dark

African countries charged to protect most vulnerable people

IMF Headquarters

. As IMF worries about food, energy crises impact

African countries have been called out to protect the most vulnerable in the society from the impact of food and energy crises.

This becomes imperative in view the inflationary pressures and food security concerns, especially for the most vulnerable, especially countries in North Africa and the Sahel who are already scarred by the COVID-19 pandemic, now exacerbated by the war in Ukraine.

The call came at the end the African Consultative Group (ACG) meeting with International Monetary Fund (IMF), in Washington D.C on Thursday, during the Annual Spring Meetings.  

This is contained in a joint statement on Sunday, by the Chair of the African Caucus, Ms. Nadia Fettah, who is also the Moroccan Minister of Economy and Finance, and IMF Managing Director, Ms. Kristalina Georgieva.  

While noting that Africa’s challenges and prospects for recovery have been very fruitful, the meeting expressed concern over the surge in commodity prices triggered by the war in Ukraine has destabilized global commodity markets.

The statement reads in part: “Although the continent’s fuel and commodity exporters will experience a windfall gain, the positive fiscal impact could be largely offset by additional energy and food subsidies.

“In contrast, high food and energy prices are straining commodity importers’ external and fiscal balances. 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 increased risks.

“In this challenging context, targeted, temporary, and transparent support to vulnerable households using and further developing social safety nets would be the most appropriate solution.”

The meeting also argued that “For this effort to succeed, governments in the region, the international community, and the private sector should make concerted efforts to mobilise revenue and additional financing to support the recovery.”

We agreed that the top priority must be to protect the most vulnerable households from the impact of high food and energy prices.

Reforms and diversification

African governments are also urged to “implement needed reforms to promote inclusive and sustainable growth, achieve diversification, tackle the climate crisis, and transition to a green economy.”

Also of concern to the Group is the need to address rising debt vulnerabilities of developing countries, particularly in Africa, calling on governments to find effective ways to alleviate the weight of the debt service.

It also “stressed the need to continue working together to strengthen the debt resolution architecture, including by improving the Common Framework for debt treatments and technical assistance within the Multipronged Approach (MPA) to address the remaining capacity requirements.

Pledging its support, the IMF informed it has reformed its concessional lending toolkit for low-income countries to provide greater flexibility to the access levels.

…implement needed reforms to promote inclusive and sustainable growth, achieve diversification, tackle the climate crisis, and transition to a green economy.

It also 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 historical Special Drawing Rights (SDR) allocation.

“The SDR allocation boosted liquidity and reserves around the world. About US$34 billion were allocated to countries in Africa, equivalent in some countries to as much as 6 percent of GDP.

“The IMF has just established a Resilience and Sustainability Trust (RST), which will be operationalised later this year, funded by SDRs voluntarily channeled from 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 initial pledges of about $40 billion toward financing the RST, and encouraged other contributors to make additional pledges to ensure the RST is well-positioned to support African countries to address their long-term challenges and build resilience.

Total
0
Shares
Leave a Reply

Your email address will not be published. Required fields are marked *

Previous Post

Buhari lauds Dangote’s entrepreneurial acumen, enjoins Nigerians to emulate him

Next Post

Polaris Bank commences nationwide sensitization for non-oil exporters

Related Posts
Total
0
Share