IMF wants relaxed conditions for Africa

By BUUMBA CHIMBULU
THE International Monetary Fund (IMF) has called for the relaxation of external financial conditions for Sub-Saharan Africa to access hard currency bond markets.
Hard currency is money that comes from a country with a strong government and economy and that is not likely to lose its value.
IMF Division Chief Research Department, Malhar Shyam Nabar, expressed concern that the conditions had been extremely tight for Sub-Saharan Africa over the past several months.
Mr Nabar said a turnaround in conditions and better access for Sub-Saharan African issuers to access external hard currency bond markets would certainly help with improving the outlook.
“In terms of what the global outlook means for Sub-Saharan Africa, of course, the partial recovery that we are projecting next year clearly has a beneficial impact for the outlook in terms of stronger external demand.
“But one key element really is that the external financial conditions, which have been extremely tight for Sub-Saharan Africa over the past several months,” he said during a recent press briefing.
The IMF, he said, had stepped in with very widespread support on concessional financing and debt service relief to try and conserve liquidity for these economies.
Mr Nabar explained that this was meant to help countries redirect resources to combatting the health crisis and the economic crisis they are facing.
IMF Chief Economist and Director of the Research Department, Gita Gopinath, said: “overall for the region as a whole, our numbers are close to what we had in June, so it is -3 percent for 2020 and then [-]3.1 percent in 2021, but there is significant heterogeneity within the region.”
Ms Gopinath observed that there were countries that were commodity exporters that had been very negatively impacted not just by the Covid-19 pandemic but by the drop in oil prices.
“There is always a difference between countries that are more diversified, that seem to have better growth prospects than others, but it is also important to keep in mind that, for instance, in Sub-Saharan Africa, the World Bank projected that over 20 million people will enter extreme poverty this year,” she said.