IMF: Africa’s Priority Is To Protect The Vulnerable From Soaring Prices

Rabat – The International Monetary Fund (IMF) has stressed the need to provide economic relief funds for Africa’s vulnerable so households can mitigate the effect of soaring food and energy prices.

The April 21 meeting, with government representatives from across the continent, including Morocco’s Economy and Finance Minister, Nadia Fattah, looked to tackle regional issues hindering economic recovery on the continent.

Aiming to enhance the IMF’s policy dialogue with African countries, the meeting featured the IMF’s governors from 12 African countries, in addition to representatives from the international monetary fund, according to an IMF press release.

During the meeting, the assembly discussed a number of issues, including post-pandemic economic recovery, soaring commodities prices, and global supply chain disruptions driven by the war in Ukraine, the IMF statement said.

“Our discussions on Africa’s challenges and prospects for recovery have been very fruitful. Today the green shoots of the recovery that started in 2021 are threatened by the war in Ukraine at a time when the war on COVID-19 is still not over,” the Fattah and Georgieva said in a joint statement.

The vaccination rate in Africa remains very low at 13.2%, one of the lowest worldwide, despite the recent progress of the vaccination campaign, the statement explained.

In North Africa, the rate of vaccination stands at 28.1%, relatively higher than the continental average, but still below the world average, the statement said.

Regarding soaring commodities prices, the officials noted in the statement that the war in Ukraine has sent a shock through the global commodities market, exacerbating the COVID-induced surge in inflation and food security concerns.

“Several countries in North Africa and the Sahel are among the most vulnerable in the world to price increases or shortages of wheat since they are highly dependent on imports from Russia and Ukraine,” it said.

According to market outlooks, external trade is set to revive as exports increase. However, rising energy and food prices will offset the progress as governments race to subsidize the vital commodities, the statement said.

Africa’s top priority should be to protect the most vulnerable and mitigate the effect of rising food and energy prices on households. “But the external shock is hitting the continent at a time when most countries have limited fiscal space, with high debt vulnerabilities and increased risks,” it added.

Given the limited fiscal capital available to provide full-scale commodities subsidies, the meeting concluded that African governments should focus on providing “targeted, temporary, and transparent” support to vulnerable households.

The statement stresses the importance of coordinating efforts between regional governments, the international community, as well as the private sector to mobilize funds for such ventures.

Only by coordinating efforts between stakeholders can Africa stimulate inclusive, sustainable growth, diversify its economies, address the climate challenge, and transition to a greener economy, the statement argues.

In the course of the meeting, the fund underscored the need to address rising debt in developing countries, especially in Africa, and to devise effective ways to alleviate the pressure of debt services.