Transcript

Transcript of Press Briefing: Sub-Saharan Africa Regional Economic Outlook, October 2024

October 25, 2024

Participants:

• Abebe Aemro Selassie, Director, African Department, IMF
• Kwabena Akuamoah-Boateng, Communications Officer, IMF

MR. AKUAMOAH-BOATENG: Good morning, good afternoon, and good evening to everybody in the room and those joining us from around the world.  I am Kwabena Akuamoah-Boateng with the IMF's communications Department.  Welcome to this press briefing on the Regional Economic Outlook for Sub-Saharan Africa, and I'll be your moderator today. 

I am pleased to welcome Abebe Aemro Selassie, Director of the IMF’s African Department.  Abe, welcome.  Abe will give us opening remarks on the report which we just released, titled Reform Amid Great Expectations.  Before we turn it to Abe, just a reminder that we have simultaneous interpretation in English, Portuguese, and French online and also in the room.  The report and analytical notes are now available on our website@imf.org/Africa.  

MR. SELASSIE: Good morning.  Good afternoon to those watching us online.  And thank you, as Kwabena said, for joining us today for the release of the IMF's Regional Economic Outlook for Sub-Saharan Africa.  I would like to share a couple of perspectives on recent economic developments before taking your questions.  

The first point I would like to make is that economic growth in Sub-Saharan Africa remains subdued, particularly in per capita terms.  We are projecting growth this year at around 3.6 percent, the same as last year, with some signs that it is beginning to accelerate, and we're projecting that it will reach around 4.2 percent next year.  This space, needless to say, is not sufficient to reduce poverty or indeed to recover the lost ground in recent years, much less the developmental challenges that countries have been facing.  Still far below the 6.7 percent growth rates the region enjoyed until about a decade ago, of course. 

But as always, it is important to highlight the considerable differences in circumstances across the region.  In particular, the average [masks] quite a lot of variation.  For example, 9 out of the fastest, 29 out of the 20 fastest growing economies are in Sub-Saharan Africa, particularly those with more diversified structures which are doing well. 

The second point I want to stress is that we are seeing some improvement in macroeconomic imbalances.  Specifically, inflation continues to decline.  Budget deficits have begun to narrow, reverting to pre-crisis levels.  And debt-to-GDP ratios are also stabilizing, albeit at a high level.  And interest payments remain high.  

The third point I want to stress, and we touch on in our report also, is that the political and social environment facing governments as they have been implementing these difficult reforms remains, of course, difficult.  The cost-of-living crisis over the last several years that we've been talking about -- around the world has been particularly acute in Sub-Saharan Africa.  This, of course, has intensified strains on households who spend a very large share of income relative to other regions on food, for example.  Governments are also making fiscal adjustments at a time when financing remains difficult.  All of these are putting quite a lot of strain on government services and, indeed, you know, the population.  

Against the [inaudible] backdrop in our report, we discussed the tough balancing act that policymakers in the region face.  You know, one of these, of course, is to continue to sustain improvements in macroeconomic balances, make room to spend on development and social protection, and to do so, to do reforms that are socially and politically acceptable.  The latter, making reforms acceptable, requires quite a bit of communication, consultation, improved governance to build confidence, and, of course, measures to promote inclusive growth through job creation.  

Lastly, I would like to highlight that, you know, at the Fund, we have been doing our utmost, utmost, to provide the region with the resources that's needed to spread the period over which reforms can be made.  Specifically, since 2020, we have provided funding to the tune of $60 billion and stand ready to do more as and when countries ask.  

That said, our support, coming as it is against the backdrop of declining official development assistance, difficult market conditions, even if more recently a few countries have returned to market, also means that countries continue to face a very difficult time and a very difficult funding environment.  

Much work remains to be done, of course, in the region, by policymakers, by people in the region, but we remain extremely optimistic about the region's prospects.  And I have no doubt, no doubt, that this challenging period will also be overcome, and growth resuscitated. 

MR. AKUAMOAH-BOATENG: So, before we turn to the room for your questions, a few ground rules.  For those of you in the room, please raise your hand when you called upon.  Please identify yourself, your organization, and try as much as possible to stick to one question.  For those online, please put your questions in the chat or raise your hand and then we will come to you.  I will start from my right.  The gentleman then.  

