IMF worries over impact of Russia, Ukraine crisis on African economy

INVA SION OF UKRAINE and the unprecedented sanctions imposed on Russia are having far-reaching consequences that could result in a devastating blow on Africa’s economy, according to the International Monetary Fund (IMF).

Kristalina Georgieva, managing director of IMF, raised the concern in a statement signed by Nicolas Mombrial, IMF media contact person, following a meeting between the international financial institution and African ministers of finance, African central bank governors, and representatives from the United Nations Economic Commission for Africa (UNECA)

According to Georgieva, the crisis in Ukraine came at a delicate time for Africa, particularly as the global economy and the continent were beginning to recover from the ravages of the COVID-19 pandemic.

“This new crisis threatens to undo some of that progress. We discussed how to sustain Africa’s recovery already lagging other regions despite significant new obstacles,” she said.

She listed areas where Africa was particularly vulnerable to impacts from the Ukraine war to include increased food prices, higher fuel prices, and lower tourism revenues.

Georgieva further noted that the continent faced more difficulty in accessing international capital markets.

Addressing concerns about the limited domestic policy space to sustainably address the ongoing crises, the IMF managing director enjoined African policymakers to redouble efforts to advance reforms that would promote resilience, which she described as a priority for many countries.

She also reiterated IMF’s readiness to help African countries address the repercussions of the war, by helping to design and implement reforms through policy advice, capacity development, and lending.

“Recent reforms to the Fund’s lending toolkit (will) provide greater flexibility to help meet financing needs,” she noted.

Georgieva expressed pleasure over the ongoing strong interest from African countries in the proposed IMF Resilience and Sustainability Trust, assuring that the international financial institution plans to have it fully operational by the end of 2022.