“The reinforcement of mobilizing internal resources remains a central priority, supported by governance reforms to improve public finance management, increase fiscal transparency, and strengthen accountability,” reads a statement issued by the Executive Director of the International Monetary Fund (IMF), Kristalina Georgieva, and the African caucus, representing the finance ministers of the region’s countries.
The statement, released in the context of the IMF and World Bank Annual Meetings, taking place this week in the U.S. capital, asserts that “medium-term budgetary strategies will aim to balance consolidation with growth and create space for priority investments, complemented by structural reforms to promote private sector development, deepen trade integration, and generate jobs.”
The document argues that “it is also essential to build resilience to climate shocks, as extreme climate events are already reducing output by one to two percentage points annually in the most vulnerable economies.”
In a “challenging global context,” officials highlight Africa’s growth above 4%, the stabilization of the debt-to-GDP ratio at 65%, and the reduction of inflation to an average of 4%, but they acknowledge many challenges remain.
“Vulnerabilities remain significant: in many low-income countries, interest payments absorb about 15% of revenues, while external financing is limited by high financing costs and diminishing official aid,” in a context where “fragile and conflict-affected states face particularly severe challenges, and per capita income in many countries has not yet recovered to pre-pandemic levels.”
The IMF is undergoing a reform of its financing capacity for poorer countries, having launched several initiatives in recent years to facilitate disbursements and enhance financial aid instruments.
Among these measures is the establishment of the Poverty Reduction and Growth Trust, which is expected to ensure annual loans of over seven billion dollars, approximately six billion euros, to the poorest countries, benefitting from longer maturities and interest-free financing.
Additionally, the Fund has launched the Resilience and Sustainability Trust, aimed at strengthening economies particularly affected by structural challenges, with an objective to “strengthen pandemic preparedness and build climate resilience, with 26 programs approved so far, nearly half of them in Africa.”