QUESTIONER: I am a journalist working for the East African.   You mentioned about the economic growth in East Africa and especially that Sub-Saharan Africa is still remaining actually subdued.  Are you still optimistic about the economy back in the region?  And this takes me to my second question about the equity whereby these countries are saying about the interest rates and that there is no kind of equity.  What do you have to tell them?  

MR. AKUAMOAH-BOATENG: All right, thank you.  Lady, the lady in the pink.

QUESTIONER: Good morning.  Thanks for taking my question.  One question about the region and another about South Africa itself.   On the region, in the context of the growing protectionism that the IMF has warned of, how do you see the region's trade and export prospects?  And in particular, with a U.S. election coming up, could increase protectionism be bad for measures such as the AGOA, the African Growth and Opportunity Act, which African countries have taken advantage of?  Then, on South Africa, the Fund -- is more pessimistic than South Africa's own government on the prospects for our public finances.  Whereas our own treasury sees debt stabilizing in the next fiscal year, the Fund doesn't see it stabilizing out over the forecast period, as I understand it.  So why are you so much more pessimistic and also does the Fund, have you changed your view on the outlook for South Africa at all following our elections and the formation of a national unity government?  Thank you.  

MR. SELASSIE: Thank you.  On growth prospects, as I said, we continue to see … aggregate numbers continue to show that growth is very tepid.  But as I said in my opening remarks also.  So as always, you know, there is quite a bit of heterogeneity in the, in the growth numbers, quite a lot of differentiation.   And I think East Africa has some of the fastest grow, faster growing economies.  I mean, the countries like Rwanda, of course, Uganda, they're all, you know, growth is holding up relative to, say, oil exporters, some of our largest economies where gross remains very weak.  

On, I think, the other question you had is about the cost of borrowing for countries. I mean, it is worrisome how high it remains.  One good sign is that, you know, at least some countries have started to return to markets, but at more expensive levels than in the past.  And in any case, you know, borrowing from capital markets, particularly at these high rates, can only -- can only be used for a small sliver of borrowing, perhaps for refinancing needs.  If the totality of borrowing -- if the average cost of borrowing is going to be at that level, I think it would be difficult for countries.  

What can be done about it?  As always, kind of, you know, no silver bullet.  We've been making the case for continued increased availability of concessional financing for countries in the region.   We think that is one thing that can be done.  Countries themselves, of course, have -- a lot of reforms that they could pursue to try and reduce imbalances and thus recourse to borrowing.  So, a mix of policy measures.

On trade and the geopolitical environment.   I think first the point is I'm not sure kind of the region will be spared if continue -- geopolitical tensions continue.  To amplify there almost certainly will reduce growth rates, affect financial flows, and that is going to have some effect on the region, even if most countries in the region are -- have limited integration into global supply chains.  

Second, I do hope that even in an environment where geopolitical tensions may go up a notch, there remains the will that initiatives like AGOA will be protected and renewed.  I know discussions are underway and for renewal next year and we do hope that that this can happen.  It certainly is one of the more important things that can be done.  Particularly all the more so, I think -- if more concessional financing is not going to be made available to open avenues for countries to at least use trade -- as an engine of growth and creating employment which is so desperately needed.  

Turning to South Africa.  Just, I think, a couple of things here.  First, I think there's an issue of vintage.  That is our Article IV mission was I think much earlier this year and economic developments since then have been better.  So we have a team going out next month which will be doing a comprehensive assessment at the latest data and -- we’ll take that into account.  

Second, you know, some of the differences probably also are on account of the external environment.  You know, with cost now with funding, with the easing cycle that we've seen, the revision to interest rates, global path for financing conditions, I think those also will have material impact, particularly for South Africa -- on the debt outlook.  We are very, very hopeful that the direction of policies in South Africa will remain one where, you know, the imbalances that have built up last couple of years are being addressed.  And we are looking forward to having good discussions in the next month.  

MR. AKUAMOAH-BOATENG: All right, thanks Abe.   We'll take another two from here.   Lady in the head wrap.  

QUESTIONER: With the recent Staff-Level Agreement, how will the new ECF program address Sierra Leone's debt vulnerabilities and fiscal challenges, especially given the high domestic T-bill rates and the fiscal pressures from loss making entities like the Electricity Distribution and Supply Agency.  

