IMF urges policy caution for vulnerable Africa

In a new report, the International Monetary Fund (IMF) said African governments face an 'extremely challenging' environment in macro-economic policy.

IMF urges policy caution for vulnerable Africa
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JOHANNESBURG - African countries have to walk the tightrope as they contemplate economic reform at a time of worsening hunger and climate change, the IMF said on Thursday.

In a new report, the International Monetary Fund (IMF) said African governments face an "extremely challenging" environment in macro-economic policy.

"Addressing the lack of resilience to climate change (and) critically underlying chronic food insecurity... will require careful policy prioritisation against a backdrop of financing and capacity constraints," it said.

At least 123 million people, or 12% of sub-Saharan Africa's population, are projected to be acutely food insecure, it said. The impact on economies from the COVID-19 pandemic has combined with a surge in grain prices fueled by the Ukraine War, it said.

At the same time, East Africa is suffering from one of the worst droughts in recent history.

Despite these problems, some liberalising reforms in trade, regulations and markets are feasible, the IMF said.

"Trade liberalisation and import diversification could help stabilise regional food supply and prices," the fund suggested.

It pointed to a ban that Zambia imposed on exports of its corn in 2020. If some of the harvest had been available, it could have helped with southern Africa's food shortfall.

The IMF renewed a pledge to back African countries needing technical assistance and financial support.