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World economy will prosper if Africa prospers – IMF boss

by Business News Report

Managing Director International Monetary Fund (IMF) Ms Kristalina Georgieva has said that a prosperous world economy in the 21st century requires a prosperous Africa. Georgieva said this at the 2023 Annual Meetings Curtain Raiser Speech on the  Outlook for the Global Economy and Policy Priorities in Côte d’Ivoire on Thursday. The IMF boss gave the speech ahead of the IMF/World Bank 2023 Annual Meetings in Marrakech, Morocco, from Oct. 9 to Oct. 15. She said though advanced economies were rapidly aging, they had abundant capital. “The key will be to better connect that capital to Africa’s abundant human resources, to inject more dynamism into the current anaemic global growth outlook.” Georgieva said Africa also makes the strongest case for building economic resilience.

“The COVID-19 pandemic, Russia’s war in Ukraine, climate disasters, the cost-of-living crisis, political instability, these are the many faces of a shock-prone world. Their impact is most fully on display in Africa, as is the overwhelming necessity to better prepare ourselves for that world. A prosperous Africa requires maintaining the most important bridge of all, the bridge that connects all countries, that of international cooperation. During the meetings, we will make coming together meaningful for the people in our member countries.” Speaking on the global economic outlook,  the IMF boss said the economy was resilient, but challenged by weak growth and deepening divergence. She said this was largely because of stronger-than-expected demand for services and tangible progress in the fight against inflation. “While the recovery from the shocks of the past few years continues, it is slow and uneven. As you will see from our updated forecast next week, the current pace of global growth remains quite weak, well below the 3.8 per cent average in the two decades before the pandemic.

“Looking ahead over the medium term, growth prospects have weakened further.” The IMF boss identified three policy priorities countries should consider for stronger future economic growth. She said the first priority was to reinforce economic and financial stability by fighting inflation. Winning the fight against inflation requires interest rates to remain higher for longer. It is paramount to avoid a premature easing of policy, given the risk of resurging inflation.” Georgieva noted that some countries in Africa were reforming their energy subsidies to create space for development spending. “Nigeria, for example, recently removed fuel subsidies that cost about 10 billion dollars  last year, four times the amount spent on health. Many countries also need to generate higher and more reliable domestic revenue. She said the second policy priority was to lay the foundations for inclusive, sustainable growth through transformational reforms and building strong state institutions.

“History teaches us that poor countries become richer by educating people, putting in place good infrastructure, and ensuring effective governance with respect for the rule of law. First and foremost is the need to invest in people. For Africa, this means expanding high-quality education at all levels, so that young people can seize the job opportunities of tomorrow. It also means scaling up investment in healthcare.” The IMF boss said the third policy priority was to boost collective resilience through international cooperation, saying that cooperation is weakening at a time we need it most. She said that international cooperation was needed to address the existential threat of climate change, especially for vulnerable countries as they dealt with shocks they had not caused. Georgieva said there was a need to work together to help countries deal with debt challenges. “With the right policies and Harambee meaning (pulling together in full cooperation), we can build a bridge to a more prosperous and peaceful future. We can lay the groundwork for a half-century even more impressive than the last.

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