MR. AKUAMOAH-BOATENG: All right.  Let's take the gentleman.  

QUESTIONER: You cited the need for communication and transparency.  My question is: I would like to know how critical the corruption diagnostic program is for Kenya's ongoing IMF program which ends in April next year.  And secondly, Kenya reckons or believes that your debt sustainability indicators should also include remittances in addition to tourism receipts for more accurate assessment of the debt situation. Will this be taken in -- into account going forward?  And in your opinion is Kenya's Debt sustainable? 

MR. AKUAMOAH-BOATENG: Any more questions on Kenya?   No.  Okay, so we take the Sierra Leone and Kenya questions and then we'll come back to the room.  

MR. SELASSIE: On Sierra Leone, really, I am very happy that we're going to be able to move forward with this ECF program which will, which we are hoping to take to the board very soon.  What will little help do?  I mean, first and foremost, you know, the program itself, the contents of the policies are of course, something that have been designed by the government.   And what we are doing is providing, you know, policy advice as the government's been developing these programs, about best practices in other countries, what could be done in a different way.   And second, providing financing so that the reforms can be implemented over a period of time.  

And as you noted, the level of debt in Sierra Leone is particularly elevated.  The cost of domestic borrowing is high and very limited access to capital markets abroad.   So, what we are providing is, of course, zero-interest financing over a substantial period of time to help ease the cost of financing that the government is facing.  We hope these resources can be used to roll out social protection programs to foster more development spending and keep the government's cost of borrowing as low as possible.  This is exactly why countries turn to us.  And, you know, I think there's a moment right now in -- in Sierra Leone -- to build on the stabilization efforts of the last couple of years and reinvigorate growth.  So, we're very much looking to supporting the government's reform efforts.

On Kenya.  You know, I think the government has been out to explain, to say that better effort could have been done to explain why it is that -- that particular taxes, particular reforms are being pursued.  That's the point that -- we’re noting -- on communication.  Second, also, I think there's a lot of questions remain about how well, how efficiently and effectively government resources are being used.  Our experience, and I think this is also common sense, is that government, you know, people's willingness to pay more taxes is directly correlated to assurances that the resources are being used effectively and transparently.  So, I think promoting transparency, showing to what purpose government resources are being used in a -- in a much more effective way than has been the case -- would help in the long run effort to generate tax revenue.  

The diagnostic assessment that the Kenya government has requested, we strongly welcome.  We will be sending a team out to basically, you know, see what areas of weaknesses, strengths Kenya has relative to other countries in terms of, you know, how public accounts are accounted for.  And, you know, we're looking forward to working with the government in a very constructive way and providing some ideas, some thoughts on what could be done.  

And then on the debt issue.  As we've said in the past, you know, debt in Kenya, there's always, you know, there's -- we've always been of the view that it's closer to a liquidity challenge -- than a solvency challenge.  There are a lot of strengths in this economy and what we do when we work with governments, of course, is always to continue updating this assessment.  Our assessment to date is that debt remains sustainable, but there has to be a path that will assure that specifically the primary balance needs to move towards the debt stabilizing level.  We, of course, are always looking at ways to make sure that our assessment is a reasonable one.  So, you know, I think we already include remittances, but if there are other signs of strength in the economy, we will include that.  So, this debt assessment is an ongoing thing rather than a one-off thing.  

MR. AKUAMOAH-BOATENG: All right, thank you.   Let's go online before we come back to the room.  I see Julian Samboko.  Please unmute, identify yourself, and then ask your question.  Please limit it to one if you can.  Thanks, Julian.  Please go ahead.  

QUESTIONER: Thank you very much.  Can you hear me?  

MR. AKUAMOAH-BOATENG: Yes, we can.  Please go ahead.  

QUESTIONER: Thank you very much.  Quick question to Abe on Kenya.  The government is in talks with the UAE for a 1.5-billion-dollar facility.   The National Treasury has indicated that IMF Had initially expressed misgivings about Kenya going this route with the UAE.  Could you give us some color around what sticky issues the IMF saw in this arrangement?   Thank you.  

MR. AKUAMOAH-BOATENG: All right, thank you.   We also have Idris online.   Idris.  Sorry, Idris, we can't hear you.  If you could unmute, identify yourself, and ask your question.  

