IMF Projects That Africa Needs Extra $44 Billion to Fight Coronavirus
The International Monetary Fund (IMF) has disclosed that sub-Saharan Africa needs an extra amount of about $44 billion to be able to fight the coronavirus pandemic aside the outstanding $110 billion funding.
IMF in a regional economic outlook update on Monday 29th June, 2020 explained that the additional funding needs continue in spite of the organization’s approval on debt-service relief for 21 sub-Saharan African countries for an initial six-month phase which will be ending mid-October. IMF also established a Debt Service Suspension Initiative for 20 leading economies and waived up to $14 billion in payments for the world’s poorest countries, mostly African countries, until December.
According to the IMF, about $10.1 billion has been disbursed through emergency facilities or augmented existing arrangements to 29 sub-Saharan African countries. It holds that more international support is urgently required for the region to overcome the crisis and return to sustainable growth.
In a statement released along with the outlook, the director of the IMF’s African department, Abebe Aemro Selassie indicated that “this crisis is unprecedented.”
He further urged for collective effort to save livelihoods.
“Our efforts today will have significant consequences down the road, not only in helping our members offset the immediate tragedy of the crisis, but also in ensuring that peoples’ lives and livelihoods are not destroyed forever,” he said.
IMF suggests that sub-Saharan Africa’s economy is forecast to contract by 3.2% in 2020 which is twice of the organization’s estimate in April. IMF went on to cut gross domestic product forecasts for 37 of the region’s 45 economies and realized that Comoros and Mauritius are the largest downward revisions in tourism-dependent. Also, the forecasts for the change in GDP in oil-exporting countries was cut by 2.1 percentage points.
IMF says the plummet in regional output is likely to rub out nearly a decade of progress in development in the region, with real GDP per capita forecast to contract by 5.4% to a level which was last seen around 2010.
Citing the World Bank, IMF projects that the pandemic is likely to surge global poverty for the first time since the Asian crisis in 1998, with 26 million to 39 million more people at risk of extreme poverty in sub-Saharan Africa alone.
“While economic growth in the region is projected to rebound to 3.4% in 2021, it’ll be shallower than the expected world growth rate because support packages in sub-Saharan Africa are ‘considerably smaller’ than those implemented in many other economies,” the IMF said.
“Downside risks could materialize if health systems are overwhelmed, given that many economies have reopened before the infection has peaked. However, with the easing of global financial conditions and a rebound in oil and other commodity prices, the projected downturn could be less pronounced,” it added.