THE International Monetary Fund (IMF) has stated that inflation, debt, and forex crisis is pushing African economies to the brink.
The Managing Director of the IMF, Kristalina Georgieva, disclosed this in a report titled, ‘Facing a Darkening Economic Outlook: How the G20 Can Respond,’ on the IMF’s website, a prelude to the meeting of G20 ministers and central bank governors will have in Bali later this week.
The IMF chief said ministers of finance and central bank governors on the continent disclosed this to her this week, adding that that most countries on the continent could raise money from the global financial markets as they do not have large domestic markets to turn to.
“The particularly difficult conditions in many African countries at this moment is important to consider. In my meeting with Ministers of Finance and Central Bank Governors from the continent this week, many highlighted how the effects of this entirely exogenous shock was pushing their economies to the brink.
“The effect of higher food prices is being felt acutely as food accounts for a higher share of income. Inflation, fiscal, debt and balance of payments pressures are all intensifying. Most are now completely shut out from global financial markets; and unlike other regions don’t have large domestic markets to turn to.
“Against this backdrop, they are calling on the international community to come up with bold measures to support their people. This is a call we need to heed,” the IMF boss stated.
Georgieva said the human and economic impact of the war in Ukraine has worsened with commodity price shocks and an increase in cost of living leading to a crisis for hundreds of millions of people across the world. She said inflation is now higher than expected and has broadened beyond food and energy prices which has prompted major central banks to announce further monetary tightening.
She disclosed that the fund would downgrade its global growth projection for both 2022 and 2023 in its World Economic Outlook update later this month. She said it is going to be a tough 2022, and the possibility of a tougher 2023 is quickly materialising.
“It is going to be a tough 2022 – and possibly an even tougher 2023, with increased risk of recession. That is why we need decisive action and strong international cooperation, led by the G20. Our new report to the G20 outlines policies that countries can use to navigate this sea of troubles,” Georgieva stated.