QUESTIONER: Yes, sorry, sorry.  Thank you so much.  Well, I would like to bring you back in Senegal.  Recent news has highlighted the depth situation that is more significant than what was reflected in the official data.  So, this raises two questions -- to the Director.   Beyond the debate on who is responsible for what.  Can we expect the IMF often turned to as last resort by countries to intervene in this context and to support Senegal, who apparently is facing tough difficulties?   And the second question is what lessons can be drawn from the situation with the view to improve the transparency of public finance data in the Sub-Saharan region.  Thanks.  

MR. AKUAMOAH-BOATENG: All right, thank you.   We have [Matsu Lee] online.  

QUESTIONER: Yeah, sure.  I wanted to ask -- about Sudan and what the IMF thinks of the impact on the economy of the conflict there and -- the status of the IMF programs there.  And if you could, any update on Ethiopia and its negotiations with private creditors, particularly VR Capital.  Thanks a lot.   

MR. AKUAMOAH-BOATENG: All right, thank you.   Abe.  

MR. SELASSIE: Okay.  On the -- on Kenya and in particular, borrowing, including -- some new borrowing that has been in the news.  You know, it goes back to the point I made earlier about making sure that the average -- the weighted average cost of borrowing, the borrowing cost on average, remains at a healthy level for all countries.  It's not just for Kenya, but all countries.  So, if countries are borrowing at 8, 9, 10 percent for the entirety of their debt stock, you pretty soon are going to get into debt problems because that will tend to be much higher than the growth rates that that countries have.  

So, a really important reason why we keep talking about this funding squeeze, why there is need for increased concessional financing to support the region reach its development funding goals, why we ourselves provide financing, is of course, to lower -- the weighted average cost of funding.  So, it's not so much that a single loan will be the cause of debt problems, but the totality, the total average cost has to be as low as possible.  So, it's in that context that we often will flag concerns if a particular loan is going to be -- tilting the average cost of funding to a higher-level causing debt problems down the road.  So, I am sure it's in that context that discussions will be -- that any discussions that have been had with the team have taken place.

On Senegal.  As we've said, we strongly welcome -- the, you know, pursuit by the new administration of the WAEMU wide requirements for each coming -- each new administration to do an audit of public accounts.  This is, I think, really a great -- a great policy that the WAEMU countries have.  

Second, we also, in particular welcome the government's readiness to, you know, make public its findings.  But this work, I understand, is still ongoing.  So we are going to wait until the [inaudible] has, you know, finalized the numbers and also hopefully identified how the overruns in spending, how the debt numbers fail to capture the true extent of the numbers.   So, we're going to wait until -- we have the full findings before we can hear anything further.  

Needless to say, we stand ready to work with governments that are always ready to tackle the challenges that they are facing.  So, this is no different for Senegal.  And as I said, we welcome the openness, the transparency the government has shown, and we will work with them to find a way forward.   

And in terms of lessons for countries and the region, I think it goes back to this key point that if the social contract in our countries is going to be strengthened, if we're going to have better governance, improved governance, improved development outcomes, it really is important that we have, you know, public accounts that are as transparent as true as possible.  We of course do our utmost to push for the publication of accounts for all, you know, public data, all public finance data being made available.  And I think it shows us that we need to continue a lot more work here and we'll do so in the coming years.  

MR. AKUAMOAH-BOATENG: Okay.  Take the lady in black, first row.  

QUESTIONER: Hi, good morning.  Thank you for taking my questions.  My name is Nume Ekeghe from This Day Newspaper Nigeria.  What is -- my questions are: what are the IMF's projections for the social impact of false subsidy removal and forex unification in Nigeria, particularly in terms of poverty, inequality, and food security?  Also beyond the immediate impact of the fuel subsidy removal and forest unification, what is IMF's medium term outlook for Nigeria's economy?  And then lastly, can you give, can IMF give like recommendations on how to strengthen Nigeria's fiscal policy and improve revenue considering all the reforms that I just spoke about now?   Thank you.

MR. AKUAMOAH-BOATENG: Thank you.  Any other questions on Nigeria?  Okay, gentleman in the middle, purple tie.  

