MD of IMF calls for resetting of African economies to recover from COVID-19

Ms. Kristalina Georgieva, Managing Director of the International Monetary Fund (IMF) has noted that in order to build forward better, there is a need for resetting the African economies to recover from the COVID-19 pandemic to the path of growth.

She said “bold and immediate action for response, recovery, and reset of African economies.”

“Liquidity and financing response is the bridge to vaccines and recovery,” she added.

Ms. Georgieva made these observations during a virtual meeting with African Ministers in charge of finance to discuss the immediate economic response to the COVID-19 pandemic and convened by the Economic Commission for Africa (ECA)

“The world stands to lose an estimated $9 trillion if only the rich get COVID-19 vaccines. 40% of this loss will be in advanced economies,” she said.

The IMF MD urged the Ministers to prepare for a focused and practical discussion during the 2021 Spring Meetings.

“Now is the moment to demonstrate that SDR allocation can be part of a comprehensive support framework, together with debt reduction, debt relief, and policy support actions in the countries,” said said.

Ms. Georgieva noted that ECA’s Executive Secretary, Vera Songwe’s call together with Finance Ministers’ to triple concessional financing was “critical in the spring meetings’ conversations last year.”

During the meeting, the ministers were unanimous in their call for additional liquidity, $500 billion in Special Drawing Rights (SDR) , better market access, more concessional resources, and an extension in the Debt Service Suspension Initiative (DSSI), given the prolonged nature of the pandemic.

Mr Ken Ofori-Atta, Ghana’s Minister of Finance and Economic Planning-designate said “We all know that the COVID-19 pandemic will persist for the next 2-3 years. Why are we extending the DSSI for 6 months and not 24 months?”

He said the cascading effects of COVID-19 were “a frightening thing for a finance minister to witness when they don’t have the means to respond.”

On access to the markets, Egypt’s Minister of Finance, Mohamed Maait, said “there’s a strong case for vulnerable countries to access the markets at affordable rates to afford essentials such as PPEs and food for their populations.”

Equitable access to COVID-19 vaccines was highlighted as an imperative for building forward better.

In addition to vaccine availability, ECA’s Songwe stated that the issue of distribution and deployment were also worthy of serious attention. And for this reason, countries needed additional fiscal space and less austerity.

The objective of the meeting was to “seek IMF support in forging a way out of the crisis by transforming existing liquidity instruments and easing market access to alleviate the debt burden and provide much-needed liquidity for the continent,” she added.

Minister Vera Daves of Angola emphasised the importance of country reforms and in particular good governance reforms as an important component of the response and recovery plan.

Angola she said is committed to continuing on its reform path.

The meeting agreed on the need for a concerted effort to accelerate reforms to increase revenues, improve expenditure and manage debt to attract more private sector investments into Africa.