Press Release No. 09/23

Press Release: IMF African Department Director Antoinette Sayeh Says Sub-Saharan Africa Needs to Brace Itself for Global Downturn

February 4, 2009

The current global financial crisis will have a significant impact on Sub-Saharan Africa this year. Although the region is positioned to record positive rates of growth of 3.3 percent, compared to negative output in the advanced economies, this represents a sharp slowdown from recent years, according to Antoinette Monsio Sayeh, the International Monetary Fund's African Department Director.

Ms. Sayeh spoke today at the seminar Africa: Sustaining Success in the Face of Global Turmoil, held at the European School of Management in Paris and co-hosted by the IMF and CapAfrique. Lionel Zinsou, President of the Strategic Council of CapAfrique; Daniel Cohen, Professor at the Ecole normale supérieure et Ecole d'économie de Paris; Jean-Michel Severino, Managing Director of the French Agency for Development, and Mandé Sidibe, Chairman of the Ecobank Group Board of Directors, were among the panelists.

Ms. Sayeh said in her presentation that countries in the region will have to deal with slower global growth, large falls in commodity prices, and reduced financial inflows and that the international community must maintain its assistance to Africa to live up to the Gleneagles commitments.

"As the global crisis continues to unfold, the uncertainty surrounding the outlook is unusually large, and risks remain mainly on the downside," Ms. Sayeh cautioned. "The crisis could slow global growth by more, or for longer than expected, pulling commodity prices down even further than projected. Also, financial flows to Africa could slow further or even reverse, putting severe pressures on the balance of payments in many countries."

According to the IMF's most recent projections, Sub-Saharan Africa's expected growth rate of 3.3 percent in 2009 is three percentage points less than the Fund's April 2008 forecast. Fiscal balances for the region as a whole will deteriorate significantly, especially among oil exporters, the IMF expects.

"Some countries, which have created fiscal space in recent years through debt reduction and strong policies, may have scope for fiscal stimulus. But in others, this scope is limited by debt sustainability or financing constraints. The challenge for policy makers is to maintain stability so as not to jeopardize hard-won gains of recent years," Ms. Sayeh said. Also, she noted, domestic financial sectors have fortunately not faced a systemic crisis in Africa as a result of global financial turmoil. But supervisors need to be prepared, identify vulnerabilities, and have contingency plans in place.

The African Department director urged the international community to maintain its assistance for Africa to make progress towards the Millennium Development Goals. "The current situation makes it even more important to ensure that aid is predictable, transparent, and aligned with the policy priorities of the recipients," Ms. Sayeh said.

Addressing both the immediate crisis and the long-term challenges that will remain after the global economic and financial storm abates are the main objectives of a high-level conference that the IMF and the government of Tanzania will co-host in Dar es Salaam on March 10-11, Ms. Sayeh said. The event, "Changes: Successful Partnerships For Africa's Growth Challenge," will bring together policy makers, the private sector, and civil society from Africa and beyond to discuss how to ensure that the global financial crisis does not damage Africa's recent economic gains.

For more information, please visit the conference's website, http://www.changes-challenges.org.

Press contact
Andreas Adriano
International Monetary Fund
aadriano@imf.org
+1-202-623-4188