QUESTIONER: Nigeria, of course, has been mentioned and has gone through two really pertinent reforms in terms of liberalization of foreign exchange market and also the removal of fuel subsidies.  Considering that when the IMF does extend facilities to countries, it does request that certain reforms have to take place in terms of reducing subsidies.  So, since Nigeria has already done that, there has been some talk around Nigeria approaching the IMF for funding.  Again, this is within business circles, not at the government level.  I just wanted to get some kind of statement from the IMF in terms of whether or not Nigeria has approached you and, you know, what that would entail. 

MR. AKUAMOAH-BOATENG: All right, thank you.   Maybe one more question on Nigeria and then we can come.  Green suits in front.  

QUESTIONER: Thanks, Governor.  Good morning.  My name is Onyinye Nwachukwu from Business Day Nigeria.  Still staying on the reforms which the IMF has been recommending for a very, very long time now.  Yeah, we all know that the subsidy has finally been removed and then the effects, you know, have been, you know, unified and all that.  But I've seen tremendous pain on Nigerians, you know, since these reforms, you know, were announced.  So, I just wanted to find out, you know, whether you think anything has gone wrong with these reforms -- one.  And then whether you still stand by those recommendations that pushed these reforms.

MR. AKUAMOAH-BOATENG: Okay.

QUESTIONER: And then what more do you think, like she asked, the government should be doing urgently to remedy the tough situation back home?  

MR. SELASSIE: Thanks.  So you know, just to be very clear, it wasn't the case that when, you know, subsidies were significant when the exchange rate was being kept at an artificial level.  There were other imbalances that were present in the economy, including very, very high levels of inflation.  Reserves were, you know, being run out.  Government's ability to borrow from markets was of course, heavily compromised.  And -- this was the really difficult trade off that governments in Nigeria over recent years have faced.  This inability to have a healthy macroeconomic situation, one that will foster growth, diversification, resources to invest in health and education that were needed because so much resources were being used by fuel subsidies.  

So that is the first point I want to make that it's not - I'm not sure, kind of the situation predating the recent changes was a sustainable one.  It wasn't sustainable.  You know, and the pressures that were being felt were even if there was not outright macroeconomic default, you know, or there was less investment in health, less investment in education, so there was pain being felt elsewhere.  

Second, the immediate effect, of course, of doing these changes always, always causes quite a lot of dislocation.  You have noted the inflation, and you know, we have absolutely, absolutely no doubt that conditions at the moment are extremely, extremely difficult.  On top of a situation, as I noted earlier, where, you know, the effect of the food price shock in recent years has been quite acute in our countries, in our region.   Food accounts for a higher share of the consumption basket.  Now you have fuel prices going up, which will have percolated -- additional effect on other essential goods.  So all of this well recognized.  

It's also why we have been on record again and again and again about the need to put in place measures -- to target the most vulnerable and do, you know, social protection over the years as these reforms have been implemented.  I know there are some steps that are being taken in that direction, but I think really some of the savings from the fuel subsidy reforms of the exchange rate subsidy being removed should, in our view, be directed to helping cushion the effect on the most vulnerable households.  

There was a question about whether there has been a request for funding from the IMF.  No, there has not been a request for funding from the IMF from Nigeria.  But to just be very clear, you know, this is also a question that has come up in the context of some other countries.  You know, if and when countries turn to us, we hope that they do so having a very clear plan of how they want, you know, what kind of economic reforms they want to pursue, and turning to us would be a way to help reduce the funding costs that they face, as I said earlier.  It's the right of every country that's in good standing with the IMF to borrow and have access to the concessional financing that we provide.  So, but there is no request for funding from Nigeria at the moment.  

MR. AKUAMOAH-BOATENG: We shall go to the side of the room.  Gentlemen on the first row.  

QUESTIONER: My first question has to do with in your World Economic Outlook report, you projected about 3 percent for Ghana.  But when your staff came to Accra, Ghana for their tariff review program, they were optimistic about revising Ghana's growth outlook.  Has that been done as we speak right now?  And what is the outlook for Ghana as well?  And also, about the debt restructuring program.  Ghana is almost through your level, the commercial, bilateral creditors.  Is it enough to still put us on that path to debt sustainability or there are still some concerns?   And also, as we go forward, what do you think will be the major threats to the Ghanaian economy?  Thank you.   

MR. AKUAMOAH-BOATENG: All right, thank you.   Any other questions on Ghana?   Ghana?  Yes, lady in the red jacket.  

