Rising food prices threaten Nigeria’s economic recovery -IMF
The International Monetary Fund has warned that rising food prices combined with reduced incomes in Nigeria and other Sub-Saharan African countries are a threat to economic recovery and poverty reduction.
As contained in the latest regional economic outlook launched by the IMF on Thursday, the COVID-19 pandemic has had a harsh impact on the region’s most vulnerable, with about 30 million people thrown into extreme poverty.
The report shows that the crisis has highlighted key disparities in resilience between countries in sub-Saharan Africa, “also exacerbated preexisting vulnerabilities and inequality within each country leading to food inflation which threatens to jeopardize previous gains in food security.”
“As the pandemic continues, authorities face an increasingly difficult policy environment, with rising needs, limited resources, and difficult tradeoffs. Saving lives remains the top priority, but there is also an urgent need for spending prioritization, revenue mobilization, enhanced credibility, and an improved business environment.
“International solidarity and cooperation remain vital, not only on vaccination but also on addressing other critical global issues, such as climate change.”
The report also highlighted increasing debt vulnerabilities as a source of concern as many governments will have to undertake fiscal consolidation.
Overall, public debt is predicted to decline slightly in 2021 to 56.6 percent of GDP but remains high compared to a pre-pandemic level of 50.4 percent of regional GDP.
The report states that half of sub-Saharan Africa’s low-income countries are either in or at high risk of debt distress, and more countries may find themselves under future pressure as debt-service payments account for an increasing share of government resources.
Commenting on the report in a virtual meeting, Abebe Amero Selassie, director of the African Department of IMF, said that the difficult policy environment that authorities faced before the crisis has been made more demanding by the crisis.
According to him, policymakers in the region face three key fiscal challenges including tackling the pressing development spending needs; containing public debt; and mobilising tax revenues in circumstances where additional measures are generally unpopular.
“Meeting these goals has never been easy and entails a difficult balancing act. For most countries, urgent policy priorities include spending prioritization, revenue mobilization, enhanced credibility, and an improved business climate.
“On COVID-19, international cooperation on vaccination is critical to address the threat of repeated waves. This would help prevent the divergent recovery paths of sub-Saharan Africa and the rest of the world from hardening and becoming permanent fault lines, which would jeopardize decades of hard-won social and economic progress.
“Looking further ahead, the region’s vast potential remains undiminished. But the threat of climate change and the global process of energy transition suggest that sub-Saharan Africa may need to adopt a more innovative and greener growth model.
“This presents both challenges and opportunities, and it underscores the need for bold transformative reforms and continued external funding. Such measures may not be easy, but they are key prerequisites of the long-promised African century,” he said.