Of the more than $110 billion in additional funding that sub-Saharan Africa will need this year to fight the coronavirus pandemic, $44 billion has not been financed yet even after several countries have taken up emergency loans and debt-service relief initiatives, according to the International Monetary Fund (IMF).
The funding needs persist despite the IMF approving debt-service relief for 21 sub-Saharan African countries for an initial six-month phase ending mid-October and a Debt Service Suspension Initiative by the Group of 20 leading economies that waived up to $14 billion in payments for the world’s poorest countries — most of them in Africa — until December, the lender said on Monday in a regional economic outlook update.
The lender disbursed $10.1 billion through emergency facilities or augmented existing arrangements to 29 sub-Saharan African countries, it said. More international support is urgently required for the region to overcome the crisis and return to sustainable growth, according to the IMF.
Sub-Saharan Africa’s economy is forecast to contract by 3.2% in 2020, double the IMF’s April estimate. The lender cut gross domestic product forecasts for 37 of the region’s 45 economies, with the largest downward revisions in tourism-dependent Comoros and Mauritius. The forecasts for the change in GDP in oil-exporting countries was cut by 2.1 percentage points, the IMF said.
“This crisis is unprecedented,” Abebe Aemro Selassie, the director of the IMF’s African department, said in a statement released with the outlook. “Our efforts today will have significant consequences down the road, not only in helping our members offset the immediate tragedy of the crisis, but also in ensuring that peoples’ lives and livelihoods are not destroyed forever.”
The decline in regional output is likely to erase nearly a decade of progress in development, with real GDP per capita forecast to contract by 5.4% to a level last seen around 2010, the lender said. The pandemic is likely to increase global poverty levels for the first time since the Asian crisis in 1998, with 26 million to 39 million more people at risk of extreme poverty in sub-Saharan Africa alone, the IMF said, citing World Bank estimates.
While economic growth in the region is projected to rebound to 3.4% in 2021, it’ll be shallower than the expected world growth rate because support packages in sub-Saharan Africa are “considerably smaller” than those implemented in many other economies, the IMF said.