QUESTIONER: Hello Good morning.  My name is Naa Ashorkor Cabutey Adodoadji I work with Asaase Radio in Accra, Ghana.  Yes, as he said, I would like to know what policy advice you have given to the government development after completing the debt restructuring program.  Thank you.  

MR. AKUAMOAH-BOATENG: Thank you.  We can take one more on Ghana.  

QUESTIONERAnd still on this, I would want to find out, you know, what the -- how is the Fund working with Ghanaian authorities to ensure a sustainable balance between the necessary government spending and debt sustainability.  And how will this influence the quest for government to get onto the international market again for borrowing?  

MR. SELASSIE: So, on the  growth projection, I think being with the press, you understand deadlines, and the deadline for submission of the WEO numbers, because we have to do it for the entire membership, was, I think, in, you know, mid- to late-August.  So, at that time, our projections were 3 percent in Ghana.  The team subsequently went out, of course, to Accra, and you know, as is always the case, did updates and projections, and I think we are now projecting closer to 4 percent.  So, that is the difference.  And you know, had we been going to, had the deadline been, you know, mid-October, I think the 4 percent number would have been the one that would have shown in the WEO print.  

You know, I think Ghana, of course, has gone through a really wrenching period of macroeconomic instability and, you know, decided to move forward with a comprehensive set of reforms.  I think these reforms are beginning to bear fruit, and that's the growth numbers that we're seeing.  And going forward, really, it is continuing to strike a healthy balance between the need -- continued need to address all the development spending needs Ghana has with avoiding debt sustainability.  So that requires, you know, maintaining modest levels of fiscal deficits going through an election cycle now, avoiding the pitfalls to which Ghana -- has, you know, pitfalls Ghana has faced in election cycles in the past.  These will all be critical to making sure that, you know, going forward, Ghana can have a healthy macroeconomic situation.

On debt.  Yes, I think, you know, really, again, faster progress than we, you know, fast progress, which is really, really welcome.  But there remains, you know, a significant amount of debt that needs to be agreed on consistent with the parameters of the program with non-Eurobond commercial creditors.  And we hope that progress can be made on that in the coming weeks and months.  I think the government needs to stay strong and make sure that it gets the best deal that it can -- for the people of Ghana, and we hope they do so.  

MR. AKUAMOAH-BOATENG: I know we have a lot of hands in the room, but I see some hands online.  Let's just go online and I'll come back to you in the room 

QUESTIONER: Hello, can you hear me?  

MR. AKUAMOAH-BOATENG: Yes, we can hear you.  

QUESTIONER: Okay, thank you.  

MR. AKUAMOAH-BOATENG: Looks like we lost him.

QUESTIONER: So, the Regional Economic Outlook it spoke about the sort of difficult balancing act policymakers are facing and the need for sort of carefully designed communications to sort of set out the need for reforms that may be unpopular.  Many of these reforms are sort of typically espoused or supported by the IMF, whether as part of a program or not.  And there is, you know, often sort of criticism when, you know, when these reforms are painful, as Abe mentioned.  There is often sort of criticism of the IMF.  But the report sort of didn't really seem to me to sort of talk about, you know, the IMF's role in this and in communicating about these reforms.  So, I was wondering, is the IMF prepared to sort of discuss some more its role of sort of, you know, prior actions?  For example, when it comes to programs the mild reform milestones that countries need to hit as part of programs and to address the sort of perception of these reforms and that they may be sort of unpopular, quote unquote, -- IMF pushed reform.  

QUESTIONER: So, I was -- my question was about the climate change topic, which poses a significant risk to the African economy.  And the IMF has established its Resilience and Sustainability Trust, to which several African countries have already subscribed.  But this assistance alone does not appear to be sufficient given the magnitude of the need. So, I wanted to know, to this date, what is the assessment of this program and how is the IMF positioning itself to help African countries mobilize the full financing they require? 

MR. AKUAMOAH-BOATENG: So, Abe, there's another question which we received, which is written from.  His question is, what is the general outlook for Lusophone countries in Sub-Saharan Africa?  

MR. SELASSIE: Rachel, on the question on the role of the IMF as we work with governments when they're doing implement, you know, difficult reforms, I think, you know, again, there's a lot of humility that is needed as outsiders when we go and work with countries who are trying to advance very, very difficult reforms.  

