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IMF projects 3.6% economic growth in sub-Saharan Africa

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The International Monetary Fund (IMF) has revealed that growth in sub-Saharan Africa is expected to slow to 3.6 percent in 2023.

The IMF, through its Director of the African Department, Abebe Aemro Selassie, while speaking to newsmen on Friday, said the projected slowed growth is a result of a “big funding squeeze”, which is connected to the drying up of aid and access to private finance.

“I wish I was bearing better news, but unfortunately, we’re expecting growth to decelerate from 3.9 percent to 3.6 percent in 2023. And this to a large extent reflects the big funding squeeze tied to drying up of aid and access to private finance,” Selassie said.

“So, there are a number of reforms that need to be pursued. I think first and foremost, of course, is policies to strengthen the resilience of economies. So, in many countries, for example, there’s a big challenge in mobilizing more domestic revenues. That needs to be addressed wherever that’s the main challenge.

“Second, I think it’s also important to consider policies to insulate domestic economies from the external environment. So, allowing exchange rates to adjust, interest rates to be recalibrated, to reflect better to reduce inflation are all going to be very important parts of the policy response to this adverse external environment,” added Selassie.

“We are engaging like never before with the region. Of course, over the last couple of years, we’ve provided considerable financing to the tune of around $50 billion to support the region. Whether the very difficult economic environment that was facing and we continue to try and provide as much financing as possible to support countries in the coming months.

“As important, however, of course, are policies and reforms that need to be pursued by countries, and we are deeply engaged with working with countries to navigate and to put in place the right types of policies in each individual country,” said Selassie.

With a typical tax ratio of only 13 percent of GDP in 2022, Sub-Saharan African nations considerably fall behind other emerging economies, developing nations, and developed economies in terms of revenue collection.

The IMF has supplied the area with around $50 billion in financing.

The IMF says it will continue to work with the region to implement the correct kinds of policies that are suited to the requirements of each nation.

IMF projects 3.6% economic growth in sub-Saharan Africa

The International Monetary Fund (IMF) has revealed that growth in sub-Saharan Africa is expected to slow to 3.6 percent in 2023.

The IMF, through its Director of the African Department, Abebe Aemro Selassie, while speaking to newsmen on Friday, said the projected slowed growth is a result of a “big funding squeeze”, which is connected to the drying up of aid and access to private finance.

“I wish I was bearing better news, but unfortunately, we’re expecting growth to decelerate from 3.9 percent to 3.6 percent in 2023. And this to a large extent reflects the big funding squeeze tied to drying up of aid and access to private finance,” Selassie said.

“So, there are a number of reforms that need to be pursued. I think first and foremost, of course, is policies to strengthen the resilience of economies. So, in many countries, for example, there’s a big challenge in mobilizing more domestic revenues. That needs to be addressed wherever that’s the main challenge.

“Second, I think it’s also important to consider policies to insulate domestic economies from the external environment. So, allowing exchange rates to adjust, interest rates to be recalibrated, to reflect better to reduce inflation are all going to be very important parts of the policy response to this adverse external environment,” added Selassie.

“We are engaging like never before with the region. Of course, over the last couple of years, we’ve provided considerable financing to the tune of around $50 billion to support the region. Whether the very difficult economic environment that was facing and we continue to try and provide as much financing as possible to support countries in the coming months.

“As important, however, of course, are policies and reforms that need to be pursued by countries, and we are deeply engaged with working with countries to navigate and to put in place the right types of policies in each individual country,” said Selassie.

With a typical tax ratio of only 13 percent of GDP in 2022, Sub-Saharan African nations considerably fall behind other emerging economies, developing nations, and developed economies in terms of revenue collection.

The IMF has supplied the area with around $50 billion in financing.

The IMF says it will continue to work with the region to implement the correct kinds of policies that are suited to the requirements of each nation.

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Angola’s draft budget estimates 1.65%/GDP deficit in 2025

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Draft budget documents show that Angola’s government expects a 1.65% GDP budget deficit in 2025, up from 1.46% this year.

According to finance ministry records on its website, Africa’s second-largest crude oil exporter’s 2025 budget is predicated on $70 per barrel of oil. Brent crude futures were around $74 per barrel on Friday.

In an interview with Reuters last week, Vera Daves de Sousa, the finance minister of Angola, stated that the southern African nation was under a lot of strain due to the possibility of declining oil prices.

Additionally, according to the draft budget, economic growth would pick up speed in the non-oil sectors, increasing from 3.3% this year to 4.1% next year.

According to the finance ministry, yearly inflation will drop from nearly 29% to 16.6% by the end of next year.

Last week, Daves de Sousa told Reuters that Angola was considering asking the International Monetary Fund for a funding program.

Its most current IMF program, worth $3.7 billion, was authorised in 2018 after the country’s earnings were severely damaged by the collapse of global petroleum prices.

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IMF predicts 4% Middle East, North Africa growth next year

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The International Monetary Fund (IMF) has said that Middle East and North Africa growth would rebound to 4% next year if oil output curbs were phased out, and headwinds, including wars, subsided.

As geopolitical and macroeconomic concerns remain, the IMF’s latest Regional Economic Outlook, launched in Dubai, predicts “sluggish” growth of 2.1% in 2024.

The IMF noted that risks to the outlook for the overall area, including the Caucasus and Central Asia, “remain tilted to the downside,” and called for an acceleration of structural reforms, notably in governance and labour markets, to raise chances for medium-term growth.

Jihad Azour, the IMF’s director for the Middle East and Central Asia department, said in an interview that the MENA growth estimate for 2024 has been revised downwards by 0.6% from April’s report, mainly due to the extension of the Israel-Hamas conflict and further extensions of OPEC+ voluntary oil production cuts.

He said the “good news” was that inflation was gradually being brought under control across the region. He predicted that the region would average the 3% goal rate in 2024, except for Egypt, Iran, and Sudan.

The outlook, however, differs significantly throughout the region. According to Azour, oil-exporting nations should be better equipped to handle such threats thanks to “strong” growth in the non-oil sector.

Non-oil growth in the Gulf Cooperation Council (GCC) region has mostly outpaced overall growth despite lower oil prices and production this year, thanks to government-led investment programs that support domestic demand. The GCC includes Saudi Arabia, Kuwait, the United Arab Emirates, Qatar, Bahrain, and Oman.

Oil importers from the Middle East and North Africa are still more susceptible to protracted hostilities and significant funding requirements.

“Even as these issues gradually abate, uncertainty remains high and structural gaps will likely hold back productivity growth in many economies over the forecast horizon,” the IMF report said.

Since January 2024, the IMF has authorised $13.4 billion in fresh investment for Middle Eastern and Central Asian nations, including initiatives in Jordan, Pakistan, and Egypt.

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