The Global Crisis and Sub- Saharan Africa

Antoinette Sayeh African Department International Monetary Fund Main Messages

1. The global crisis is affecting SSA: growth is falling sharply, and fiscal and BoP pressures are mounting. 2. Policymakers have some room to respond with stimulative policies, but financing constraints impose limits. 3. The IMF has scaled up its support for Africa with increased and more flexible financing, technical assistance and policy advice. Main Transmission Channels of the Crisis to Sub-Saharan Africa

Declining External Demand for SSA’s Output.

Slumping Commodity Prices.

Scarcer Financial Flows. Growth is slowing down

GDP Growth 8 (Percent)

6

4

2

0 Sub-Saharan Africa World -2 2000 2002 2004 2006 2008 2010 Sources: IMF, World Economic Outlook; and IMF, African Department database. Inflation is slowly falling, from a high level 20 Consumer Price Inflation 20

(Percent) Sub-Saharan Africa

15 World 15

10 10

5 5

0 0 2000 2002 2004 2006 2008 2010 Source: IMF. Policy Response in SSA

Countries should respond to the crisis by: • Using fiscal space where available, considering medium-term sustainability. • Where possible, using monetary policy and allowing the exchange rate to adjust to counter demand slowdown. • Countries have been responding broadly along these lines Fiscal Policy Response Sub-Saharan Africa: Fiscal Deficit Changes (Percentage points of GDP, 2009 minus 2008)

0

-5

-10

-15

-20

-25

-30 Chad Gabon of Angola Nigeria Guinea Equatorial Cameroon Congo, Rep. Congo,

10

5

0

-5

-10

-15 Mali Kenya Ghana Eritrea Guinea Zambia Malawi Uganda Senegal Lesotho Rwanda Burundi Ethiopia Namibia Tanzania Comoros Mauritius Botswana Swaziland Seychelles Cape Verde Cape Madagascar South Africa Côte d'Ivoire Gambia, The Mozambique Burkina Faso Burkina Sierra Leone Guinea-Bissau Congo, Dem. Rep. of Dem. Rep. Congo, São Tomé and Príncipe and Tomé São Central African Republic African Central Monetary Policy Response

Percent of SSA countries

80 80 First semester 2008 Second semester 2008 70 70 60 60 50 50 40 40 30 30 20 20 10 10 0 0 Tightening No change in policy Loosening Tightening No change in policy Loosening

Source: IMF staff estimates Role of International Community: The Recent G-20 Summit Commitment to restore growth

Improving Financial Supervision and Regulation

Strengthening Global Financial Institutions.

Supporting Low-Income Countries

Boosting IMF Resources Fund Response

More Resources and More Flexible Conditions for IMF Financing

Expanding and accelerating capacity building

Strengthening Governance, Voice, and Representation