African countries have asked the International Monetary Fund (IMF) for more funds to enable them recover from the effects of the Covid-19 pandemic.
According to the African countries, the $36.5 billion they have so far received from IMF during this Covid-19 pandemic are not enough to resuscitate their economies.
The call was made by African Ministers of Finance and representatives from the United Nations Economic Commission for Africa (UNECA) during a meeting with the managing director of IMF, Ms Kristalina Georgieva, over the weekend.
The meeting sought to discuss Africa’s response to the Covid-19 pandemic and the efforts for a sustainable, green, and inclusive recovery.
The African ministers said the resources directed to the African continent are incommensurate with their financing needs since African economies are increasingly feeling the crunch of the pandemic on public finances.
In response, Ms Georgieva said financial support to African countries reached an unprecedented SDR 26.2 billion ($36.5 billion), of which low-income countries received SDR 12.8 billion ($17.8 billion), during this period.
She added that the IMF has recently boosted its capacity to provide financial support to Africa. It has increased the capacity for concessional financing under the Poverty Reduction and Growth Trust (PRGT).
She said in August 2021, the Board of Governors of the IMF approved the largest SDR allocation in the history of the IMF equivalent to $650 billion (about SDR 456 billion), including about $33 billion to Africa.
IMF asked African governments to be transparent and accountable on the financial resources they are receiving from the institution.
“Transparent and accountable use of these resources in the context of medium-term policy frameworks is essential to ensure an effective and sustainable response to the pandemic needs,” Ms Kristalina said, adding: “During our deliberations, discussants stressed that the financing needs of African countries, especially low-income countries, are expected to remain high in the next couple of years, as countries strive to overcome the impact of the pandemic, advance reforms, address climate change adaptation costs, and foster economic recovery.”
In this context, Ms Kristalina explained that the IMF is exploring additional options to help poorer and more vulnerable countries in their recovery efforts and to facilitate more resilient and sustainable growth through potential SDR channeling. This would enable members that have strong external positions to voluntarily re-allocate part of their SDRs to help more vulnerable members.
“The IMF is also enhancing partnerships with other multilateral institutions to help countries support the recovery. In our discussions today, I was greatly encouraged by African policymakers’ strong interest in working with the IMF on SDR 2 channeling to finance longer-term reforms, including to build resilience to climate change and enhance health sector capacity,” she said.