Russia’s invasion of Ukraine has caused a global economic shock affecting sub-Saharan Africa, at a time when countries in the subregion have little or no policy space to deal with it. . The April 2022 edition of the report on the economic outlook of the International Monetary Fund (IMF) presented, this July 21, 2022, in Lomé, by the resident representative of the Fund, Maximilien Kaffo, lists three transmission channels of this new shock on the economies of the sub-region: The prices of energy, food products and the cost of financing. This report proposes substantial short-term solutions to manage the impact of this shock on the economies of the sub-region. It also identifies reforms that can be implemented in the medium and long term, in order to promote a more sustained and sustainable economic recovery. The report analyzes the role that the international community can play to support the countries of sub-Saharan Africa in strengthening their resilience, in order to promote much more noticeable growth.
The presentation of the IMF report on the regional economic outlook for sub-Saharan Africa yesterday was attended by officials from the Ministry of Economy and Finance, technical and financial partners, development actors, civil society and the private sector. This report touches on the consequences of the Russian-Ukrainian war on the development of economies in Africa south of the Sahara, while proposing solutions for ending the crisis.
Indeed, the economic recovery in sub-Saharan Africa has been more pronounced than expected in the second half of 2021. Hence, a sharp upward revision of last year’s growth estimate, from 3.7% to 4 .5%. This year, on the other hand, this renewed vigor is mortgaged by the Russian-Ukrainian war, which caused a global economic shock. According to the April 2022 International Monetary Fund (IMF) Economic Outlook Report, titled “ A new shock, little room for maneuver “, the surge in oil and food prices weighs, in particular, on the external and budgetary balances of the countries importing basic products and accentuates the fears with regard to food security in the region. In addition, the shock threatens to aggravate some issues of particular concern in the area, including the social and economic followingmath of the COVID-19 pandemic, climate change, heightened security risks in the Sahel and the ongoing political tightening. currency in the United States. All of these factors explain why Sub-Saharan Africa’s growth momentum has lost momentum this year, with economic activity growing at 3.8%. According to the IMF, the economic recovery should accelerate in 2023 to reach around 4% in the medium term. But this rate of growth is not enough to regain the ground lost due to the pandemic.
Protecting vulnerable households once morest soaring prices
In addition to accelerating the vaccination campaign once morest COVID-19, certain action priorities stand out, namely: protecting the most vulnerable households once morest soaring energy and food prices, without increasing the vulnerability debt, contain inflationary pressures and manage exchange rate adjustments.
Beyond the pandemic and the current geopolitical tensions, there is a need to create jobs and achieve the Sustainable Development Goals. In this, sub-Saharan Africa will need to record solid, inclusive and sustainable growth. To do so, governments will need to take determined steps to further diversify their economy and unleash the potential of the private sector. This, by strengthening integration, mobilizing finance and improving financial inclusion through digital innovation. With all the current needs induced by the pandemic and the crisis in Ukraine, the sub-region will need all the support it can receive from technical and financial partners. Thus, the IMF is committed to ensuring that the most vulnerable people receive sufficient financial assistance.
Significant resources have funded unforeseen Covid-related expenses
On the occasion, the Secretary General of the Ministry of Economy and Finance, Mr. Agbénoxévi Kofi Paniah, indicated that in 2020, despite the general slowdown that most of the world’s economies have experienced, due to the effects of the Covid-19 pandemic, the Togolese economy has been resilient, posting a growth rate of 1.8%. This level of growth was made possible thanks to the response measures taken by the government to limit the impact of the health crisis. To this end, efforts to contain the effects of the COVID-19 pandemic have led the government to commit significant resources to finance unforeseen expenses related to the health crisis. These expenditures mainly related to the acquisition of sanitary equipment for the screening and care of people infected with COVID-19. We also note the implementation of actions aimed at supporting the purchasing power of households, in particular the most vulnerable groups. This, through the innovative digital cash transfers of the “ I knew which touched nearly a million Togolese. The efforts undertaken also relate to taking charge of the social tranches of water and electricity consumption, the granting of credit to agricultural producers, with a view to supporting agricultural production and maintaining food self-sufficiency. Mr. Paniah also underlined that these efforts have contributed to supporting the private sector, in particular SMEs/SMIs. Support provided through tax relief measures, postponement of tax deadlines for all companies that have expressed the need, suspension of the application of tax penalties in the event of tax adjustment, adoption of support measures for consumption, production and safeguarding employment, etc. All these measures have made it possible to achieve a growth rate of 5.5% in 2021, once morest a forecast of 4.8%.
A series of measures in the face of the war in Ukraine
In the opinion of the Secretary General, the crisis in Ukraine and the terrorist threat in the far north of Togo might lead to a slowdown in this growth dynamic that began last year. To limit the impact of this crisis both on public finances and on the population, the government has taken a series of substantial measures since the start of the war in Ukraine. These include, among others, the subsidy granted to petroleum products, the suspension of VAT and the capping of the prices of certain imported food products, the ban on the export of basic local products such as corn, the fertilizers for the 2022-2023 agricultural campaign and the suspension of the Motor Vehicle Tax (TVM).
Regarding specifically the terrorist threat in the far north of the country, Mr. Paniah made it clear that the government continues to make efforts to fight once morest this phenomenon which hinders the security of people and property. To this end, a state of security emergency has been decreed in the Savannah Region, an exceptional measure which aims to control the situation and ensure the protection of the populations, in order to guarantee them the exercise of their activities. economic and professional.
In 2022, he specifies, economic activity will benefit from the even more assertive execution of the projects and reforms of the 2025 government roadmap. The implementation of structural reforms of the economy and the establishment of an attractive business climate continue, in order to attract more private investors and achieve the objectives of sustained and inclusive growth.
While thanking the IMF, the Secretary General made an urgent appeal to all technical and financial partners, the private sector and civil society, to maintain and strengthen their support for Togo, in order to break this impasse. which hinders its economic and social development.
Following the presentation of the report, the debates were opened, moderated by the permanent secretary in charge of reform policies, Mr. Stéphane Akaya. Exchanges that allowed everyone to better understand the quintessence of this IMF report.
Komla GOKATSE
