Press Release No. 15/174

Press Release: African Consultative Group Meeting: Statement by the Chairman of the African Caucus and the Managing Director of the IMF

April 19, 2015

Mr. Armando Manuel, Chairman of the African Caucus, and Ms. Christine Lagarde, Managing Director of the International Monetary Fund (IMF), co-chaired the African Consultative Group meeting today at the IMF Headquarters. They issued the following statement after the conclusion of the Group’s meeting in Washington.¹

“We had very productive discussions on the short- and medium-term prospects for Africa highlighting the policy challenges as well as the continued opportunities. We concurred that the economic outlook remains promising, with economic activity projected to increase at an annual rate of just over 4 percent in 2015 in an environment of continued moderate inflation.

“We noted that the declining oil prices—while beneficial for the continent’s oil importing countries—pose significant challenges for Africa’s oil exporting economies, and will require prompt fiscal adjustment in those countries, as well as greater exchange rate flexibility where feasible.

“We also noted that a key downside risk to the outlook is the unwinding of unconventional monetary policies, and the potential impact this may have on borrowing costs. In this regard, African countries should continue with their efforts to preserve macroeconomic stability and build resilience. For most countries, finding the right balance between strengthening reserve positions, raising private and public investment, and ensuring appropriate levels of social spending will be critical in the period ahead, while for some countries it will also be important to strengthen their fiscal positions and contain debt accumulation. In addition, we look forward to concerted efforts to restore peace and stability in countries that have been affected by political instability or conflict.

“Looking forward, we welcomed the efforts of the international community to seek agreement on a new set of Sustainable Development Goals, and we discussed the ways in which the Fund can help its members attain those goals including in the key area of financing for development.”

Mr. Manuel noted that “Sub-Saharan Africa has so far sustained a healthy growth rate. We wish to take this opportunity to thank the IMF for its invaluable assistance in helping the countries affected by Ebola to contain this crisis and urge continued close engagement of the international community in supporting the rebuilding process. In the near term, Africa is suffering from the decline in commodity prices, and remains vulnerable to a further slowdown in emerging economies, particularly China. Against this backdrop, African oil exporters recognize the need for prompt fiscal adjustment, while Africa’s oil importers intend to take this opportunity to reduce costly energy subsidies and create the fiscal space to support their development objectives. In addition, access to funding could become more challenging as the United States unwinds its unconventional monetary policy. In this context, African countries look to the Fund to continue its effective engagement with Africa. Going forward, as we seek to achieve the Sustainable Development Goals, we agreed that it will be important for governments to maintain macroeconomic stability, strengthen institutions and the business environment, address critical infrastructure gaps, expand access to financial services in our economies, and seek to ensure that growth is both broad-based and inclusive.”

In closing, Ms. Lagarde said “The IMF will remain closely engaged with our African members, supporting them with financial resources and technical advice as needed. In particular, we will continue devoting resources to assist North African countries in transition and fragile states to ensure economic stability and build resilience. At the same time, the Fund will continue to strengthen the analytical underpinnings of its policy advice and instruments, and seek to adapt its policies to the evolving needs of the membership.”

¹ The African Consultative Group comprises the Fund Governors of a subset of 15 African countries belonging to the African Caucus (African finance ministers and central bank governors) and Fund management. It was formed in 2007 to enhance the IMF’s policy dialogue with the African Caucus. The Group meets at the time of the Spring Meetings, while Fund Management meets with the full membership of the African Caucus at the time of the Annual Meetings.