Transcript Impact Of The Crisis On The Financial Systems in AFR

The Financial Crisis and Decades of
Reforms: Options for Africa’s Future
Reforms
May 2009
Antoinette Monsio Sayeh
Director, African Department
International Monetary Fund
Disclaimer: The views expressed herein are those of the author and should not be attributed to the
IMF, its Executive Board, or its management.
Agenda
What can we learn from Africa’s reform successes and
how can these reforms be preserved or deepened?
How should African governments handle the domestic
fallout of the ongoing crisis and push forward with
economic and trade reforms?
What is the role of the state vis-à-vis the private sector in
weathering the storm?
Reform success stories
Sub-Saharan Africa:
17 high-growth
Figures for B
GDP per Capita Growth Rates
10
countries: (4 oil
(Simple 3-year moving average)
exporters, 4 middle- 8
High-growth
income, and 9 LICs) 6
Medium4
14 low-growth
growth
countries (12 of them 2
0
fragile states)
13 medium-growth -2
Low-growth
-4
countries
1970 1974 1978 1982 1986 1990 1994 1998 2002 2006
Source: IMF, World Economic Outlook
African success stories:
Getting the critical basis right
Macroeconomic stability
Avoiding major policy failures
Reinforcing institutions
Proactive role of government
Higher aid
Fallout from the ongoing
global crisis
Sub-Saharan Africa: 2008 v. Current Forecast for 2009
2008 and Current Forecast for 2009
Real GDP growth
(Percent)
15
10
2008 Outcomes
5
Current
account
balance
(Percent
of GDP)
Inflation
(Percent)
0
-15
-10
-5
Latest AFR
projections
for 2009
0
5
-5
-10
-15
Fiscal balance
(Percent of GDP)
Source: IMF, African Department database
10
15
All countries will be affected by the
crisis, including some star performers
Impact of the Crisis on Growth in Sub-Saharan Africa
1
15
GDP growth, (Percent of GDP)
2009 Proj.
10
5
GDP growth,
Average 1997-2007
0
-5
0
-5
-10
-15
Source: IMF staff estimates
5
10
15
How can the challenges be dealt
with in the short-term?
Use available fiscal space
Where possible, ease monetary policy
and let the exchange rate adjust to the
external environment
Closely monitor financial vulnerabilities
and be prepared to act promptly
Strengthen social safety nets
What are the implications of the
crisis for structural reforms?
It is important now to move ahead with
planned structural reforms in:
Public financial management
Social safety nets
Cost of doing business
Countries also need to avoid new
restrictions on trade flows as they work to
mitigate the impact of the global crisis.
Role of the state versus the private
sector in a time of crisis?
Near-term
 More active aggregate demand policies
 Strengthening of financial sector surveillance
Medium-term
Larger focus on improving supervisory and
regulatory environment
Private sector as engine of growth
How can the international
community help?
African countries require the support of the
international community to respond
effectively to the global crisis.
The international community should
endeavor to meet or exceed the G-8
Gleneagles commitments.
The Role of the IMF
The IMF is taking important steps to help African
countries meet the challenges of the crisis:
Doubling concessional lending to low income countries
Working on a proposal to increase the general SDR
allocation
Revising its lending instruments to make them more
flexible
Continuing to provide policy advice and extensive
technical assistance for strengthening economic
policymaking in Africa