JOHANNESBURG/LONDON, Oct 14 (Reuters) – Africa’s central banks are walking a tightrope trying to rein in inflation that is largely out of their control and causing “appalling” food insecurity, warned the director of the International Monetary Fund for Africa.
The IMF’s semi-annual Regional Economic Outlook published on Friday warned that 123 million people, or 12% of the population in sub-Saharan Africa, face acute food insecurity, where lack of access to adequate food puts life or well-being in immediate danger. someone’s livelihood. the end of the year.
That compares with around 82 million people affected before the COVID-19 pandemic, but the hammer blow from the virus, the fallout from the war in Ukraine, as well as worsening unrest and drought in parts of the continent have made the numbers skyrocket.
“What really worries us is the fact that this is on top of all the disruption caused by the pandemic,” the IMF’s Abebe Selassie told Reuters this week.
“I was in Chad (in May) and really the conditions that you saw there in terms of food security are really very, very horrible.”
Ethiopia, Somalia and parts of Kenya are also on track for a failed fifth rainy season, with a looming famine in Somalia.
Annual food price inflation in sub-Saharan Africa has hovered above 10% since the second half of 2021 and the IMF’s new economic forecasts this week revised up its regional inflation projection by 2 percentage points to 8.7% for this year.
It also cut GDP growth forecast by 0.2 percentage point to 3.6%, a significant drop from 4.7% expansion in 2021, and said Nigeria, Ghana, Ethiopia, Malawi and Zimbabwe may need to raise interest rates faster or more decisively. .
“It’s a delicate balancing act that central banks face,” Selassie said. “Inflation is this insidious, insidious tax on the poorest.”
Food prices rise again
The rapid rise in global interest rates means that the most indebted countries in sub-Saharan Africa have effectively lost access to international capital markets.
That has prompted countries like Ghana to seek IMF bailouts and Selassie said work was still under way to determine whether the West African country now needs debt relief.
Meanwhile, Ethiopia, Zambia and Chad had long been seeking to restructure their debts under the G20 Common Framework initiative established in 2020 in response to the COVID-19 pandemic.
Progress has been painfully slow. Ethiopia’s restructuring has been delayed by the ongoing civil war, although IMF Managing Director Kristalina Georgieva said this week that she expects both the Zambia and Chad processes to be completed by the end of the year.
Chad’s bilateral creditors said Thursday night that the country now does not need debt relief, given the rise in the price of crude oil, one of the country’s main sources of income. Glencore mining and oil trading company
“Is everything running as fast as we expected? No,” Selassie said, in an interview before the statement from Chad’s creditors. “But I also want to emphasize that there has been a lot of cooperation from the G20 members, China and others.”
He said restructurings in Zambia and Chad now depend on the private companies and funds that provided loans to the country and that the IMF had been “very frustrated” that required debt relief for Chad had not been finalized.
“Anything that exceeds what is reasonable to ask of Zambians would be unfair to the people of Zambia,” Selassie added.
He warned that more African countries may need to restructure their debt.
“If global conditions persist,” he said, “there will be some countries that will require a debt profile review.”
Reporting by Rachel Savage, Marc Jones, and Jorgelina do Rosario, editing by Deepa Babington and Louise Heavens
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