African nations are reportedly facing their worst financial problems in 20 years, according to the International Monetary Fund (IMF), which is calling for effective international action similar to that taken by Group of Eight (G8) first-world nations in 2005 at the Gleneagles summit in Scotland.
The Covid epidemic and the spike in food and other costs when Russia invaded Ukraine are just two of the shocks that caused the crisis.
The Big Funding Squeeze was the headline of the IMF’s regional economic outlook report for sub-Saharan Africa (SSA), published in April. According to the research, reduced donor funding and a drop in lending and investment from both the West and China are factors that contribute to African countries’ difficulties obtaining financing on international markets and declining exchange rates on local currencies.
In more than half of the African nations, food costs have increased by more than 10% as a result of inflation, which mostly affects the poor.
According to Abebe Aemro Selassie, Director of the IMF’s Africa Department, this is the continent’s most difficult economic period since the turn of the century.
No country has been able to raise capital through the sale of bonds denominated in US dollars since the spring of 2022. The dollar exchange rate hitting a 20-year high has raised the expense of servicing debt with a dollar value.