Low commodity prices, climate change, and insecurity are forcing many countries to make significant fiscal adjustments, African finance ministers said during the IMF-World Bank Spring Meetings in Washington D.C.
Ministers from four of the hardest hit countries told journalists that falling export revenues are leaving large fiscal deficits and dampening growth prospects.
South Sudan’s finance minister, Stephen Dhieu Dau, said the sharp drop in international oil prices on top of recent political instability, has Africa’s newest country experiencing an extreme income shock. “Our currency has lost 80 percent since last year, and inflation reached 730 percent in August,” he said.
Dhieu Dau, said South Sudan is trying to implement reforms as well as a peace agreement to end the civil war that started in 2013, but the country needs help. “The international community participation to help our government and our reform agenda, I think is paramount,” Dhieu Dau said.
The effects of weak global demand is not limited to the continent’s large commodity exporters. Benin’s finance minister, Romuald Wadagni said whatever happens in neighboring Nigeria is felt in Benin. “Half of our revenues come from trade with Nigeria,” he said.
Benin is looking to expand its tourism and agriculture sectors as a means to diversify revenue sources, but the country is struggling with high debt. Wadagni said they started discussions recently with the IMF about a possible program.
Meanwhile, Guinea’s first-ever woman finance minister, Malado Kaba, said her country is on the verge of favorably concluding its macroeconomic program supported by the IMF, which helped it turn the corner from the dire circumstances left by the Ebola epidemic. “So now our growth estimate is of 5.2 percent, we’ve been able to substantially reduce inflation to about 8.4 percent, and we have reconstituted our foreign reserves to three months of imports,” Kaba said.
Zambia’s Trade and Commerce minister, Felix Mutati, said the country’s mining sector has been hit hard by copper prices that have fallen by more than 40 percent, and power shortages caused by climate change. “With poor rains, our power generation was down by 50 percent,” he said.
But when asked about Africa’s future prospects, Mutati said the problems that the region is facing can be solved through greater integration and trade. “It doesn’t matter how you fall, it’s all about how you rise,” Mutati said