IMF commits US$245bn additional Covid funding

LOW-INCOME countries in sub-Saharan Africa will receive additional external funding needs of US$245 billion over a five-year period to 2025, to recover ground lost during the Covid-19 crisis, the International Monetary Fund (IMF) has said.

Zimbabwe is among low-income countries in the world. In its April 2021 regional economic outlook for Sub Saharan Africa titled: Navigating a Long Pandemic, IMF said the money would also help strengthen the pandemic response spending and accelerate income convergence.

“More broadly, to recover ground lost during the crisis, sub-Saharan Africa’s low-income countries face additional external funding needs of US$245 billion over 2021-25, to help strengthen the pandemic response spending and accelerate income convergence. The corresponding figure for all sub-Saharan Africa is US$425 billion,” the report states.

“The region can cover only a portion of these needs on its own. The international community, including the IMF, has moved swiftly to help cover emergency needs over 2020. But further support will be essential — including through more concessional financing, and more help to deal with the region’s debt.”

Sub-Saharan Africa is still in the grip of a health and economic emergency.

A year ago, most African countries swiftly implemented national lockdowns to contain the virus and spare the region from the worst of the crisis. While vital in saving lives, these measures added to the global recession and had a dramatic impact on local economies, prompting sub-Saharan Africa to shrink by an extraordinary - 1,9% in 2020 — the worst outcome on record, according to the IMF.

IMF said the extension of the Group of 20 (G20) debt service initiative to December 2021 and the new common framework will be helpful in this regard, and a US$650 billion Special Drawing Rights allocation will provide about US$23 billion to sub-Saharan African countries to help boost liquidity and fight the pandemic.

“Over the long term, however, official resources may not be sufficient. The legacy from this crisis may also provide a valuable opportunity for innovative new financing approaches, which may help sub-Saharan Africa mobilise private-sector funds, particularly in light of the region’s investment requirements,” The Bretton Woods Institute said. IMF said the region entered the Covid-19 crisis with less fiscal space than at the onset of the global financial crisis, with 16 countries either at high risk of debt distress, or already in distress in 2019.