Africa’s central banks are struggling to subside inflation which is going uncontrolled. The inflation has caused “horrifying” food insecurity, warned the International Monetary Fund’s (IMF) Africa head.
The IMF’s twice-yearly Regional Economic Outlook that came out on Friday cautioned that 123 million people, that comprise 12% of sub-Saharan Africa’s population, confront acute food insecurity by the end of the year.
The huge number of affected people are a result of increasing cases of COVID-19 pandemic, from the war in Ukraine and also the chaos caused by natural calamities like droughts in parts of the continent.
IMF’s Abebe Selassie said, “What worries us really is the fact that this is coming on top of all of the dislocation caused by the pandemic.” “I was in Chad (in May) and really the conditions that you saw there in terms of food security really are very, very horrifying.” he added.
Rise in Inflation, Shortfall in GDP
Rainy season has also failed in countries like Ethiopia, Somalia and parts of Kenya. Somalia is reeling under famine.
In Africa, annual food price inflation has gone over 10% from the second half of 2021. The regional inflation forecast for this year was raised up by 2 percentage points to 8.7% in the IMF’s latest economic forecasts released this week.
The forecast has also predicted a short of 0.2 percentage points to 3.6% in the Gross Domestic Product (GDP). This is significantly short from the 4.7% expansion in 2021. The IMF has also said that to cope up, countries like Nigeria, Ghana, Ethiopia, Malawi and Zimbabwe might need an increased interest rates faster and decisively.
The most indebted nations in sub-Saharan Africa effectively no longer have access to the international finance markets as a result of the rapidly rising global interest rates.
This has led other nations, like Ghana, to ask for IMF bailouts, and Selassie stated that efforts were still being made to ascertain whether the West African nation now requires debt relief.
Meanwhile, as a result of the G20 Common Framework plan put in place in 2020 in response to the COVID-19 pandemic, Ethiopia, Zambia, and Chad have long sought to restructure their loans.
Painfully sluggish progress has been made. The ongoing civil conflict in Ethiopia has slowed down the restructuring process, but IMF managing director Kristalina Georgieva expressed hope this week that both Zambia’s and Chad’s procedures would now be completed by the end of the year.
