Wednesday, March 18, 2009

IMF releases assessment of economic crisis on Africa

IMF Survey Online 2009-03-10 

The International Monetary Fund (IMF) is pressing advanced economies to honour and increase their commitments to developing countries in Africa as concerns rise that the continent’s economic gains will slip away as a result of the global downturn.

The organisation has also called for a revival of stalled world trade negotiations.

The IMF released its impact assessment of the global economic and financial crisis on Africa yesterday on the eve of a major conference to be held in Dar es Salaam, Tanzania today and tomorrow (March 10-11) regarding Africa’s future.

As global growth has slowed down, along with the decline in most commodity prices and tighter credit, the economic outlook for sub-Saharan Africa has worsened significantly, the IMF report said.

“Risks are rising and how long the crisis will last is uncertain. Policymakers must walk a tightrope between not aggravating the shock in aggregate demand on the one side, while protecting hard-won gains in economic fundamentals on the other.”

Many countries in the region have enjoyed robust growth in recent years which has strengthened their balance sheets. Sound economic policies as well as a favourable external environment and increased external support in the form of debt relief and higher inflows have contributed to this performance.

However, the food and fuel price shocks experienced in 2007-08 which preceded the current global financial crisis weakened the external position of net importers of food and fuel, causing inflation to accelerate and dampening growth prospects.

The global financial crisis only makes it more difficult to meet the policy challenges confronting the region as it strives to consolidate economic gains and meet the Millennium Development Goals (MDGs).

The report, entitled “Impact of the Global Financial Crisis on Sub-Saharan Africa”, can be accessed on the IMF website here .