Ndubuisi Francis in Abuja
The International Monetary Fund (IMF) has outlined four priority areas of focus for policymakers in Nigeria and other countries in sub-Saharan Africa to boost economic growth in the medium to long term in the face of the worsening global crisis and declining growth projections.
Speaking at a webinar Monday with the theme, ‘Living on the Edge: IMF Outlook for Sub-Saharan Africa’, which was hosted by the Institute for Security Studies (ISS) in collaboration with the IMF, the Fund’s Head, Regional Studies Unit, African Department, Luc Eyraud, highlighted the priority areas to strike a balance.
According to him, policymakers must address food insecurity, consolidate public finances, manage the shift in monetary policies and accelerate sustainable and greener growth.
He said: “Policies implemented in an emergency including untargeted, costly and distortionary fiscal support measures should be gradually phased out, and countries need to strike a delicate balance in conducting monetary policy to address the rise in inflation and resist exchange rate pressures without undermining recovery.”
Eyraud explained that growth in the region was expected to decline from 4.7 per cent in 2021 to 3.6 per cent in 2022, reflecting the global economic slowdown, rise in global inflation and other crisis.
Commenting on inflation and food insecurity, he observed that 80 per cent of countries in the region adopted temporary and mostly untargeted measures in response to food and fuel price shocks.
He stressed that half of the accelerated inflation was driven by food which represents 40 per cent of the consumption basket.
Eyraud regretted that the rapid rise in global inflation, fuelled by an increase in energy and essential food prices, has put the squeeze on most households in the region and impacted hardest those who are most vulnerable.
Besides, he pointed out that 19 out of the region’s 35 low-income countries are either in debt distress or have high risk of debt distress, adding that countries are now moving very close to the edge of buffers.
He advised that: “The limited policy space with limited room to error and decisions must often strike a delicate balance between competing demands.
“Policies implemented in an emergency including untargeted, costly and distortionary fiscal support measures should be gradually phased out, and countries need to strike a delicate balance in conducting monetary policy to address the rise in inflation and resist exchange rate pressures without undermining recovery.”
On public finance, Eyraud noted the growing debt profile of countries in the region in the face of incressing financing costs, explaining that there was a need for countries to stabilise their debt below 70 per cent of GDP.
“It is important to ensure effective and transparent public debt management while maintaining credible and clearly articulated medium-term fiscal frameworks, countries must consolidate public finance by boosting revenue mobilization, prioritizing and increasing the efficiency of public spending where possible,” he said.
Eyraud also noted that sub-Saharan African accounts for two to three per cent of global CO2 emissions, and needs between $30 billion and $50 billion annually to finance climate adaptation, adding that international support would be critical to financing climate adaptation needed for resilient growth.
According to him, “High-quality growth will require investment in resilient green infrastructure to capitalize on the region’s sizable endowment of renewable energy resources leveraging private sector innovation, activity and finance.”
The Deputy Director, IMF African Department, Cathy Pattillo, in her remarks said the region was experiencing significant problems ranging from high public debt to the impact of the concurrent crisis, and double-digit inflation among other issues.
Pattillo added that solutions such as political stability, supportive global environment and help from the international community, which was employed in the late 1990s, were no longer obtainable.
She said: “The reality is that most countries are teeming with these imbalances and they’re going to have to live with them, and more countries are going to find themselves in a kind of grey zone and there’s going to be extreme uncertainty, as vulnerabilities and imbalances are going to stay high and it’s going to be difficult to calibrate.”
