Typical street scene in Santa Ana, El Salvador. (Photo: iStock)
IMF Survey : Drought, Insecurity Add to Commodity Woes—African Ministers
April 16, 2016
- Falling commodity prices for some have slashed revenues by more than half
- Severe drought conditions, security issues adding to fiscal pressures
- Hardest hit reaching out to international community for more support
The dramatic decline in commodity prices combined with severe drought conditions and rising insecurity has hit many countries hard, African finance ministers said during the IMF-World Bank Spring Meetings in Washington.
Dried lake bed in Mali. Droughts are increasingly frequent in Africa, and contribute to poverty and insecurity (photo: Karen Kasmauski/Corbis)
AFRICAN FINANCE MINISTERS
Ministers from four strongly affected countries told a press briefing that weak global demand is taking a toll on growth prospects for the region, forcing significant fiscal adjustments.
Chad has lost over 60 percent of their budget revenue from the slump in oil prices, and the country’s Finance Minister, Mahamat Allamine Bourma Treye, said insecurity in the Lake Chad region caused by Boko Haram and an ISIS offshoot in the north has triggered a massive influx of refugees, putting added pressure on the country’s limited resources.
“This security situation has brought about a new problem, because we are no longer able to trade with neighboring countries. We have major agricultural production which is usually traded with Niger, but now the border is hermetically closed,” Treye said. “Thus far, assistance by the international community is very significant, but nonetheless insufficient given the tremendous challenges Chad faces.”
Climate change having an impact
Swaziland’s Finance Minister, Martin Dlamini, said the effects of climate change have caused macro-critical challenges for the country, noting that the frequency of natural disasters, such as droughts and floods, had intensified in recent years.
“Swaziland, like many other countries in southern Africa region is currently facing severe drought conditions, affecting agriculture—especially subsistence and livestock farming, disrupting water and power supply, fueling inflation and adding to fiscal pressures,” Dlamini said.
Swaziland is facing a 30 percent decline in trade revenues due to the slowdown in neighboring South Africa, also partly caused by the drought.
Burkina Faso’s Finance Minister, Rosine Sori-Coulibaly, said a shorter rainy season has forced them to control the use of water, especially for agriculture.
“We are one of the region’s biggest producers of Cotton, which provides a livelihood to 2-3 million people,” Coulibaly said, noting the country is also feeling the effects of lower cotton prices.
Reaching out for assistance
Somalia’s Finance Minister, Mohamed Aden Ibrahim, said Somalia has abundant natural resources, but the potential for its economic development largely depends on its ability to manage the country’s external debt of more than $5 billion.
“Without addressing that issue we will not have real growth in Somalia,” Ibrahim said. “For that reason, we have engaged with the IMF three years ago, and last July concluded our first country review in 26 years. Also, Somalia concluded an agreement with the Fund only one week ago that we hope will eventually make financial resources available to us.”
Ibrahim told the room of reporters that after decades of conflict, Somalia is working hard to rebuild its economy and institutions.
“I’d like to ask you today to adjust your lenses. Somalia is no longer the Somalia of 10 or 20 years ago. Somalia is moving forward, and it’s a positive story, a story of progress,” Ibrahim said, adding that he is looking forward to a peaceful and smooth presidential election later this year.