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International Monetary Fund. African Dept.
São Tomé and Príncipe has maintained macroeconomic stability in the period since the previous ECF review (February 2021). International support and the authorities’ swift actions helped mitigate the impact of the pandemic so far. Growth is estimated at 3 percent in 2020, supported by externally-financed spending. Growth is projected to slow to 2 percent in 2021, reflecting delays in the return of tourists, and to strengthen to 3 percent in 2022. The economic outlook is subject to high uncertainty and downside risks, notably the evolution of the pandemic.
International Monetary Fund. African Dept.
Guinea-Bissau is a fragile state with considerable needs to fight the COVID-19 pandemic and address developmental challenges. After an estimated 1.4 percent of GDP contraction in 2020, a modest recovery of about 3.3 percent is projected for 2021 on the back of higher cashew exports, the gradual lifting of COVID containment measures and a more stable political situation. The outlook is subject to considerable uncertainty. An RCF disbursement of SDR 14.2 million (50 percent of quota) was approved in January to provide urgent financing (35 percent of the external gap in 2021) to support critical spending in health and catalyze additional donor resources. The RCF followed two years of protracted political turmoil and delays in reforms, now undertaken by the new government. Public debt was assessed as sustainable in a forward-looking sense based on the authorities’ commitment to sound policies supported by strong donor engagement and a Fund program. Debt service relief under the CCRT has provided some fiscal space and the country’s participation in the DSSI should also help mobilize additional resources. After the 2021 budget approval within the statutory deadlines, significant and sustained reform efforts are required to meet the WAEMU 3 percent of GDP overall balance criteria by 2025 and bring public debt-to-GDP ratio within 70 percent by end-2026.
International Monetary Fund. African Dept.
Near-term macroeconomic prospects continue to improve in the context of higher oil prices and a gradual global recovery from the pandemic shock, but the medium-term outlook remains challenging and highly uncertain. Oil production remains muted, debt and inflation remain elevated, and non-oil activity is expected to recover only gradually. However, continued strong fiscal performance (aided by higher oil revenues), exchange rate stabilization, and a return to positive non-oil growth would contribute to a reduction in the debt-to-GDP ratio this year, easing debt vulnerabilities.
International Monetary Fund. African Dept.
While improving, the economic outlook remains highly challenging, given the slow and uncertain recovery from the COVID-related shocks. Heavily dependent on oil, the Angolan economy has suffered from weakness in that sector, with falling production (related to the pandemic) and only a partial rebound in international prices recently. These shocks have led to a fifth straight year of recession and hardship. The public debt-to-GDP ratio has risen to very elevated levels, driven by recent real exchange rate depreciation. Nevertheless, strong fiscal performance and active debt management are setting the stage for a gradual economic recovery and reduction in debt vulnerabilities.
International Monetary Fund. African Dept.
The economic outlook has substantially deteriorated since the Second Review, driven by the negative effects of the COVID-19 pandemic on global economic activity and oil prices. The adverse impact of the shock on the Angolan economy, which is highly dependent on oil (95 percent of exports, two-thirds of government revenue), adds to the hardship from five consecutive years of recession. Rapid exchange rate depreciation and the decline in oil prices have pushed the public debt-to-GDP ratio to a very high level. However, continued fiscal retrenchment, prudent debt management, and debt reprofiling are expected to improve debt dynamics progressively.
International Monetary Fund. African Dept.

Abstract

Sub-Saharan Africa is struggling to navigate an unprecedented health and economic crisis—one that, in just a few months, has jeopardized decades of hard-won development gains and upended the lives and livelihoods of millions.

International Monetary Fund. African Dept.
The COVID-19 pandemic is taking a heavy toll on São Tomé and Príncipe. Tourist arrivals came to an abrupt halt in mid-March, externally financed projects are being delayed, and international supply-chains are disrupted. The challenging circumstances are further affected by the fragility of the economy and a weak health care system.
International Monetary Fund. African Dept.
São Tomé and Príncipe is a fragile, small island-state, with limited resources and capacity. The last Extended Credit Facility (ECF) arrangement expired at end-2018 having gone off-track amid parliamentary elections, power outages, internal and external imbalances, and high debt vulnerability. Growth slowed, inflation rose, the fiscal position deteriorated, and foreign reserves declined sharply in 2018, while some critical structural reforms were delayed. Higher and more inclusive growth is needed to reduce poverty and unemployment, particularly among the large youth population.
International Monetary Fund. Western Hemisphere Dept.

Abstract

Regional Economic Outlook, October 2019, Western Hemisphere Department

Authorities
Mozambique’s economy is at a turning point, and efforts to address governance and corruption vulnerabilities can have a lasting positive impact. The current levels of public debt have caused us to take a hard look at our governance and anti-corruption framework and have prompted various reforms to address the vulnerabilities exposed in this framework. In general, the problems in our society, and specifically corruption, have been examined in detail recently and are clearly macro-critical.2 One study estimated the costs of corruption to Mozambique during the period 2002 to 2014 at up to USD 4.9 billion (approximately 30 percent of the 2014 GDP).3 The impact of these costs is widespread, affecting taxpayers, public service providers, the financial and private sector, as well as Mozambique’s international reputation.4 These costs are especially harmful at a time when our country has been hit by a series of shocks, notably the fall in commodity prices, drought, the withdrawal of donor budget support, and, more recently, Tropical Cyclones Idai and Kenneth. At the same time, Mozambique stands poised to reap significant revenues from natural resource reserves, and our duty as the government is to ensure the responsible stewardship of those funds for both current and future generations. By taking meaningful steps now to implement the governance and anti-corruption framework in an evenhanded, consistent, and effective manner, and to support efforts toward transparency and individual and institutional accountability, as the government, we can aim to achieve enduring results.
International Monetary Fund. African Dept.

Abstract

The economic recovery in sub-Saharan Africa is expected to continue, but at a slower pace than envisaged in October 2018. This weaker outlook reflects domestic and external challenges. On the external side, the global expansion is losing momentum, including in China and the euro area, trade tensions remain elevated, global financial conditions have tightened, and commodity prices are expected to remain low. On the domestic front, security challenges, climate shocks, and policy uncertainty are hampering investment and weighing on economic prospects in several countries. Under current policies, medium-term average growth for the region is expected to continue to fall well short of what is needed to absorb the new entrants to the labor force and to deliver limited gains in living standards.