 percent decline in sub-Saharan Africa’s GDP in 2020 announced Abebe Aemro Selassie, Director of the African Department at the IMF.
The Regional Economic Outlook for Sub-Sahara Africa predicts that the drop will be even larger for economies dependent on tourism and commodity exports. However, growth in the region should rebound modestly in 2021 to 3.1 percent, but for many countries, a return to 2019 levels won’t occur until 2022-24.
“We expect economic activity for sub-Saharan Africa to contract by 3 percent this year. No country has remained untouched by the crisis. The largest impact on growth this year will be on tourism-dependent economies but oil-exporting countries in the region, the commodity intensive countries, have also been hit hard and growth, even in the more diversified economies, will also be significantly impacted this year,” said Selassie.
He highlighted the role the IMF has played in taking swift action to cover a significant portion of the region’s needs.
“The IMF has moved swiftly and disbursed about 17 billion dollars so far in 2020, about more than 10 times the normal amount we disburse each year. And this money, of course, has been intended to cover the region's near-term needs and to catalyze additional support from the rest of the international community,” said Selassie.
He also addressed concerns that money may be diverted by corruption. Selassie stressed the IMF’s role in improving governance and advocating for transparency on how the resources are being used and the importance of making the data available to all in the public domain.
“What we can do is bring about a lot of transparency in terms of how resources are used. This is a core function that we do through our work here in helping strengthen countries, public finance, management systems. But at a time like this, I think when resources are being provided quickly, it's really important also that you know, that there is transparency in how these resources are being used. We want this information to be in the public domain so that civil society organizations, anti-corruption agencies can all scrutinize how these resources are being used and this is an area of what we are very, very diligently following on and that's our contribution to making sure that there continues to be improved governance,” said Selassie.
The crisis has jeopardized years of hard-won development gains and upended the lives and livelihoods of millions of people in the sub-Saharan Africa region, said Selassie in his concluding remarks as he advised policymakers to prioritize saving lives and protecting livelihoods and using fiscal and monetary policies to support the region’s recovery.
“Policymakers face quite difficult tradeoffs where the pandemic continues to linger, the priority remains, of course, to save lives and protect livelihoods. And for countries where the pandemic is under more control, using fiscal and monetary policy to support the recovery has to be balanced with the need to keep an eye on that sustainability and external stability,” said Selassie
To read the full report, click here