African countries must focus on development spending - IMF
Fiscal strategies by African countries must focus on development spending, reducing debt vulnerabilities and providing essential social needs to deal with the threat of unemployment.
This was contained in a statement detailing strategies agreed on by the International Monetary Fund (IMF) and African Consultative Group, which comprises of the Fund Governors of a subset of 12 African countries belonging to the African Caucus (African finance ministers and central bank governors).
The statement was issued following a meeting, co-chaired by Ken Ofori-Atta, Minister of Finance and Chairman of the African Caucus, and Christine Lagarde, Managing Director, IMF, at the Fund’s headquarters in Washington D. C.
In addition to strengthening the effectiveness of monetary policy to enhance the monetary transmission mechanism, the meeting also urged for the enhancement of the flexibility of markets to facilitate adjustment to shocks and preserve competitiveness.
They further proposed the removal of trade barriers to boost medium-term growth, including in the context of the African Continental Free Trade Agreement and addressing illicit financing flows and base erosion to enhance governance and strengthen revenue collection.
The statement explained that despite an expected continuation of the economic recovery in Africa, medium-term growth for the region was expected to continue to fall well short of what was needed to absorb new entrants to the labour force due to current policies and increased global uncertainty.
“Against this backdrop, we agree that countries need to generate fiscal space, enhance resilience including to climate change, and create sustained high and inclusive growth, including by removing obstacles to greater gender equity,” the statement noted.
In this regard, it said, investment in human and physical capital to create jobs while at the same time reducing debt vulnerabilities was necessary to generate the expected growth.
Ms Lagarde stated that “the IMF will remain closely engaged with its African members. The Fund will continue to support the authorities’ efforts to address the current macroeconomic and structural challenges and achieve a stronger, durable and inclusive growth to absorb new entrants in the labour force”.
Mr Ofori-Atta echoed Ms Lagarde on the economic prospects of the continent, and the willingness of the sub-region to work closely with the IMF to tackle emerging concerns.
He emphasised the need for members to sustain commitment to structural reforms and encouraged the Fund to show patience in its programme engagement when there was demonstrated ownership by country authorities for successful outcomes.
By Times Reporter