Source: International Monetary Fund

April 25, 2025

PARTICIPANTS:

Speaker: ABEBE AEMRO SELASSIE, Director, African Department, IMF

Moderator: KWABENA AKUAMOAH-BOATENG, Communications Officer, IMF

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MR. AKUAMOAH-BOATENG: Good morning, good afternoon, and good evening to all of you here in the room and those joining us online. My name is Kwabena Akuamoah-Boateng.  I am with the Communications Department of the IMF, and

I will be your moderator for today. 

Welcome to today’s press briefing on the Regional Economic Outlook for Sub-Saharan Africa. I am pleased to introduce Abebe Aemro Selassie, Director of the IMF’s African Department.  Abebe will share key insights from our new report titled Recovery Interrupted. 

But before I turn to Abebe, a reminder that we have simultaneous interpretation in French and Portuguese, both online and in the room.  And the materials for this press briefing, the report, are all available online at IMF.org/Africa. Abebe, the floor is yours.

MR. SELASSIE: Good morning and good afternoon to colleagues joining us from the region and beyond. Thank you for being here today for the release of our April Regional Economic Outlook for Sub-Saharan Africa.

Six months ago, I highlighted our region’s sluggish growth, and the steep political and social hurdles governments had to overcome to push through essential reforms.  Today, that fragile recovery faces a new test: the surge of global policy uncertainty so profound it is reshaping the region’s growth trajectory.

Just when policy efforts began to bear fruit, with regional growth exceeding expectations in 2024, the region’s hard-won recovery has been overtaken by a sudden realignment of global priorities, casting a shadow over the outlook.  We now expect growth in Sub-Saharan Africa to ease to 3.8 percent in 2025 and 4.2 percent in 2026, marked down from our October projections, and these have been driven largely by difficult external conditions: weaker demand abroad, softer commodity prices, and tighter financial markets.

Any further increase in trade tensions or tightening of financial conditions in advanced economies could further dampen regional confidence, raise borrowing costs further, and delay investment.  Meanwhile, official development assistance to Sub-Saharan Africa is likely to decline further, placing extra strain on the most vulnerable population.

These external headwinds come on top of longer-standing vulnerabilities. High debt levels constrain the ability of many countries to finance essential services and development priorities.  While inflationary pressures have moderated at the regional level, quite a few countries are still grappling with elevated inflation, necessitating a tighter monetary stance and careful fiscal policy.

Against this challenging backdrop, our report underscores the importance of calibrating policies to balance growth, social development, and macroeconomic stability.  Building robust fiscal and external buffers is more important than ever, underpinned by credibility and consistency in policymaking.

In particular, there is a premium on policies to strengthen resilience: mobilize domestic revenue, improve spending efficiency, and strengthen public finance management and fiscal framework and fiscal frameworks to lower borrowing costs.  Reforms that enhance growth, improve the business climate, and foster regional trade integration are also needed to lay the groundwork for private sector-led growth.  High growth is imperative to engender the millions of jobs our region needs. 

A strong, stable, and prosperous Sub-Saharan Africa is important for its people but also the world.  It is the region that will be the main source of labor and incremental investment and consumption demand in the decades to come.  External support as the region goes through its demographic transition is of tremendous strategic importance for the future of our planet. 

The Fund is doing its part to help, having dispersed over $65 billion since 2020 and more than $8 billion just over the last year.  Our policy advice and capacity development efforts support more countries still. 

Thank you and I’m happy to answer your questions. 

MR. AKUAMOAH-BOATENG: Thank you, Abebe. Before we turn to you for your questions, a couple of ground rules, please. If you want to ask a question, raise your hand, and we’ll come to you.  Identify yourself and your organization and please limit it to one question.  For those online, you can use the chat function, or you can also raise your hand, and then we’ll come to you.  I will start from my right. 

QUESTIONER: Good morning.  Thank you for taking my question.  You mentioned several things in your report.  The recovery that is going on the continent as well as some of the challenges that the continent is facing and the dividends that the continent currently has in its youth.  Leaders on the continent are working — I was at an event yesterday where they are looking at ways to raise funds to develop projects.  So, what is your recommendation for projects?  We’re seeing a need for projects like this as well as revenue mobilization on the continent.  So, is your recommendation to leaders on the continent on how to source these funds that are needed, given that some of the advanced economies are cutting back? 

