The impact of the war is very negative and serious for the African continent

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The impact of the war is very negative and serious for the African continent
The impact of the war is very negative and serious for the African continent

Africa-Press – Eswatini. The adviser to the African Department of the International Monetary Fund (IMF), Alex Segura, said that the impact of the war in Ukraine is “very negative and very serious in Africa”, due to existing vulnerabilities.

In an interview with Lusa, on the day of the launch of the Perspectives report, Alex Segura said that “the impact on Africa of the war in Ukraine is very negative, it is very serious, because low-income countries already had more limited mechanisms to fight against the Covid-19 pandemic and had a major shock, with mechanisms much less developed than advanced countries to manage the pandemic”.

Now, the adviser to the African Department continued, “they have reached a situation of great vulnerability and the IMF’s main concern is the increase in fuel and food prices”.

Ukraine and Russia are two of the main cereal producers, namely wheat, which is the mainstay of food in several African countries, specifically in the North of the continent.

“The impact on food products is particularly serious in low-income countries, because they are very important for the most vulnerable sections of the population,” added the Spanish adviser, who is also the IMF’s representative in Cape Verde.

Asked how the IMF can help African countries, which are already faced not only with the effects of the pandemic, but also with little room for budgetary manoeuvre, Alex Segura said that support is based on three pillars.

“First, funding, through emergency programs and increased resources for new programs, then advice, an in-depth dialogue to discuss with the authorities the necessary economic policy measures and, finally, technical assistance, which serves to strengthen institutions and help define more robust policies in this very complicated situation”, said the Spanish economist.

One of the actions strongly recommended by the Fund is the introduction of “direct measures to support vulnerable sections of the population, with specific social programs, instead of generalized support for price control, which has a very strong impact on the Budget and does not benefit the lower strata of the population”, he explained.

Asked how support for the lower strata of the population can be done, in a context of great scarcity of resources and high indebtedness, Alex Segura said that the appropriate course of action depends and varies from country to country.

“Angola, for example, benefited a lot from the increase in fuel prices, because it is an oil exporting country, the exchange rate appreciated and the debt vulnerability went down a lot. Therefore, the outlook is variable; in Cape Verde, on the other hand, the growth rate has dropped and the debt vulnerability may increase. Therefore, the scenario varies from country to country”, argued the adviser from the African department.

Still, he explained, there are two principles that all countries have to manage: preserving debt sustainability and supporting the most vulnerable.

“Each country has to preserve debt sustainability, which, if it is not sustainable, has to be restructured, which is a process that takes time and needs a deep dialogue with creditors. But if it is sustainable, it must be preserved.” , and this is one of the pillars of stability”, he said.

The other pillar is the introduction of measures to support the most vulnerable sections of the population, he said, admitting that preserving public finances “may imply a country having to print budget consolidation measures” and stressing that “it is normal to use debt as a mechanism for funding, but in a moderate way because the budgetary space is reduced”.

The important thing, he concluded, “is to find the balance between preserving debt sustainability and introducing support measures to protect the most vulnerable sections of the population”.

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