July 14, 2024

IMF Director for Africa discusses economic challenges in Nigeria, South Africa, and the Horn of Africa at press briefing in Washington, D.C.

Minister of Finance of the Democratic Republic of the Congo Nicolas Kazadi talks with Abebe Aemro Selassie, IMF Director of the African Department, during a Governor Talk event on Democratic Republic of the Congo, during the 2023 Spring Meetings of the World Bank Group and International Monetary Fund in Washington on April 12, 2023. IMF Photo/Allison Shelley

The IMF Director for Africa, Abebe Selassie, has painted a not so rosy picture for African economies at a press briefing in Washington, D.C. during the IMF and World Bank Annual Meetings. With a recusal on speaking about the conflict in Ethiopia, Selassie instead focused on the economic challenges facing Nigeria, South Africa, and the Horn of Africa.

In particular, he revised down growth forecasts for South Africa to a meager 0.1 percent for 2023 due to the country’s ongoing energy crisis. While the government is confident it can stabilize energy prices, Selassie hopes that private investment will help drive future growth in the region.

Selassie also addressed concerns around monetary policy transmission in countries like Nigeria, where consumption accounts for around 80 percent of GDP. He emphasized the importance of managing negative real interest rates and the challenges of multiple exchange rates.

The IMF Director for Africa praised the creation of the common framework for sovereign debt restructuring, citing examples of Chad and Zambia benefiting from it. However, he acknowledged the need for a more nimble and efficient mechanism globally.

Selassie also acknowledged Africa’s vulnerability to decoupling between the US and China, pointing to an annex in an analytical focus that looks at the potential implications of fragmentation-type tensions on the region. He urged the need for a functioning sovereign debt restructuring framework to mitigate these risks.

Overall, Selassie’s comments paint a worrying picture for African economies, with a need for more efficient mechanisms and investment to address the challenges they face.

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