MR. AKUAMOAH-BOATENG: All right, any related questions before we go to Abebe?

QUESTIONER: Abebe, you just made the point that the recovery has been hit by these uncertainties.  Beyond just policy direction, is there any scope to do anything in terms of, for example, maybe you dispense some money though, but maybe a little more to expect — to countries that are coming off defaults and what have you to help in this recovery, even at such a time?  This is also aided by, beyond the fact that some are coming, they have no buffers whatsoever.  And then, coming from defaults, things become very difficult for some of these countries to even have the money to do this.  Could there be any extra funding, even if on a regional level, to back the policy prescriptions that you have proposed? 

MR. SELASSIE: I think there’s two different points here. The first one is more of a broader meta point, whether financing is the only constraint that is hindering more investment, more robust economic activity, and job creation. Of course, financing plays a role, but it is not the only constraint. It depends on country-to-country circumstances, what sectors we are talking about.  But it really is important to recognize that there are many other things that can be done to engender higher growth to facilitate more investment. 

One of the issues that we have seen in our region over the years is that a lot of growth has –in many countries– been driven by public spending and public investment for many years.  That, of course, has made a major contribution.  It has facilitated all the investment that we have seen in infrastructure, building schools, building clinics.  So, that has a role to play. But I would say that going forward it will be as important to see if we can find ways in which the private sector is the main engine of growth. So, there are reforms that can be done to facilitate this growth. 

The second one I am sensing from both your questions is about the circumstance right now where a combination of cuts in aid [and] tighter financing conditions are causing dislocation [and difficulties for governments. We have been, more than anybody else, stressing just what a difficult environment our governments have been facing.  We have been talking about the brutal funding squeeze that countries are under.  It has ebbed a little bit and flowed, you know, like the external market conditions, for example. There have been periods when they have been opened and some of our market access countries have been able to borrow, and then other periods where they have been closed, and we are going through one right now.  And this is on top of the cuts in aid that we have seen and tighter domestic financing conditions.  

When this more cyclical point is playing out, I think it’s important for countries to be a bit more measured in how they are seeking to tackle their development needs.  So, maybe it means a bit more relying on domestic revenue mobilization, expenditure prioritization when conditions are particularly difficult as they are now, and, as I said earlier, going back to see what can be done to find ways to engender growth over the medium-term.  But it is a difficult period, as we note in our report, and one that is causing quite a bit of dislocation to our countries. 

MR. AKUAMOAH-BOATENG: I will come to the middle. The lady in the front.

QUESTIONER: My first question is around recovery, of course, your reports are called “interrupted”.  So, with recovery slipping, growth downgraded, debt pressures mountain, is Sub-Saharan Africa at risk of another lost decade?  Because in your report you mentioned that the last four years have been quite turbulent for Africa, and we are trying to get back on track.  What is IMF’s message on bold actions that leaders must take now to avoid being left behind in the global economy and to avoid Africa being in a permanent state of vulnerability?  Because we always hear that we are in a permanent state of vulnerability.  Then for Nigeria, macros are under threat right now.  How can the government — what are your suggestions on how the government can actually push through deep reforms that deliver tangible growth for its people?  Of course, for your report, you did mention the millions and millions of people that you know live below $2.15 a day. 

MR. AKUAMOAH-BOATENG: Any more Nigeria questions? I will take the gentleman right here.

QUESTIONER: In your report you said that debt has stabilized.  And when you look at Nigeria’s debt profile, what insights can you share as to where the borrowings are going to?  Are you seeing more of long-term loans or short-term loans?  So that’s one.  So, what — recently the World Bank expressed concerns about the performance of Nigeria’s statistical body, saying that the institution is performing Sub optimally.  Do you share that sentiment?  Thank you very much. 

MR. AKUAMOAH-BOATENG: I will take one more on Nigeria. The gentleman in the first row.

QUESTIONER: I [would] like to know in specific terms, Nigeria has already undertaken several reforms, especially removed oil subsidies and floated the naira.  What more specific things do you expect of Nigeria in terms of reform?

MR. AKUAMOAH-BOATENG: All right, thank you. Abebe?

