IMF Reports 'Big Funding squeeze' Already Being Felt in Sub-Saharan Africa
April 18, 2023 6:38 AM
Sub-Saharan African (SSA) countries are facing a "significant funding pressure," causing them to slash spending on health, education, and infrastructure. People in the region, according to Abebe Aemro Selassie, are already "feeling the repercussions of the budget problem." According to the IMF, countries in the SSA region should also consider establishing "a well-functioning debt-resolution system."
According to the International Monetary Fund, the Sub-Saharan Africa (SSA) area is experiencing a "significant funding pressure" as a result of "shrinking aid budgets and decreasing inflows from partners." Without this cash, governments in the region will be compelled to slash expenditure on health, education, and infrastructure, "preventing the region from reaching its full potential," according to a statement made by the global lender.
Abebe Aemro Selassie, the lender's director of the African department, stated that people in SSA regions are already feeling the effects of the crisis, notwithstanding the region's reducing share of funding.
"The people of sub-Saharan Africa are suffering from a severe funding crisis. Russia's invasion of Ukraine has led to higher prices, higher interest rates on loans, and less availability of inexpensive capital. "When combined with a long-term reduction in aid and a more recent decline in partner investment, this implies that there is less money to spend on important services like health, education, and infrastructure," Selassie claims.
Selassie further warned that unless actions to reduce these dangers are done, the region's ambition of becoming a "driving force of the world economy in years to come" will be harmed.
Meanwhile, the IMF stated in an April 14 press release→ that it has already played its role by providing more than $50 billion to SSA nations between 2020 and 2022. The lender also announced that it has "lending arrangements with 21 countries," and that more requests for such programs are being considered.
In addition to waiting for a financial rescue, the IMF advised SSA countries to put in place "a well-functioning debt-resolution structure." Governments should also think about allowing their separate currency rates to fall.
"A final aim is to ensure that critical climate change activities do not push out essential needs like health and education. Environmental financing given by the international community must be added to present aid flows," according to the IMF.