According to the Managing Director of the International Monetary Fund, Kristalina Georgieva, African leaders need to build strong and sustainable economic resilience to be ready for climate change, geopolitical conflicts, and other threats.
Her statement came at the end of a meeting in March in Washington with African ministers of finance, African central bank governors, and representatives of the UN Economic Commission for Africa to discuss the impact of the crisis in Ukraine.
“Africa is particularly vulnerable to impacts from the Ukraine war through four main channels – increased food prices, higher fuel prices, lower tourism revenues, and potentially more difficulty accessing international capital markets,”Kristalina Georgieva
The IMF anticipates a more shock-prone world. The war in Ukraine, she said, will hit African economies along four channels;
“First, with energy prices. We have 12 countries in Africa that are energy exporters, and 42 that are energy importers. With the limited fiscal space they have, this is a real shock”
Secondly, it addresses the food prices shock – “A number of African countries already see food insecurity on a very large scale – Sudan, Ethiopia, broadly the Horn of Africa region are already in difficulty and now food prices shooting up.
The third shock is unsustainable debt as governments are “struggling to overcome the pressures of debt service with financial conditions starting to tighten” and the fourth and final impact concern is tourism, a huge source of revenue for countries such as Egypt and Kenya is likely to contract sharply again.
The way to go, amongst policy recommendations is that:
“We should invest more in the resilience of people, more equitable access to opportunities and more inclusive growth” She said.
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Source: The Economy360