MR. SELASSIE: So, in terms of the reforms that have been going on in Nigeria and the particularities of the challenge, the first thing to note is that we have been really impressed by how much reforms have been undertaken in recent years. Most notably, trying to go to the heart of the cause of the macroeconomic imbalances in Nigeria, which are related to the fact that, oil subsidies were taking up a very large share of the limited tax revenues that the government have and not necessarily being used in the most effective way to help the most vulnerable people. The issues related to the imbalances on the external side with the exchange rate extremely out of line. 

So it’s been really good to see the government taking these on, head-on, address those, and also beginning to roll out the third component of the reforms that we have been advocating for and of course, the government has been pursuing, which is to expand social protection, to target generalized subsidies to help the most vulnerable.  This has all been very good to see, but more can be done, particularly on the latter front, expanding social protection and enhancing a lot more transparency in the oil sector so that the removal of subsidies does translate into flow of revenue into the government budget.  So, there is still a bit more work to do in these areas. 

We just had a mission in Nigeria where there was extensive discussions on these and other issues on the macroeconomic area, but also other areas where there is a need to do reforms to engender more private sector investment and also how more resources can be devoted to help Nigeria generate the revenues it so desperately needs to build more schools, more universities, and, of course, more infrastructure.  So, there is a comprehensive set of reforms that Nigeria can pursue that would help engender more growth and help diversify the economy away from reliance on oil.  And this diversification is, of course, all the more important given what we are seeing happening to commodity prices.  So, I think this is an important agenda. 

Second, as the government is doing this, of course there will be a financing need.  And here what is needed is really a judicious and agile way of dealing with the financing challenges the country faces.  In the long run, the financing gap can only be filled by permanent sources such as revenue mobilization.  But in the interim, carefully looking at all the options the country must borrow in a contained way will be part of that solution.  And I think the government has been going about this prudently and cautiously so far, and we are encouraged by that. 

And lastly, on data issues in Nigeria we really applaud the effort the government’s making to try and revise and upgrade data quality in Nigeria.  This task is not an easy one in our countries, given the extent of informality there is, given the extent of relative price changes that play out in our economies.  So doing this cautiously is what is needed methodically.  And that is exactly what we see happening.  We welcome, though, the efforts the government is making because without good data, it is difficult to make good policies.  So, we really applaud the effort the government is making to try and upgrade data quality. 

MR. AKUAMOAH-BOATENG: We will take a round of questions online.

QUESTIONER: There are bills in the UK Parliament and the New York State Assembly that aim to force holdout private creditors to accept debt treatments on comparable terms to other creditors and to limit or stop such litigation.  Are these bills needed, do you think, or is the current international debt architecture sufficient?  So, you know, IMF, DSAs, creditor groups, the common framework, where applicable. 

MR. AKUAMOAH-BOATENG: Please go ahead with your question.

QUESTIONER: Earlier this month, the IMF reached a staff-level agreement with Burkina Faso to complete the Third Review of the country’s program.  So as part of the review, the IMF allowed a greater fiscal flexibility, allowing Burkina Faso to raise its public deficit target to 4 percent, up from the 2 percent cap set by the West African Economic Monetary Union.  So, given that the country’s challenges, such as persistent insecurity, high social demands, are common across the region, wouldn’t it be wiser to consider applying this flexibility more broadly to the West African Economic Monetary Union?  And my second question will be about the downward revision of the growth forecast for 2025 and 2026 in Sub-Saharan Africa.  Does the IMF view this new crisis – I am talking about the global uncertainty and the recent U.S. tariff measures.  Does the IMF view this crisis as potentially more severe and with broader consequences for the region than previous shocks such as COVID and the war in Ukraine? 

MR. SELASSIE: On the first question on debt workouts and the challenges there, I am not fully informed about the specifics of the bills that Rachel, you are talking about, indeed, we have seen from time to time some private creditor groups holding out, trying to hold out, but I am not sure that a bill is what’s needed, but rather, force of argument to try and bring people to the table. And in recent restructurings, at least I am not aware of this being the main hindrance in advancing discussions.  There have been many other factors, including just the complexity of the current creditor landscape, that have played a role. 

On Burkina Faso, flexibility under the program or the deficit targets for the WAEMU countries more generally, just it is important to distinguish between particular years’ fiscal deficit targets that the government wants to pursue and we, incorporate in the program and just the more medium-term criteria, convergence criteria that there is for the WAEMU countries. 

