The economies of sub-African countries face a triple threat from the coronavirus which means revenues will take a hit just as spending needs to ramp up to contain the pandemic and treat citizens, says the IMF.
Karen Ongley, the IMF’s mission chief for Sierra Leone, and Abebe Aemro Selassie, director of the IMF’s African Department, say in an article on the IMF’s website that growth in the region will be hit hard.
“Precisely how hard is still difficult to say. But it is clear that our growth forecast in April’s regional outlook will be significantly lower,” they say. “The slowdown will mean revenues take a hit, just as countries face additional public spending needs.”
Sub-Saharan countries face three related threats.
First, measures that have been introduced to slow the spread of the virus will have a “direct cost on local economies.”
“The disruption to people’s daily lives means less paid work, less income, less spending, and fewer jobs. And, with borders closed, travel and tourism are quickly drying up, and shipping and trade are suffering,” state the authors.
Second, projected slowdowns in major global economies will see world demand fall for goods.
“Countries are likely to also see delays in getting investment or development projects off the ground.”
Third, the sharp decline in commodity prices will hit oil exporters hard.
“The price of oil has tumbled to levels not seen in decades. We don’t yet know where they will settle, but with oil prices already down by more than 50 percent since the start of the year, the impact will be substantial.”
They add that the health of citizens must be a priority.
“Yet, now is no time for half measures. Without exception, people’s health is the priority and countries should boost health spending accordingly.”
The IMF says it is making $50 billion available via rapid-disbursing emergency facilities, including $10 billion on highly concessional terms for low-income countries.
“With this, we are accelerating efforts to back countries in the region. So far, we’ve received requests for emergency financing from close to 20 countries, with requests from another 10 or more countries likely soon.”