disclaimer: the views expressed herein are those of the author and should not be attributed to the...
TRANSCRIPT
Disclaimer: The views expressed herein are those of the author and should not be attributed to the IMF, its Executive Board, or its management.
The Financial Crisis and Decades of Reforms: Options for Africa’s Future
Reforms
May 2009
Antoinette Monsio SayehDirector, African Department
International Monetary Fund
Agenda
What can we learn from Africa’s reform successes and how can these reforms be preserved or deepened?
How should African governments handle the domestic fallout of the ongoing crisis and push forward with economic and
trade reforms?
What is the role of the state vis-à-vis the private sector in weathering the storm?
What can we learn from Africa’s reform successes and how can these reforms be preserved or deepened?
Reform success stories
17 high-growth countries: (4 oil exporters, 4 middle-income, and 9 LICs)
14 low-growth countries (12 of them fragile states)
13 medium-growth countries
Figures for Box 2.1.
-4
-2
0
2
4
6
8
10
1970 1974 1978 1982 1986 1990 1994 1998 2002 2006
(Simple 3-year moving average)
High-growth
Low-growth
Medium-growth
Sub-Saharan Africa:GDP per Capita Growth Rates
Source: IMF, World Economic Outlook
African success stories: Getting the critical basis right
Macroeconomic stability
Avoiding major policy failures
Reinforcing institutions
Proactive role of government
Higher aid
Fallout from the ongoing global crisis
2008 and Current Forecast for 2009
Source: IMF, African Department database
Sub-Saharan Africa: 2008 v. Current Forecast for 2009
Source: IMF, African Department database.
0
5
10
15
2008 Outcomes
Latest AFRprojections
for 2009
Real GDP growth(Percent)
Currentaccountbalance(Percentof GDP)
Fiscal balance(Percent of GDP)
Inflation(Percent)
-5
0-5 5 10 15-15 -10
-10
-15
All countries will be affected by the crisis, including some star performers
Source: IMF staff estimates
Impact of the Crisis on Growth in Sub-Saharan Africa 1
-15
-10
-5
0
5
10
15
-5 0 5 10 15
GDP growth, Average 1997-2007
GDP growth,2009 Proj.
(Percent of GDP)
How can the challenges be dealt with in the short-term?
Use available fiscal space
Where possible, ease monetary policy and let the exchange rate adjust to the external environment
Closely monitor financial vulnerabilities and be prepared to act promptly
Strengthen social safety nets
What are the implications of the crisis for structural reforms?
It is important now to move ahead with planned structural reforms in:
Public financial management
Social safety nets
Cost of doing business
Countries also need to avoid new restrictions on trade flows as they work to mitigate the impact of the global crisis.
Role of the state versus the private sector in a time of crisis?
Near-term More active aggregate demand policies Strengthening of financial sector surveillance
Medium-termLarger focus on improving supervisory and
regulatory environment Private sector as engine of growth
How can the internationalcommunity help?
African countries require the support of the international community to respond effectively to the global crisis.
The international community should endeavor to meet or exceed the G-8 Gleneagles commitments.
The Role of the IMF
The IMF is taking important steps to help African countries meet the challenges of the crisis:
Doubling concessional lending to low income countries
Working on a proposal to increase the general SDR allocation
Revising its lending instruments to make them more flexible
Continuing to provide policy advice and extensive technical assistance for strengthening economic policymaking in Africa