So, the 3 percent target criteria are for the medium- to long-term.  And it has been very clear that when there are shocks or when there are pressing social development needs, countries do have the scope to deviate from that.  In fact, often the constraint on the Sahel countries has been not having enough, sufficient, enough financing to be able to meet these to advance development objectives.  The other constraint of course is that overall, the more you exceed this 3 percent target and add to the overall debt burden, the more you are going to have – you are likely to build up debt vulnerabilities. 

So, in the work that we do with countries, whether it is Burkina Faso or other WAEMU countries or indeed beyond, what we try and help with is of course to help countries strike this balance between addressing the immediate and pressing needs that they have while avoiding medium-term debt sustainability problems.  I think one is just thinking about how to strike this balance.  And then second, we put resources on the table very cheaply to help countries, avoid, at least in the near term, more difficult financing difficulties.  So, for Burkina and others, it is just about striking this balance.

And on growth, whether this latest shock is as bad for the region as the previous ones. I think it is really important also to point out that as difficult, I mean the last four or five years have been incredibly difficult time for our countries, a lot of challenges, a lot of dislocation, but there is also been quite a lot of resilience, and I think that is important to stress.  I would note that, even now, it is this year, 11 out of the 20 fastest growing economies in the world are from Sub-Saharan Africa.  So, there are quite a lot of countries that are going to be sustaining significant growth in the region.  So, we should also not lose sight of this resilience. 

Second, and more broadly, the buildup of uncertainties I think is very negative.  And this is interrupting what we are seeing in terms of a recovery.  But growth is not, we are not projecting growth to collapse.  And our hope is that as things calm down, the region can resume its growth trajectory also.

MR. AKUAMOAH-BOATENG: We will take three more questions online, then we will come back to the room.

QUESTIONER: I wanted to know about Senegal, in terms of whether funds would be repaid after the misreporting of data and if the IMF has learned anything from that?  And also, just if you can, the status of the IMF’s programs and even operations in Sudan and South Sudan? 

MR. AKUAMOAH-BOATENG: Please go ahead.

QUESTIONER: The IMF is urging countries to focus on domestic revenue mobilization.  But you may have seen that South Africa’s Finance Minister has withdrawn the VAT increase that he had proposed in the budget, in the face of opposition from coalition partners.  Does the IMF see any alternative sources of revenue that are feasible for the South African government as the parties hoped?  And are there any lessons here for other countries trying to mobilize domestic revenue?                                                         

QUESTIONER: Building on the question that Hilary has asked that the REO does make the case for domestic revenue mobilization, and you made that argument, I believe, in the last two Regional Economic Outlook reports as well.  But poverty is still endemic.  Incomes, as far as I can tell, have not really recovered to pre-pandemic levels.  So other than broadcast to tax exemptions what else can be done to raise tax-to-GDP ratios?  One last question on this.  Has there been any progress that has been made in the Sovereign Debt Roundtable in deciding how debt from Afreximbank, and Trade and Development Bank should be treated, at least under the common framework for countries like Ghana and Zambia?  Now, do they qualify to not have their debt restructured in the same way that the IMF, the World Bank’s credit lines?

MR. SELASSIE: On Senegal, I was recently in Dakar for discussions building on work that our team has been doing. What we are waiting for is the government to finalize the work that’s ongoing.  Right now, the audits are going on and reconciliation work is going on. 

On the extent of domestic and external debt.  We have been very clear in welcoming the transparency and really robust and collegial way in which the government has been engaging on the issues that have arisen in the misreporting case and we look forward to the numbers stabilizing, and engaging in discussions on the next steps in terms of bringing the, the findings to our Executive Board and next steps in our engagement with Senegal. 

On South Sudan, it has just been a difficult period of course for South Sudan.  They have been hosting hundreds of thousands of refugees fleeing from the conflict in the north.  The conflict has also interrupted, disrupted heavily their main source of tax revenue, oil exports through the pipeline.  So, it’s been a really wrenching period.  Over the last three, four years we have provided, you know, we have been trying to provide South Sudan with emergency financing and trying to find a way in which we can engage with a more structured longer-term program.  We remain hopeful that we are going to be able to do that.  But first and foremost, I think we need to see what can be done to make sure that the policy making environment is as robust and as strong as it is, and as transparent, so we can come in, step in and support South Sudan.

