By Omoh Gabriel
The IMF has that Nigeria economy will drop by 3.4 per cent thus plunging it into another round of recession. The multilateral financial institution in its global economic forecast that was embargoed until today projected significant economic contractions in oil-exporting countries, with Nigeria’s GDP forecast to fall 3.4 per cent this year after growing 2.2 per cent in 2019. It however said that the Nigeria economy will recover in 2021 by a growth of 2.4 per cent. Angola’s economy IMF said is expected to remain in recession, contracting by 1.4 per cent in 2020. It said that South Africa which growth was 0.2 per cent in 2019 will decline to a growth of –5.8 per cent in 2020 but recover to 4.0 per cent in 2021. Global economic output is said which was 2.9 per cent in 2019 will fall by –3.0 per cent in 2020 and grow by 5.8 per cent in 2021. The United States of America’s economy the IMF data showed is projected to fall by–5.9 per cent in 2020 and rise to 4.7 per cent in 2021
It said “Across countries in sub-Sahara Africa, the less diversified economies, such as Nigeria or Angola, will be hit the hardest, reflecting the impact of lower commodity prices and containment efforts. Among the non- resource intensive countries, those dependent on tourism (such as Cabo Verde, Mauritius, São Tomé & Príncipe or Seychelles) are expected to witness a severe contraction due to extensive travel restrictions, while emerging and frontier economies (such as South Africa, Ghana) will face the consequences of large capital outflows and tightening financial conditions. The policy priority is to ramp up health capacity and spending to save lives and contain the virus outbreak. The pandemic is reaching the shores of the continent at a time when budgetary space to absorb such shocks was limited in most countries, thus complicating the appropriate policy response”.
According to the IMF “Sub-Saharan Africa is facing an unprecedented health and economic crisis. COVID-19 outbreak threatens to exact a heavy human toll, upend the livelihood of vulnerable groups, damage businesses and retard the region’s growth in the years to come. No country will be spared. As of the 9th of April, over 6,200 cases have been confirmed across 43 countries in the region, with South Africa, Cameroon, and Burkina Faso being the most affected. The region must deal with three large shocks: disrupted production and reduced demand; global recession; sharp decline in commodity prices. Growth in sub-Saharan Africa in 2020 is projected to contract at –1.6 percent, the lowest level on record.
“Fiscal, monetary and financial policies should be used to protect vulnerable groups, mitigate economic losses and support the recovery: the immediate priority is for countries to do whatever it takes to ramp up public health expenditures to contain the virus outbreak, irrespective of the fiscal space and debt positions; sizeable, timely and temporary fiscal support is crucial to protect the most affected people and firms, including those in the informal sector. Policies could include cash transfers or support in-kind to help people under strain, including through digital technologies, and targeted and temporary support to hard-hit sectors and a more supportive monetary stance and injection of liquidity can play an important role in sustaining firms and jobs.
“Broad-based support from all development partners is essential to address the sizable financing needs including debt relief for the most impacted countries. The IMF is making [$100] billion available via rapid-disbursing emergency facilities. In addition, the IMF’s Catastrophe Containment and Relief Trust can provide grants to the poorest countries to pay off debt to the Fund. Subject to the decisive actions, growth in the region is projected to recover in 2021 to around the 4 percent mark. However, the depth of the slowdown in 2020 and the speed of recovery will depend on several factors, including how the pandemic interacts with weak local health systems, the effectiveness of national containment efforts, and the strength of support from the international community.
Sub-Saharan Africa’s gross domestic product is expected to contract 1.6% this year, compared 3.1% growth last year, as the coronavirus pandemic wrecks the region’s economies, the International Monetary Fund said on Tuesday . Various African governments have imposed lockdowns and curfews to curb the spread of the coronavirus, but the restrictions are putting pressure on most economies — some of which were already in recession. The IMF said in its World Economic Outlook that GDP was projected to fall sharply in South Africa, the continent’s most advanced economy. The country’s GDP is projected to contract 5.8% in 2020 from growth of 0.2% in 2019.
South Africa entered a recession in the final quarter of last year as power cuts by state utility Eskom took a toll on the economy, while public finances were strained by bailouts to struggling state firms.
The country imposed some of the toughest restrictions on the continent to contain the coronavirus, including a five-week lockdown to the end of April. With production and spending curtailed, the economic outlook was set to remain grim. The IMF and the World Bank – which has also projected a recession for sub-Saharan Africa in 2020 – are racing to provide emergency funds to African countries and others to combat the coronavirus and mitigate the impact of sweeping shutdowns aiming at curbing its spread.
The Executive Board of the International Monetary Fund, IMF, in attempt to assist poorest African countries had on Monday approved immediate debt service relief for 25 of the IMF’s member countries under the Fund’s revamped Catastrophe Containment and Relief Trust (CCRT). The beneficiaries are: Afghanistan, Benin, Burkina Faso, Central African Republic, Chad, Comoros, Congo, D.R., The Gambia, Guinea, Guinea-Bissau, Haiti, Liberia, Madagascar, Malawi, Mali, Mozambique, Nepal, Niger, Rwanda, São Tomé and Príncipe, Sierra Leone, Solomon Islands, Tajikistan, Togo, and Yemen. Ms. Kristalina Georgieva, Managing Director of the Fund in a statement said deal is part of the Fund’s response to help address the impact of the COVID-19 pandemic. This provides grants to our poorest and most vulnerable members to cover their IMF debt obligations for an initial phase over the next six months and will help them channel more of their scarce financial resources towards vital emergency medical and other relief efforts. The CCRT can currently provide about US$500 million in grant-based debt service relief, including the recent US$185 million pledge by the U.K. and US$100 million provided by Japan as immediately available resources. Others, including China and the Netherlands, are also stepping forward with important contributions. I urge other donors to help us replenish the Trust’s resources and boost further our ability to provide additional debt service relief for a full two years to our poorest member countries,” she said.
