IMF Report: Sub-Saharan Africa is Facing an Unprecedented Health and Economic Crisis

The region’s economy is set to shrink by 1.6 percent in 2020, and real per capita income to fall by even more -- 3.9 percent on average.

IMF Report: Sub-Saharan Africa is Facing an Unprecedented Health and Economic Crisis

On April 15, 2020, the International Monetary Fund (IMF) released its latest Regional Economic Outlook for Sub-Saharan Africa. According to the report, Sub-Saharan Africa is facing an unprecedented health and economic crisis that threatens to reverse recent development progress across the region and may weigh on growth for years to come.

“The world is facing a serious challenge, and sub-Saharan Africa will not be spared,” said Abebe Aemro Selassie, Director of the IMF’s African Department. “All indications are that the COVID-19 pandemic will exact a heavy human toll and cause an acute economic crisis. The region is facing plummeting global growth, tighter financial conditions, a sharp decline in key export prices, and severe disruptions to economic activity from the measures that have had to be adopted to limit the viral outbreak. Consequently, we now project the region will shrink by 1.6 percent this year—the worst outcome on record."

“Shrinking incomes will worsen existing vulnerabilities, while containment measures and social distancing will inevitably jeopardize the livelihoods of countless people. Also, the pandemic is reaching the continent at a time when many countries have little room for maneuver in their budgets, making it more difficult for policymakers to respond.” 

Against this backdrop, Mr. Selassie called for decisive measures to limit the human and economic costs of the crisis;

1. "First and foremost, the immediate priority is to do whatever it takes to ramp up public health spending to contain the outbreak, regardless of a country’s budget."

2. "Second, substantial and timely support is crucial. Policies could include cash transfers or in-kind support to vulnerable households, including informal workers. They could also include targeted and temporary support to hard-hit sectors. The ability of countries to mount an adequate response will depend in large part on their access to concessional funding from the international community."

3. "Third, monetary and financial policy can also play an important role in sustaining firms and jobs."

He further added, “In support of these domestic measures, a coordinated effort by all development partners will be key. The Fund is working closely with our partners—the World Bank, the World Health Organization, the African Development Bank and the African Union—to respond swiftly and effectively to this crisis. The Fund is set to provide some US$11 billion to 32 sub-Saharan countries that have requested assistance in recent weeks, with disbursements to Burkina Faso, Chad, Gabon, Ghana, Madagascar, Niger, Rwanda, Senegal, and Togo already made."

“Immediate debt relief is also being provided for the poorest and most vulnerable countries through the IMF’s Catastrophe Containment and Relief Trust, freeing up resources for health and social protection spending. Together with the World Bank, the IMF is also making the case for debt relief from official bilateral creditors for those low-income countries that request forbearance." 

“This is an unprecedented crisis. And our member countries need us now more than ever. Together with our partners, we aim to help the region smooth the worst of this shock, ensuring that peoples’ lives and livelihoods are not destroyed forever.”

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IndraStra Global: IMF Report: Sub-Saharan Africa is Facing an Unprecedented Health and Economic Crisis
IMF Report: Sub-Saharan Africa is Facing an Unprecedented Health and Economic Crisis
The region’s economy is set to shrink by 1.6 percent in 2020, and real per capita income to fall by even more -- 3.9 percent on average.
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