Africa to get $33bn from new IMF drawing rights ― Georgieva

Members of the International Monetary Fund (IMF) have backed an unprecedented proposal to allocate new $650 billion Special Drawing Rights (SDR) and it will be the largest in the history of the organisation.

In a message to the annual general meeting of African Development Bank (AfDB) on Wednesday, IMF Managing Director, Ms Kristalina Georgieva however, warned against mounting public debts in Africa, which jumped from six per cent of GDP to 58 per cent in 2020.

She said “once approved”, the SDR, “which we intend to achieve by the end of August, it will directly and immediately make about $33 billion available to our African members.

She stated that interest payments on debts in 2020 reached 20 per cent of tax revenue for the region as a whole and exceeded one-third of revenue in some countries.

“Similarly, public debt in North Africa rose by about 12 percentage points to an average of 88 per cent of GDP last year,” while lamenting that the continent is projected to grow by a mere 3.2 per cent while average global growth would be as high as six per cent.

Saying that the best way to deal with debt is for economies to grow, she added, however, “this is not an easy task during the pandemic when governments face reduced revenues and increased spending on crisis measures.

“But this crisis is an opportunity for transformative reforms—to improve public services, strengthen governance, and boost domestic revenue mobilization.

“Think of how digitalization can improve tax administration and revenue collection, and the quality of public spending. With radical transparency, Africa can tap into new sources of finance, such as carbon offsets.

“And there is room to encourage more private investment in social and physical infrastructure.

“As noted at the G7 summit, Development Financing Institutions and multilateral partners intend to invest at least $80 billion into the private sector in Africa over the next five years.

The IMF boss disclosed that Africa was facing the world’s fastest growth rate for new COVID cases, with an exponential trajectory even more alarming than during the second wave in January.

“Based on current trends, this wave will likely surpass previous peaks within the next week. It is a human tragedy—and an economic calamity,” as countries are being forced to reintroduce restrictions, further denting a precarious recovery.

According to her, only 0.6 per cent of Africa’s adult population have been fully vaccinated so far.

To help the situation, Georgieva stated that IMF staff recently proposed a $50 billion plan that involves vaccinating at least 40 per cent of the population of all countries by the end of this year and at least 60 per cent by mid-2022.

“The $50 billion price tag is dwarfed by the estimated $9 trillion boosts to global economic activity by 2025 from faster vaccine rollout and faster recovery.

“It would be the best public investment of our lives—and it would be a game-changer for Africa.

“Together with the World Bank, WHO, and WTO, we are forming a ‘war room’—a task force to monitor and accelerate the implementation of this plan.”

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