“So far, we have received emergency funding requests from around 20 countries, with the expectation of receiving help requests from 10 or more countries soon,” wrote Abebe Aemro Selassie, in an opinion article published jointly with advisor Karen Ongley on the IMF blog.
The text states that the first financial agreements should be signed in early April.
“What started out as a public health crisis is today a major global economic crisis, and our fear is that African countries will be hit hard,” reads the text, which warns that the conditions in African countries are today very different from the circumstances with which they faced the previous world recession in 2009.
“10 years ago, the region managed to be spared the worst of the global financial crisis, with reduced levels of indebtedness, most countries had space to raise spending and managed to implement countercyclical policy measures”, recall the authors, pointing out that “the countries were also less integrated into the international financial markets and, therefore, the interruption of financing affected only a small number of them ”.
Today, they warn, the outlook is quite different: “None of these conditions apply to the current situation, as many sub-Saharan economies have limited margins in their budgets to increase spending, and are more dependent on international capital markets”.
In addition to the difficulties of implementing 'social isolation' measures, such as working from home, to prevent the spread of the new coronavirus, the pandemic will have “a substantial economic effect in sub-Saharan Africa”, essentially for three reasons, say authors.
“First, the very measures that are critical to stop the spread of the virus will have direct costs for local economies”, since they will imply “less paid work, less income, less spending and less jobs”.
Secondly, adversities on a global scale will have repercussions in the region: “The slowdown in large economies will cause a drop in international demand, leading to disruptions in production and global supply chains, which will have a greater impact on trade”.
The article also warns that “the tightening of global financial conditions will limit access to finance, and it is also more likely that countries will experience delays in making investments or development projects”.
Finally, they list, the sharp decline in raw material prices will hit oil exporters hard, aggravating the first two effects and motivating “a considerable impact”, with IMF estimates pointing that “each 10% decline in prices result, on average, in a 0.6% reduction in the growth of oil exporters and an increase of 0.8% of GDP in global budget deficits ”.
The new coronavirus, responsible for the covid-19 pandemic, has already infected an additional 480,000 people worldwide, of whom nearly 22,000 died.
After appearing in China in December, the outbreak spread worldwide, prompting the World Health Organization (WHO) to declare a pandemic situation.
The number of deaths caused by covid-19 in Africa rose to 73 today with the number of cumulative cases exceeding 2,800 in 46 countries, according to the latest pandemic statistics.
MBA // LFS
The Covid-19: IMF says it has received aid requests from 20 African countries first in Vision.