The first point to say is that I think over the years we have learned a lot about, you know, what types of reform programs work, what don't, what puts strain on inequality.  And we make sure to inform the advice that we give to countries on these issues.  For example, you know, we increasingly emphasize how important it is to avoid doing spending compression, spending cuts and instead spend more on, you know, to where fiscal adjustment is necessary to raise more money by, to do this, to affect this adjustment by doing revenue mobilization.  This is again, you know, drawing on the lessons where cuts in spending have in the past affected spending on health, on education, really, really crucial areas -- for developing countries to help sustain growth and improve social outcomes.  

Second, we have also been out there for the last several years, particularly on the part of our work in low-income countries, the Africa region, using phrases like “brutal funding squeeze.”  It is not common at the Fund that we use phrases like that.  We have been saying this exactly because countries are, you know, policymakers are in a really, really invidious position.  They have very high levels of debt.  They cannot get any access to rolling over, doing any financing of this debt.   So, and you know, we have been making the case and providing resources, but also urging others to come with us so that the reforms, the efforts that countries have to make can be spread over many years.  So again, this is another example of why we have been, you know, advocating the way we have about difficult funding environment facing countries.  

And then last but not least, you know, we always advise countries and work with countries to make sure that reforms can be as sensitive as possible to the most vulnerable.  In particular, we work on rolling out social programs.  So, we do our utmost to make sure that, you know, programs are as reasonable as possible.  And that's what I can tell you about how we approach the reforms that we call for.

On climate change.  You know, again, we are very proud as an institution to be probably one of the only sources of incremental additional financing that's being made available to countries to pursue their climate resilience work.  So the Resilience of Sustainability Trust, which is funded by -- from the re-channeling of SDRs amounting to about 45 billion, I would say is one of the, you know, incremental, again, incremental, not moving money between pots as tends to happen on climate finance, but new sources of financing that is out there.  And we already have 11 programs in the region where we're working with countries to improve their policies to adapt to climate change.  

But more resources are needed, and we're doing a lot of work also to make sure that we can help catalyze more resources.  So, we have financing roundtables, which we've been preparing and working with country authorities in several countries.  The most recent one in Madagascar.  It's long road to go.  Long road to go.  But I think both the core developmental challenge but as well as the climate change challenges our countries face will require quite a lot of reforms and international support.  

Oh, Lusophone countries.  I think quite a lot of heterogeneity and in those country cases.   You know, from Angola, Mozambique, Cape Verde, São Tomé, of course.  So, I think we can follow up with specific numbers later.  

MR. AKUAMOAH-BOATENG: We're almost out of time, so I will take one last round of questions, starting from the lady in the front.   Please keep your questions brief so that we can move on.  

QUESTIONER: Thank you, Kwabena, for taking my question.  Mr. Selassie, I will take it from a different slant.  You talked about, you acknowledged the cost-of-living crisis, as well as you mentioned that we should do socially acceptable reforms.  Most of the reforms that African governments are doing are not socially acceptable.  As it were in the case of Nigeria, you addressed that earlier, which is making the Fund very unpopular.  And not just the IMF, the World Bank itself.  So, what is the advice of the Fund to governments, as it were, across Africa in terms of spending?  Because even most of the savings that are gotten from removal of subsidy from petrol and all of that, the citizens still do not see it.  So, what is the fund's advice then?  Secondly, the Intergovernmental Group of 24 had a press briefing here on Tuesday and they've given the IMF four key reforms as to how they want to see the IMF.  You are celebrating 80 years this year.  They want to see the IMF serve the needs of developing and poorer countries.  As the Director of African Department, what is your outlook at least for the next decade?  

MR. AKUAMOAH-BOATENG: We take the lady in the front.  Let's keep the questions as brief as possible.  

QUESTIONER: My question is regarding the title of the report, Reforms Amidst Great Expectations.  And there's been a lot of questions regarding the challenges that Africa are facing and some of the reforms that are being implemented.  So, could you talk about the Great Expectations and the countries that you forecast above 5?  What are they doing right?  And what lessons can other ministers as well as bankers learn from there?  

MR. AKUAMOAH-BOATENG: One last question.   Gentleman with the blue shirt, and then we wrap up.  

