The sub-Saharan Africa region’s economic outlook will grow by 3.4 percent in 2021, up from 3.1 percent projected in October, and supported by improved exports and commodity prices, along with a recovery in both private consumption and investment. The IMF announced today (Thursday, April 15th) in a press briefing in Washington, DC.
“The region's economy contracted by 1.9 percent in 2020, while this is somewhat less severe, about one percentage points less than we projected in October, you know, 2 percent contraction. It's still the worst outcome on record. Fortunately, the region will recover some ground this year and is projected to expand by 3.4 percent. Even so, per capita output is not expected to return to 2019 levels until after 2022.” Said Abebe Aemro Selassie, Director of the IMF's African Department.
Sub-Saharan Africa is still facing a record health and economic crisis.
Since October 2020’s Regional Economic Outlook, the region has confronted a second COVID-19 wave that swiftly outpaced the scale and speed of the first.
While this episode has eased for now, many countries in the region are bracing for further waves, particularly as access to vaccines remains scant.
“As we have observed throughout the pandemic, the outlook is subject to greater than usual uncertainty. The main risk is that the region could face repeated COVID-19 episodes before vaccines become available. But there are a range of other factors, such as limited external concessional financing, political instability, domestic security or climate events that could also jeopardize the recovery.” emphasized Selassie.
Selassie explained that during the height of the crisis, policy discussion was often tailored to different phases of the pandemic: immediate actions to save lives and livelihoods; near-term initiatives to secure a recovery once the acute phase of the crisis had passed; and then longer-term measures to build a more resilient and sustainable economy. But for sub-Saharan Africa, all these phases may overlap, leaving authorities in the position of trying to boost and rebuild their economies while simultaneously dealing with repeated outbreaks as they arise.
“The immediate recovery, of course, remains to save lives. This will require more spending to strengthen local health systems and containment efforts, as well as, of course, the vaccine rollout efforts that's needed. For most countries, the cost of vaccinating 60 percent of the population will require increasing health spending in a few cases by as much as 50 percent. The next priority is to reinforce the recovery and unlock the region's growth potential with bold and transformative reforms. These are more urgent than ever and include reforms to strengthen social protection systems, promote digitalization, improve transparency and governance, and mitigate climate change,” said Selassie.
To further assist with the region’s recovery, The IMF has already provided some relief under the Catastrophe Containment and Relief Trust (CCRT) to 22 sub-Saharan African countries. In addition, most sub-Saharan African countries have signed up for the Group of Twenty (G20) Debt Service Suspension Initiative (DSSI) which allows 73 countries to request suspension of debt-service payments to bilateral official creditors for a limited period on standardized repayments terms.
Selassie added that the new anticipated special drawing rights (SDR) general allocation would strengthen the region’s crisis response by swiftly boosting the reserves of all members in a transparent and accountable manner.
“Once our executive board has taken a final decision and, you know, required steps after that, we do hope that the general allocation just approved by the IMFC will allow about 23 billion SDRs to reach 45 countries in the region. So this will be very, very beneficial for countries to, you know, create fiscal space, the balance of payments, support that they need to get vaccines for example, and partly to pay for the part of the cost of vaccines and the like.” Said Selassie.
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