In the face of inflation, the International Monetary Fund encourages African governments to support families

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At the Hamraween market in Mogadishu, Somalia, on April 2, 2022.

that it “Shock increases shock”, Summarizes Kristalina Georgieva, Managing Director of the International Monetary Fund (IMF). As the COVID-19 pandemic begins to recede, African economies are bearing the brunt of the consequences of the war in Ukraine. Prices of energy and food products have risen since the start of the Russian offensive on February 24, exacerbating inflationary tensions that were already affecting most African countries. According to the economic forecasts published on Thursday, April 28, by the International Monetary Fund, this “Inflation is expected to remain high in the region in 2022, at 12.2%, and then gradually decline to reach 9.6% in 2023.”

Sub-Saharan Africa was given only a short respite. “At the end of 2021, there was a very strong momentum of economic recovery in the region,” Details of the report’s director, Baba Ndiaye, division chief in the IMF’s Africa Department: Growth forecast has been revised upwards from 3.7% to 4.5%. But that momentum has stopped working. The growth rate is expected to be only 3.8% in 2022. Of course, there is great variation between countries. »

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Of the 45 countries in Sub-Saharan Africa, eight are oil exporters and can hope to turn the increase in fuel prices into financial windfalls. The budget revenue for 2022 for the countries involved, Nigeria and Angola at the fore, has been revised upwards by 2.1 points by the International Monetary Fund. But the other 37 will bear the brunt of the negative consequences of this increase.

“All the inhabitants will suffer, Economist warns. Without well-established social safety nets, we can expect to exacerbate poverty, inequality and social tensions, with the risk of political instability. This is what worries us. »

example of togo

The IMF is usually reluctant to pump public money, so it has urged governments to protect the most vulnerable families with targeted aid. “We must reallocate some items of the current budget to countries that have no fiscal room to maneuver, Baba Ndiaye acknowledges. Or resort to subsidies, as was the case in Togo. »

Lomé created Novissi in 2020, a social assistance program through cash transfers aimed at supporting workers in the informal sector deprived of income due to the pandemic. Using satellite imagery and artificial intelligence, Novisi has been able to map the most vulnerable families. According to program data, 11.4 billion CFA francs (about 17.4 million euros) were distributed to 567,000 people between April and June 2020.

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Be careful, however, warns the IMF, to stick to limited timely targeted subsidies, to limit the negative impact on debt dynamics. The report notes that public debt rates, exacerbated by the pandemic, are at their highest levels since the turn of the century, and 20 low-income countries are currently in debt distress or highly vulnerable to debt distress. It is difficult under these circumstances to obtain loans from capital markets or international institutions. “Governments You will have to perform a difficult balancing act,” Baba Ndiaye admits.

debt issue

The countries of the continent will not be able to overcome this new crisis without the direct support of the international community: in the form of aid to restructure their debts, first, but also financial donations in the case of the most indebted countries. . Allocating $23 billion [environ 21,7 milliards d’euros] In SDR [DTS] From the International Monetary Fund to the region in 2021 has provided much-needed support to consolidate external positions and finance urgent spending during the pandemic, The report mentions. Another milestone is the G-20 commitment to transfer $100 billion in SDRs to vulnerable countries. »

It will then be time to think, in the longer term, about the resilience of African economies. Which, according to the International Monetary Fund, will necessarily go through massive industrialization on the continent, which at the moment is still heavily dependent on its exports of raw materials. To support emerging industries, the report calls for harnessing the potential of the private sector in the form of research and development assistance or support for start-up incubators.

“All of these strategies have worked in the past, Baba Ndiaye explains. Mauritius has been able to diversify its economy in this way, as have Rwanda and Burkina Faso. With regard to loans directed to public or semi-governmental institutions, on the other hand, the experience was less conclusive. »

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The International Monetary Fund is ultimately placing most of its hopes in the Continental Free Trade Area (ZLEC). [Sa] Successful implementation will strongly enhance the region’s growth and competitiveness “,” The report indicates. The Continental Free Trade Area could be the largest free trade area in the world, with a market of 1.2 billion consumers and a gross domestic product of $2.5 trillion. Above all, it will enable Sub-Saharan Africa to integrate into global value chains, not only as a region that provides raw materials, but as a source of lastly manufactured goods and products.

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