QUESTIONER: Two quick ones.  One on Zambia.  Do you expect to extend -- the program there after the drought they've had?  The second is on the DSDR paper that came out on Wednesday.  There's talks about liquidity measures or measures to improve liquidity for countries, like you were talking about Kenya, for instance.  But it was pretty light on detail.  Could you give us an idea about what sort of tools that could be?  

MR. SELASSIE: A lot of good questions.  So, you know, on the work we do.  Nigeria is a case where we don't have a program.  So, the work we do is regular Article IV surveillance.  It's no different to the dialogue we have maybe about SWANA region or other countries, Japan or the UK and we put out, we, of course, express our thoughts on what would be a better use of public resources.  And I think over the years, what Nigeria has been thirsting for is a lot of investment in infrastructure, a lot of, you know, investment that's required in health, education, and the like.  I think those have been as strong views expressed in Nigeria, as -- continued sustaining subsidies for fuel and other areas.  

At the end of the day, these are really deeply domestic and deeply political choices that governments have to make.  They have made choices that we think move in the direction of better use of public resources in a way that will unlock this incredible potential that the economy has to make it more dynamic to invest and to facilitate growth.  And we welcome those reforms while also recognizing, as I said earlier, that it has entailed quite a lot of cost, interim adjustment costs, and a better job, as I said, can be done by rolling out social protection, particularly for the most vulnerable.  

On the reforms that are ongoing at the IMF.  I think, you know, this last four or five years have been a period of incredible, incredible change in our institution.  One, these changes have been in the direction of making it possible to do more work in the region, to have, you know, much more intensified engagement in the region through all manner of ways.  Including the Resilience and Sustainability Trust that I noted earlier.  So to my mind, these changes are already underway.  More, of course, needs to be done.  We don't ever rest on our laurels, and, you know, we are consulting incessantly with the membership, with various groups to make sure that we are moving in a direction where we are addressing the needs of countries, the needs of the membership.  So that's continuing to happen, and that will be taking place. 

Just to give you a small example, you know, one of the things we've been very heavily involved in recent years is this high-level working group that African Ministers have created to come up with reform proposals.  And those are the kind of discussions that have contributed to changes in the, you know, surcharges, additional charges on some borrowing that other additional countries have, the length of programs, et cetera.  So we are doing quite a lot of work listening to the membership.  

Why did we call it Reforms Amidst Great Expectations?  I think, you know, when we've been -- when we've seen the protests that have been happening on the streets, you know, the, you know, the dialogue, the chatter, one thing that has struck us really is that how much, you know, how great the expectations of the young people is of our governments, of us also, of course, as an institution, but of governments itself.  This is really something to revel in.  You know, people wanting to hold governments more to account, people wanting better outcomes, better use of public resources.  And it was a nod -- to that why, you know. we titled the report Reforms Amid Great Expectations.

On Zambia, it really goes back to the issue of climate change.  The Minister was showing me some pictures of Vic Falls, which really, I've never seen -- never seen Victoria Falls as dry as he showed the pictures, he showed me and brings through in a very stark way, having been there a couple of times.   Shows what kind of wrenching damage climate change is doing to the continent.  By the same token, he was telling me the Northern part of the country has been flooded like historic floods there.  

So, you know, we are very cognizant.  We are working on recalibrating the program and providing more financing, augmenting the program to make sure that the government has additional resources it can use to defray some of the effects of this on the most vulnerable households.  

And then lastly, on the SDR paper, I think this is one of our frequent papers that looks at global liquidity conditions and makes an assessment of what needs to be done.  I would disentangle this from other work and ideas that have been floating about what more can be done to use SDR for other purposes.  That discussion, I think, has yet to begin in earnest.  

MR. AKUAMOAH-BOATENG: All right, thank you very much, Abe.  Unfortunately, that's all the time we have.  Now if you have questions, we aren't able to get to, please do send them to me or anybody on our team, and we'll try and get back to you as soon as possible.  And a reminder, you can find the reports, the analytical notes, and the related materials on our website@imf.org/Africa.  

The meetings continue later this morning we have our press briefing for the Western Hemisphere Department.  And then in the afternoon we have our IMFC press briefing.   And then tomorrow morning we have the African Finance Minister's press briefing.  

On behalf of Abe, the African and Communications Departments, we thank you all for coming and see you next time.  

MR. SELASSIE: Thank you.