Africa is at a turning point, but economic reforms must be sustained – IMF

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Africa is at a turning point, but economic reforms must be sustained - IMF

The () has declared that Africa stands at a pivotal moment, having weathered multiple shocks over the past four years that plunged many economies into crisis.

Speaking at the Regional Economic Outlook for Africa in Washington, US, Mr. Abebe Aemro Selassie, Director of the African Department, expressed optimism about Africa's prospects if the right policy choices are made. He emphasized the potential for this moment to lay the foundation for what he called “the African century.”

Despite the continent experiencing negative economic growth of -1.6% during the 2020 pandemic, it has since returned to a positive growth path, albeit with fluctuations. Africa's (GDP) saw a decline from 4.7% in 2021 to 4.0% in 2022 and further to 3.4% in 2023. However, projections indicate a rebound to 3.8% of GDP in 2024 and 4.0% in 2025.

While acknowledging these encouraging signs, Mr. Selassie cautioned that Africa still faces challenges and emphasized the importance of sustaining reforms for continued improvement in macroeconomic conditions. He stressed that sustaining economic gains is crucial for building resilience to shocks, creating jobs, diversifying economies, and enhancing living standards.

Mr. Selassie outlined three priorities for governments in the region: improving public financing, sustaining inflation reduction measures, and boosting structural policy reforms. He also underscored the importance of international support, with the IMF having provided US$58 billion in financing to the region since the start of the pandemic.

In its Regional Economic Outlook, the IMF highlighted that while Africa has regained its footing, governments are grappling with funding constraints, high borrowing costs, and rollover risks. The report called for improved public finances, revenue mobilization, maintaining price stability, and supporting growth. It also emphasized the need for structural reforms to expedite trade integration, enhance the business environment, and attract more foreign direct investment.

Furthermore, the report stressed the importance of continued support from the international community, noting that sub-Saharan African countries would require an estimated gross external financing of about $70 billion annually from 2024 to 2028. It called on multilateral and official bilateral creditors to play a key role in providing financing and supporting domestic policy and reform efforts.

As Africa navigates these challenges, the IMF remains committed to supporting the region's economic recovery and development.

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