IMF sub-Sarahan Africa outlook ‘too gloomy’

6 Nov 17

IMF is “too gloomy” in its economic outlook for sub-Saharan Africa, an economist at the Overseas Development Institute has said. 

The IMF noted in its report on sub-Saharan Africa last week that vulnerabilities have increased in the region, partly due to rising public debt, financial sector strains and low external buffers. 

But the report did not fully account for the recent improvements in commodity prices and is “too pessimistic”, Judith Tyson from the ODI said. 

“For example, oil prices have now recovered to over $60 a barrel, from 2016 lows of $27 a barrel. This has given a boost to oil producers such as Nigeria and Angola,” she said. 

The IMF said the policy environment had started to improve, fiscal deficits were stabilising and current account deficits narrowing, reflecting a “slight rebound” in commodity prices.

Tyson said: “The report’s forecast is too pessimistic but these positive developments actually present a key opportunity for the region to tackle rising and unsustainable debt levels – the major underlying problem highlighted by the IMF.”

At the end of 2016, public debt, which is high both in oil exporting countries and other fast-growing economies, had exceeded 50% of GDP in nearly half of the sub-Saharan African countries, the IMF said. 

The report also highlighted the fact that most sub-Saharan African countries are planning fiscal adjustments to contain the recent increase in debt.

It predicted the growth for the region is expected to pick up to 2.6% in 2017 from last year’s 1.4%, partly as a result of a recovery in oil production, a good harvest in Nigeria and easing of tensions in the Niger Delta.

Growth beyond 2017 is expected at about 3.5%, below the 5% mark achieved in the first half of the decade.

PF International has contacted IMF for comment. 

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