On revenue mobilization, I want to just first link this to the point I made earlier that what we have observed and again there is a risk of generalizing, but what we’ve observed over the last 10, 15 years in the region is that governments have made a very significant effort to invest in really important infrastructure needs in building schools, in building health clinics and much else.  And you see very positive outcomes.  Look at the electricity coverage in our region, look at the human development indicators and how much they have moved over the years in the region. 

But we have also seen that despite a lot of investment, for example, in electricity generation capacity and electricity coverage in our countries, many roads are being built.  The returns of all this investment have not been captured in the tax revenue, which is one of the points, the pressure points where debt levels have gone up and the interest-to-revenue ratio.  So, the interest payment-to-revenue ratio has also been rising.  And this has been one of the key points of vulnerability in many economies and why a few countries have gotten into debt difficulty and needed to restructure. 

So going forward, I think it’s very clear that to be able to continue investing; to be able to continue expanding economies and the government doing its core function, it has to find more ways other than borrowing to address this. 

Now, in the past, governments have been quick to cut spending, and that has, we found, again and again, to be very detrimental to development progress and growth outcomes.  I think this, again, at the risk of generalizing, was the approach that was generally pursued in the 1980s and found to be very problematic, very challenging, very depressing to growth.  So, we would very much love for countries to avoid this. When there are pressing spending needs, there’s generally only a couple of ways that you can finance this.  Spending cuts or revenue mobilization.  You can borrow, of course, but as I said, borrowing is not optimal. 

Now, this doesn’t mean revenue mobilization is easy.  Far, far from it. It requires not only political engagement, but also a lot of communication, a lot of effort to show that the resources the government is trying to generate are going to be going to the right areas to help strengthen the social contract.  So, it’s a deep and engaged process, and we are very, very cognizant of that.  But I do think that this is the most optimal way, the most economically sensible way in which our countries can help address the tremendous development needs that we have.

Now, specifically on South Africa, ultimately when issues like this arise, these are deeply domestic political issues to be resolved as to what the best way to do the financing is.  So, if a tax rate increase for a particular tax is not possible, then maybe finding ways to expand the tax base, maybe trying different tax angles or if all of those are not possible, then revisiting spending priorities may be one of the ways that countries must handle this.  And this is typically what we see playing out in countries in the region when financing constraints are binding. 

So, whether it is in Kenya, South Africa, or other countries the issue of revenue mobilization is a live one, but one that is extremely complex.  We are very cognizant of that.  And one that requires quite a lot of consensus building, quite a lot of discussion to be able to advance, and of course, broader societal support.  And we absolutely see countries engaging in this and do what we can to help bring lessons from other countries where we are asked to.

Then there was a question about the GSDR.  So, this Global Sovereign Debt Roundtable, this is the initiative launched by the Fund and the Bank to try and bring creditors and debtors together around the table to find ways in which debt work[outs] can be easier because you are discussing general principles rather than country-specific debt restructuring issues. And we have seen this making quite a lot of progress. Perhaps the most recent development has been the preparation of a debt work[out] playbook that is a very helpful document that has been put out building on the experience of recent work[outs].  What has worked particularly well.  What kind of information sharing ahead of debt work[outs] have been helpful in terms of accelerating debt processes.  Debt restructurings are one of the most contentious and challenging issues that there are between states, between creditors and debtors, and it requires quite a lot of discussion, and it is not such an easy thing to do, including what the parameter of debt should be.  I think one of the questions that was raised is about the debt parameter.  This is fundamentally an issue for the debtor countries and creditors to resolve, and intra-creditor disputes also have to be done. 

So, in terms of the principles that generally we see creditors apply when these kinds of disputes arise about what the right parameter should be or not and who gets preferential treatment. I think there’s generally been two rules of thumb. One is that the terms in which new financing is being provided or the financing is provided, whether it’s commercial or concessional has been a factor that most creditors look at in terms of whether a particular credit should be included in the parameter or not, and then also the extent to which new financing is being made available.  So, what differentiates senior creditors like the IMF, the World Bank, of course, is that for most countries we operate providing concessional financing very long-term.  And we are the ones that come in and provide financing consistently through crisis and otherwise. 

