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Sub-Saharan Africa region — October, 2009: Sub-Saharan Africa has been hit hard by the global recession, but signs of resilience remain. While South Africa and some other middle-income countries were caught in the turbulence of international financial markets, and oil exporters saw government revenues plunge, some countries with wider commodity bases have so far escaped the worst of the crisis. Also, and reassuringly, with stronger initial fiscal and external positions than in past downturns, most countries in the region have been able to partially absorb external shocks by allowing fiscal deficits to rise and reducing interest rates. Exchange rates have generally been allowed to adjust. With many families affected by the crisis, however, progress toward the Millennium Development Goals has receded. Looking ahead, fiscal policy must balance support for the recovery with enhancing future growth prospects, debt sustainability, and poverty reduction. Published biannually in May and October.

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IMF Outlook for Sub-Saharan Africa Expresses Cautious Optimism

Press Release No. 09/348
October 3, 2009
The International Monetary Fund (IMF) today released the October 2009 Regional Economic Outlook: Sub-Saharan Africa. Ms. Antoinette Monsio Sayeh, Director of the IMF’s African Department commented on the report’s main findings:

• The global economic crisis has hit sub-Saharan Africa hard, reducing economic growth to just 1 percent in 2009 after a period of sustained high economic growth. Oil exporters and middle income countries in the region have been particularly badly affected, and most low-income countries somewhat less so. In all SSA countries, however, the crisis will likely slow, if not reverse, progress on poverty reduction. Unemployment and under-employment, already endemic, have likely risen across the region. But playing-off the global economic recovery, we expect growth in sub-Saharan Africa to rise to 4 percent in 2010 and 5 percent in 2011.

• In many countries the prudent macroeconomic policies pursued in recent years have provided some policy space to counter the effects of the slowdown. Accordingly, most countries have been able to maintain or even raise public spending, allowing fiscal deficits to widen temporarily. Where possible, monetary policy has also played a supportive role.

• There are significant downside risks, however. Therefore, wherever possible, IMF staff recommends that fiscal and monetary policies remain supportive until the economic recovery is well-established. As the recovery gains strength, the emphasis of fiscal policy will need to shift from stabilization to medium-term considerations, including debt sustainability. In countries with binding financing constraints, the room for fiscal policy is more limited and the primary focus will need to remain on reducing macroeconomic imbalances. Financial sectors have been for the most part resilient, but prudential supervision will need to remain vigilant in the face of the impact of the economic slowdown on the quality of banks’ portfolios.

• Scaled-up financial support from the IMF has buttressed countries’ policy response. The doubling of lending limits and more flexible policies have facilitated a rapid response to countries’ needs, and new IMF commitments to sub-Saharan Africa have reached over US$3 billion so far this year, compared to some US$1.1 billion for the whole of 2008 and only US$0.1 billion in 2007. Looking ahead, it will be critical that other development partners support this effort and those of other international financial institutions.” Ms. Sayeh said.

The full text of the October 2009 Regional Economic Outlook: Sub-Saharan Africa can be found on the IMF’s website, www.imf.org.