IMF’s Catherine Pattillo on regional economic outlook for Africa
CNBC Africa’s Godfrey Mutizwa is joined by Catherine Pattillo, Deputy Director, Africa Department, International Monetary Fund for this discussion.
Mon, 30 Oct 2023 16:02:17 GMT
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AI Generated Summary
- Positive signs of economic improvement in many African countries post-global pandemic
- Divergence in growth between diversified and resource-rich economies underscores resilience
- Importance of addressing debt restructuring, inflation, and revenue generation for sustainable growth
The International Monetary Fund (IMF) recently released its regional economic outlook report for Africa, shedding light on the current economic landscape and future projections for the continent. In a recent interview with CNBC Africa, Catherine Pattillo, Assistant Director of Fiscal Affairs at the IMF, shared insights on the key themes shaping economic growth in Africa. The discussion covered the impact of the global pandemic, the challenges of rising debt levels, the importance of diversification, and the need for policy agility in navigating the road to recovery.
Pattillo highlighted that after years of crises, including the global pandemic, there are positive signs of improvement in many African countries. Growth is expected to increase from 3.3% in 2023 to 4% in 2024, with rising private investment and consumption acting as key drivers of growth in about 80% of the countries in the region. This indicates a broad-based recovery rather than limited to select large economies.
One of the significant trends observed is the divergence in growth between diversified economies and resource-rich economies. While diversified economies are expected to grow at a stronger pace, resource-rich economies are projected to experience slower growth. The resilience of diversified economies lies in their ability to withstand shocks due to the wide variety of sectors contributing to their growth.
The discussion also delved into the pressing issue of debt restructuring and repayment. Pattillo acknowledged the progress made in debt restructuring for countries like Chad, Zambia, and Ghana, emphasizing the importance of timely processes and transparent mechanisms to build trust among creditors. The IMF is actively involved in initiatives like the global debt sovereign roundtable to facilitate better understanding and disclosure on debt-related matters.
Looking ahead to 2024, the IMF projects a 4% growth rate for the continent, but highlights key policy areas that require attention to sustain this growth. Inflation, debt, and exchange rates are identified as critical policy areas where nimble policy decisions are crucial. While inflation is on a declining trend, debt vulnerabilities remain high, necessitating efforts to enhance revenue mobilization, improve fiscal efficiency, and manage debt costs effectively.
Pattillo emphasized the importance of increasing taxation and exploring other revenue-raising measures to create fiscal space for essential development spending. African governments are encouraged to leverage various tools such as eliminating tax exemptions, improving digitalization, and enhancing property taxes to boost revenue streams.
In conclusion, Pattillo expressed optimism about Africa's future, citing the continent's resilience, young and growing population, abundant natural resources, and entrepreneurial spirit as key drivers of economic potential. While challenges persist, there is a sense of hope and possibility for Africa to overcome obstacles and emerge as a pivotal player in global economic dynamics. The road to recovery may be complex, but with concerted efforts and strategic policies, Africa is poised to navigate towards sustainable growth and prosperity.