Speech

Opening Remarks at Press Briefing on the Regional Economic Outlook for Sub-Saharan Africa

October 13, 2023

Good morning and welcome to the IMF’s briefing on the economic outlook for Sub-Saharan Africa.

The Annual Meetings are back on the African continent for the first time in 50 years, and as many of you know, the IMF launched on Tuesday a special issue bringing together data from the whole of Africa.

This morning I will be discussing the outlook for Sub-Saharan Africa.

2023 has been a difficult year for the region’s economy, with growth slowing to 3.3 percent from 4 percent in 2022.

But we are cautiously optimistic that there is light on the horizon. Growth is expected to rebound to 4 percent in 2024 and looks set to be broad based.

Importantly, authorities in many countries are working hard to address macroeconomic imbalances. Fiscal deficits, for example, have been narrowing, helping stabilize public debt in most countries.

These outcomes are encouraging, given strong external headwinds, such as slower international demand, expensive and difficult access to finance,

Still, it is too early to celebrate as many challenges lie ahead. The funding squeeze is not over, and while debt levels have stabilized, the cost of repayments has increased and high debt service ratios to revenue risk crowding out vital development spending.

Inflation is also still too high with one third of the countries having double digit inflation.

Policymakers in the region face some of the most daunting policy challenges in the world. They must try to maintain macroeconomic stability amid limited resources, meet urgent humanitarian and development needs, as they continue to face frequent shocks and fragility.

Against this backdrop, a strong focus on four interrelated policy priorities can help:

First, addressing inflation. In countries with elevated and rising inflation, further tightening may be warranted. Countries where inflation is both falling and on track to meet their target could pause monetary policy tightening. This matters because of the hugely adverse effect of inflation in eroding the incomes of the poorest in society.

Second, reducing debt vulnerabilities, while creating space for development spending. This requires a delicate balance between raising domestic revenues and reforms to foster growth.

Third, allowing the exchange rate to depreciate where needed. Avoiding depreciation pressures at the cost of exhausting scarce international reserves and eroding competitiveness often ends up causing more challenges later on.

And finally, continuing to increase investment in priority areas—health, education, and growth-enhancing infrastructure.

Our region is home to a young, fast growing and creative population, we must invest in them now to allow them to reach their full potential and for the 21th century to be the African century.