Meeting of the African Consultative Group: Statement by the Chairman of the African Caucus and the Managing Director of the IMF
The Moroccan Minister of Economy and Finance, Ms. Nadia Fettah, Chair of the African Caucus, and Ms. Kristalina Georgieva, Managing Director of the International Monetary Fund (IMF), co-chaired the meeting of the African Consultative Group on Thursday, April 21, 2022. They issued the following statement after the conclusion of the Group meeting in Washington DC:
“Our discussions on Africa’s recovery challenges and prospects were very fruitful. Today, the green shoots of the recovery started in 2021 are threatened by the war in Ukraine at a time when the war against COVID-19 is still not over.
“Vaccination rates on the continent remain low and patchy, although some progress has been made in recent months. At 13.2 percent of its population, sub-Saharan Africa remains the region with the lowest vaccination rates in the world, and at 28.1 percent, North Africa’s average rate is also still below the world average.
“The spike in commodity prices triggered by the war in Ukraine has destabilized global commodity markets, exacerbating both inflationary pressures and food security concerns, especially for the most vulnerable who are already scarred by the pandemic. . Several countries in North Africa and the Sahel are among the most vulnerable in the world to price increases or wheat shortages because they are heavily dependent on imports from Russia and Ukraine.
“Although the continent’s fuel and commodity exporters will benefit from a windfall gain, the positive fiscal impact could be largely offset by additional energy and food subsidies. By contrast, high food and energy prices are weighing on the external and fiscal balances of commodity importers. Capital flows are also likely to be disrupted.
“We agreed that the top priority must be to protect the most vulnerable households from the impact of high food and energy prices. But the external shock is hitting the continent at a time when most countries have limited fiscal space, with high debt vulnerabilities and heightened risks. In this difficult context, targeted, temporary and transparent support to vulnerable households using and further developing social safety nets would be the most appropriate solution.
“For this effort to succeed, governments in the region, the international community and the private sector must make concerted efforts to mobilize additional revenue and financing to support the recovery and implement the reforms needed to promote inclusive and sustainable growth. sustainability, achieving diversification, tackling the climate crisis and transitioning to a green economy.
“The IMF has played its part and reformed its concessional lending toolkit for low-income countries to provide greater flexibility in access levels. It provided emergency financing to countries with urgent balance of payments needs, debt service relief under the Catastrophe Containment and Relief Trust (CCRT) to the most vulnerable countries, and enacted an allocation Special Drawing Rights (SDR) history. The allocation of SDRs boosted liquidity and reserves around the world. About $34 billion has been allocated to African countries, which in some countries is equivalent to 6% of GDP.
“The IMF has just created a trust fund for resilience and sustainability, which will be operational later this year, financed by SDRs voluntarily channeled by donor countries. It will complement the IMF’s existing lending toolkit by providing longer-term affordable financing to address longer-term challenges, including climate change and pandemic preparedness. The ACG welcomed the initial pledges of around $40 billion for RST funding and encouraged other contributors to make additional pledges to ensure that the RST is well placed to help African countries meet their long-term challenges and build their resilience.
“The group also underscored the need to address the growing debt vulnerabilities of developing countries, particularly in Africa, and find effective ways to ease the debt service burden. He also stressed the need to continue working together to strengthen the debt resolution architecture, including by improving the common framework for debt treatment and technical assistance under the multi-pronged approach ( MPA) to meet remaining capacity needs.
Distributed by APO Group on behalf of the International Monetary Fund (IMF).
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