Africa’s central banks are walking a tightrope trying to curb inflation that is mostly out of their control and causing “horrifying” food insecurity, Reuters reported, citing the International Monetary Fund’s Africa head.
The IMF’s twice-yearly Regional Economic Outlook released on Friday warned that 123 million people, or 12% of sub-Saharan Africa’s population, face acute food insecurity – where the lack of access to adequate food puts someone’s life or livelihood in immediate danger – by the end of the year.
That compares to around 82 million people affected before the COVID-19 pandemic, but the hammer blow of the virus, spillovers from the war in Ukraine as well as worsening unrest and drought in parts of the continent have seen the numbers spiral.
“What worries us really is the fact that this is coming on top of all of the dislocation caused by the pandemic,” the IMF’s Abebe Selassie told Reuters this week.
“I was in Chad (in May) and really the conditions that you saw there in terms of food security really are very, very horrifying.”
Ethiopia, Somalia and parts of Kenya are also on track for a fifth failed rainy season, with famine looming in Somalia. Sub-Saharan Africa’s annual food price inflation has remained above 10% since the second half of 2021, and this week’s new IMF economic forecast revised its regional inflation forecast by 2 percentage points to 20% this year. 8.7%.
It also cuts its GDP growth forecast by 0.2 percentage points to 3.6%, down significantly from a 4.7% expansion in 2021, with Nigeria, Ghana, Ethiopia, Malawi and Zimbabwe all expecting rate hikes more quickly or decisively. I said I might have to pull it down.
“It’s a delicate balancing act facing central banks,” Selassie said. “Inflation is an insidious, insidious tax on the poorest.”
A sharp rise in global interest rates means that sub-Saharan Africa’s most indebted countries have all but lost access to international capital markets.
This has prompted countries, including Ghana, to seek relief from his IMF, and work is still underway to determine if the West African country needs debt relief now, Selassie said. I was. Meanwhile, Ethiopia, Zambia and Chad have long attempted debt restructuring under the G20 Common Framework Initiative set in 2020 in response to the COVID-19 pandemic.
Progress was terribly slow. Ethiopia’s restructuring has been delayed by the ongoing civil war, but IMF Managing Director Kristalina Georgieva said this week she hopes the process in both Zambia and Chad will be completed by the end of the year.
Bilateral creditors in Chad said late Thursday that the country did not need debt relief amid rising oil prices, one of the country’s main sources of income. Oil trading and mining company Glencore, Chad’s largest commercial creditor, declined to comment.
“Is everything working as timely and quickly as we wanted? No,” Selassie said in an interview ahead of Chad’s creditor statement, but he also wants to highlight that there has been quite a bit of cooperation from G20 members, China and others.
He said restructuring in Zambia and Chad now relies on private companies and loans to the country, and the IMF is “extremely frustrated” that Chad’s demanded debt relief has not been completed. rice field.
“Anything beyond Zambia’s reasonable demands is unfair to the Zambian people,” Selassie added.
He warned that more African countries may need to restructure their debt.
“If the global situation continues, some countries will need to re-profil their debt,” he said.
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