Sub-Saharan Africa will have a “stronger voice” at the International Monetary Fund as it will get a third seat on the global lender’s executive board, IMF chief Kristalina Georgieva told AFP.
Georgieva delivered the news ahead of next week’s IMF and World Bank meetings in Marrakesh, Morocco — the first gathering on the continent since 1973.
The IMF executive board, which is chaired by Georgieva, is responsible for conducting the Washington-based institution’s day-to-day business and currently has 24 directors.
The United States, as the world’s biggest economy, has the largest share of votes, followed by economic powers Japan, China and western Europe, ahead of other regions and developing nations.
“I have some good news for Africa. We are advancing a preparation to have a third representative of sub-Saharan Africa in our executive board,” Georgieva told AFP in Abidjan, Ivory Coast, on Thursday.
“Ultimately, what it will mean is (a) stronger voice for Africa,” the IMF’s managing director added.
The World Bank has also announced that it will create a third seat for African nations on its own board, a decision to be made official at the October 9-15 meetings in Marrakesh.
The IMF and World Bank will tackle the thorny issue of institutional reform in Morocco as they face growing calls to better address debt and climate change in poorer countries.
– ‘Brighter prospect’ –
Georgieva said growth in sub-Saharan Africa decelerated this year to three percent.
“The impact of the war (in Ukraine) was devastating, especially coming on top of Covid,” she said.
“Countries with limited fiscal capacity were particularly severely impacted.”
Inflation, which soared in the wake of Russia’s full-scale invasion of Ukraine, caused “additional hardship on people”, Georgieva added.
Moscow’s invasion sent food prices soaring as both Russia and Ukraine are major exporters of agricultural goods.
Georgieva praised countries “for being very prudent in dealing with inflation”, which has gone down in many nations, and prioritising public spending in a way that allows them to lower deficits.
“We expect some brighter prospect for sub-Saharan Africa in 2024,” the Bulgarian economist and former European Commission vice president said.
“But it is hard. We still see that food prices are particularly high and that translates into (a) terrible fate of 144 million people having difficulty into feeding themselves or their families,” she said.
She warned against measures such as price caps or subsidising fuel to help people cope with inflation as they “ultimately benefit rich people even more than poor people”.
“What we want is countries to win the fight against inflation,” Georgieva said.
“It’s not going to happen if we throw more money without the good fundamentals for the economy to run efficiently,” she added.
Instead of subsidies, she said, “what we are strongly recommending is … to give direct support to the poorer part of population”.
While the IMF has continued to provide special assistance since the Covid pandemic broke out, including through zero-interest loans, she said she would ask nations and the private sector to “do more” to help developing countries.
– ‘Lost decade’ –
The World Bank warned in a report on Wednesday that sub-Saharan Africa’s economic outlook “remains bleak”.
The institution warned that the region could face “a lost decade of growth”, pointing to “rising instability”, and “increased incidences of attempts to destabilise governments by unconstitutional or violent means in recent years”.
The Sahel region in particular has been the scene of more than a decade of jihadist insurgencies that have fuelled military takeovers in Niger, Mali and Burkina Faso.
Despite the coups, Georgieva defended the IMF’s decision to maintain aid to those countries due to “humanitarian concerns”.
“We have a responsibility to make sure there is minimum financial capacity,” she said.
“Because the regimes are not there sufficiently for their people. It’s not an excuse for us to forget about the men, women children who need us.”