Kampala. To revamp the current economic growth slowdown in sub-Saharan African countries, the International Monetary Fund (IMF) has urged governments in the region to implement strong policy actions.
In its new Regional Economic Outlook 2017 published on May 9 titled Restarting the Growth Engine, the IMF said the sub-Saharan African economic outlook remains clouded after growth slowed sharply in 2016, averaging 1.4 per cent, the lowest in two decades. The report said about two-thirds of the countries in the region, accounting for 83 per cent of the region’s GDP, slowed down.
The IMF said a modest rebound in growth of 2.6 per cent is expected in 2017, but that it will be to a large extent driven by one-off factors in the three largest countries - a recovery in oil production in Nigeria, higher public spending ahead of the elections in Angola, and the fading of drought effects in South Africa.
“The overall weak outlook partly reflects insufficient policy adjustment. The delay in implementing much-needed adjustment policies is creating uncertainty, holding back investment, and risks generating even deeper difficulties in the future,” said Mr Abebe Aemro Selassie, the director of IMF African Department.
Mr Abebe said in particular, oil exporters such as Angola, Nigeria, and the countries of the Central African Economic and Monetary Union are still struggling to deal with the budgetary revenue losses and balance of payments pressures, some three years after the fall in oil prices.
He said the outlook remains shrouded in substantial uncertainties, including a possible further appreciation of the US dollar, a tightening of global financing conditions, especially for countries where fundamentals have deteriorated.
For the hardest-hit countries, Mr Abebe noted that strong fiscal consolidation is required, with an emphasis on revenue mobilisation.
However, Mr Abebe reiterated that sub-Saharan Africa remains a region with tremendous potential for growth in the medium term provided strong domestic policy measures are implemented.
“Unfortunately, this deteriorated outlook is partly a result of delayed and still limited policy adjustments, with an ensuing increase in public debt, declining international reserves, and pressures on financial systems placing stress on private sector activity,” said, in part, the IMF report.