Introductory Remarks at the IMF’s African Department Press Briefing
October 25, 2024
As Prepared for Delivery
Good morning, or good afternoon to those of you joining us online from Africa and beyond. Thank you for joining us today for the release of the October IMF Regional Economic Outlook for sub-Saharan Africa.
Before we begin and take your questions, I would like to share some thoughts on the current economic developments in the region.
The first point I would like to make is that economic growth in sub-Saharan Africa remains subdued, especially in per capita terms.
We are projecting growth of 3.6 percent this year, the same as last year, with some signs of a pickup to 4.2 percent next year. This pace is not sufficient to significantly reduce poverty or to recover ground lost in recent years, let alone address the substantial developmental challenges ahead. It is also still far from the 6-7 percent growth rates the region enjoyed until about a decade ago.
But as always, it is important to highlight the considerable differences across countries in the region. Despite lackluster average growth, nine of the world's 20 fastest-growing economies are in sub-Saharan Africa—and those with more diversified economic structures are the ones doing better. These countries continue to experience strong growth. In contrast, in many resource intensive countries, growth is very anemic and poverty is rising sharply.
The second point I want to make is that we are seeing some improvement in macroeconomic imbalances. Inflation continues to decline, and budget deficits have begun to narrow, reverting to pre-crisis levels. Debt-to-GDP ratios are also stabilizing albeit at a high level, which are positive signs for the region's economic health.
However, a third point I would like to stress is the challenging political and social backdrop against which governments are implementing much-needed reforms. The cost-of-living crisis, particularly due to higher food prices, has been more acute in our region. And this has intensified the strain on households who spend a larger share of household expenses on food. Governments are making fiscal adjustments by increasing revenue and compressing spending. But elevated interest burdens continue to strain public finances and they add to the sense that government services are not improving or even deteriorating.
Against this backdrop, our report discusses the tough balancing act that policymakers face:
- Pursing macroeconomic stability;
- while meeting development needs, including strengthening social safety nets to protect the most vulnerable;
- and designing reforms that are socially and politically acceptable.
This latter point—making reforms acceptable—requires effective communication and consultation, improved governance to rebuild public trust, and measures that help promote inclusive growth through job creation.
I would also like to highlight the intensified engagement of the Fund in the region. Our involvement is at one of the highest levels in recent history, with numerous ongoing programs and financial arrangements. Since 2020, the Fund has made available over $60 billion in financing for the region.
However, declining official development assistance is challenging the effectiveness of our support. While countries like Benin, Côte d'Ivoire, Kenya, Senegal, and Cameroon have returned to markets this year, access for many other countries remains limited, and financing conditions remain costly and difficult. This forces countries to make significant adjustments with limited external financing.
Much work remains to be done to reinvigorate reforms and tap into the region's tremendous potential. We delve into these topics in our upcoming Regional Economic Outlook, where we discuss policy considerations for calibrating strategies amid diverse circumstances and constrained financing.
Thank you for your attention. I am now happy to take your questions.