MR. AKUAMOAH-BOATENG: We have time for one more round of questions. I will start with the gentleman in the front here. 

QUESTIONER: The U.S. is your largest shareholder, and we are seeing mixed messages this week from the Treasury Secretary mentioning that he remains committed to the Fund but also calling on you to hold countries accountable to program performance, empower staff to walk away if reform commitment is lacking. 

So, I wanted to ask you, should we expect the IMF spigot to start closing in response to U.S. pressure?  Or if not, are you changing your approach to countries, what you are telling them and how to deal with their issues?  Are you being a little more stringent in your requirements? 

You have talked about Senegal, maybe Ghana, Ethiopia, related to that issue of the U.S stepping in.  The CEMAC negotiations this week, we saw American energy companies working with the CEMAC on repatriation of funds dedicated to the rehabilitation of oil sites.  I’m wondering if you have a stance on that, what the IMF position is?  I understand the U.S is trying to get the IMF involved in that.

MR. AKUAMOAH-BOATENG: All right, thanks. Gentleman. 

QUESTIONER: Kenyan authorities here have indicated the need to present a credible fiscal framework as they try and unlock a new program for Kenya.  Would you offer more color into the discussions this week, noting again that the same credibility questions led to the cancellation or the termination of the program at its final review?  

MR. AKUAMOAH-BOATENG: We have a question online “what is the IMF’s view on Kenya’s debt position?”

MR. SELASSIE: So, on the first question, I would like to refer you to Kristalina who gave comprehensive responses to the Secretary’s IMFC Statement. What I want to add though is that in the region, in Sub-Saharan Africa, in terms of programs, the calibration of reforms, incorporation of reforms, I would say that we are always in terms of each program has its particularities and what we always try and do in these programs is make sure that we’re striking a balance of helping countries address the long term challenges and also the cyclical challenges that are often the ones that cause them to come to us.  And I would say that I don’t think there are many countries that think that the adjustment efforts that they’re being asked to make are easy ones.

On CEMAC.  Just to be very clear there is this dispute that is going on between member states, the BEAC, and oil companies with respect to what are called restitution funds.  The funds under contracts that countries have with oil companies are meant to be available to help restore the sites where oil is extracted back to their pre-extraction standards. 

What has been a bit frustrating is that we are not privy to the contents of these documents. We have been calling on members and the companies involved to be transparent about this, to publish these documents.  They are after all documents that are about how countries natural resource wealth are used.  And we’ve been on record going seven, eight, nine years pushing for production sharing agreements, the terms of these things to be published so that each side can hold the other accountable.  I think that is the first thing that could be done to bring more transparency and light and understanding to the rest of the world about what is going on in these discussions. 

Second, we have also made it clear to both parties that given that we do not have full information, it is difficult for us to know what to say.  But in general, any encumbrances in terms of how we look at foreign exchange reserves and these standards are published, any encumbrances like the type that we think there may be in the document, i.e., that is the expectation that these resources will be used for specific purposes means they’re not general use reserves.  So, they would not be classified as part of reserves. 

On Kenya, we have had a very strong engagement with Kenya over the years and will continue to have such engagement going forward.  As we have noted, government has asked for a follow-on program to try and address the remaining challenges in Kenya, and we are discussing how to do that including in the context of these meetings. 

It has been good to hear and see that the economy has been performing quite well in some parts.  Particularly the external adjustment front seems to have been proceeding well.  The current account has been narrowing.  So, there are quite a lot of strengths.  But also of course there remain fiscal challenges which were a significant part of the last program’s objectives that need to be advanced.  So, we are going to engage with the government and do everything that we can to be able to help it go forward. 

MR. AKUAMOAH-BOATENG: Unfortunately, that is all the time we have. So, if you have any questions that we didn’t get to, please send them to me or to Media at IMF.org and we will try and get back to you as soon as possible.  So, also to mention that the report is now available at IMF.org/Africa.  The Spring Meetings continue.  Later this morning, we have the press briefing for the European Department and later in the afternoon we have the IMFC, and the Western Hemisphere Department press briefings. 

On behalf of Abebe and the African and Communications Departments, thank you all for coming to this press briefing and see you next time.