- International Monetary Fund. African Dept.
- Published Date:
- October 2007
© 2007 International Monetary Fund
Regional economic outlook: Sub-Saharan Africa — [Washington, D.C.] : International
Monetary Fund, 2007.
p. cm. — (World economic and financial surveys)
Includes bibliographical references.
1. Economic forecasting — Africa, Sub-Saharan. 2. African cooperation. 3. Africa, Sub-Saharan — Economic conditions — 1960- 4. Africa, Sub-Saharan — Economic conditions — 1960- — Statistics. I. Title: REO. II. International Monetary Fund. III. Series (World economic and financial surveys)
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The following conventions are used in this publication:
In tables, a blank cell indicates “not applicable” and ellipsis points (…) indicate “not available,” and 0 or 0.0 indicates “zero” or “negligible.” Minor discrepancies between sums of constituent figures and totals are due to rounding.
An en dash (–) between years or months (for example, 2005–06 or January–June) indicates the years or months covered, including the beginning and ending years or months; a slash or virgule (/) between years or months (for example, 2005/06) indicates a fiscal or financial year, as does the abbreviation FY (for example, FY2006).
“Billion” means a thousand million; “trillion” means a thousand billion.
“Basis points” refer to hundredths of 1 percentage point (for example, 25 basis points are equivalent to ¼ of 1 percentage point).
This report was prepared in the Policy Wing of the African Department of the International Monetary Fund, under the direction of Benedicte Vibe Christensen, Deputy Director. Research was coordinated by Andrew Berg and Calvin McDonald, with contributions from Paulo Drummond, Jan Gottschalk and Ulrich Jacoby; and Corinne Delechat, Dimitry Gershenson, Alejandro Hajdenberg, Emmanuel Hife, Stella Kaendera, Armine Khachatryan, Stanislaw Maliszewski, Kirsty Mason, Wayne Mitchell, Gillian Nkhata, Catherine Pattillo, Robert Sharer, Amadou Sy, Charalambos Tsangarides, Smita Wagh, and Felipe Zanna. Gustavo Ramirez and Saeed Mahyoub prepared the charts and statistical tables, Elizabeth Miranda and Anne Grant provided editorial assistance, and Emma Morgan was responsible for document production, with assistance from Natasha Minges. Marina Primorac of the IMF’s External Relations Department copyedited the manuscript and coordinated production of the printed publication.
The report benefited from comments from staff in the African and other departments of the IMF. Opinions expressed in this report are those of the authors and do not necessarily represent the views of the IMF or its Executive Board. The report is based on data available as of October 1, 2007.
West African Development Bank
Central African Economic and Monetary Community
Common Market of Eastern and Southern Africa
Debt Management Strategy (Uganda)
Debt Sustainability Analysis
East African Community
Foreign direct investment
Heavily indebted poor countries
World Bank’s Maquette for MDG Simulations
Millennium Development Goal
Multilateral Debt Relief Initiative
Malawi Growth and Development Strategy
Official development assistance
Public financial management
Purchasing power parity
Poverty Reduction Strategy Paper
Poverty and Social Impact Analysis
Southern African Development Community
Uganda Revenue Authority
West African Economic and Monetary Union
World Trade Organization
In recent years, sub-Saharan Africa has been experiencing its strongest growth and lowest inflation in over 30 years. Growth in sub-Saharan Africa should reach 6 percent in 2007 and 6¾ percent in 2008, both slightly lower than projected in the April Regional Economic Outlook: Sub-Saharan Africa but up from about 5½ percent in 2006 (Chapter 1). The economic expansion is strongest in oil exporters but cuts across all country groups. On the external front, it reflects strong demand for commodities, increased capital inflows, and debt relief. Internally, continued progress in stabilizing economies and implementing reforms in most countries has helped sustain rising investment and productivity. Inflation (excluding Zimbabwe) should average 7½ percent in 2007—with inflation in 32 out of 44 countries in single digits—and fall to 6¾ percent in 2008.
Can the growth momentum be sustained? In the past, because of weak institutions and volatile terms of trade and other shocks, growth episodes in sub-Saharan Africa have generally been shorter than in other regions and often ended with a dramatic collapse in output. In the current expansion, many countries have benefited from improved terms of trade, but there are also signs that macroeconomic and policy conditions continue to improve, which should help sustain growth. Many other sub-Saharan African countries have sustained growth for several years despite stable or declining terms of trade. These countries are reaping the benefits of economic reforms and improved macroeconomic policies, as well as a decline in armed conflicts and political instability. As a result, investment has increased, economic growth has strengthened, and income volatility has fallen. Sustaining the current expansion and reducing poverty ultimately depend on each country’s ability to pursue structural and institutional reforms to increase productivity, boost resilience to shocks, and attract private investment.
Having successfully stabilized their economies, many sub-Saharan African countries have been increasingly reorienting fiscal policies toward promoting economic growth and poverty reduction. Chapter 2 provides an overview and discusses the experiences of five countries in creating and using this fiscal space to accelerate progress toward meeting the Millennium Development Goals. These experiences suggest some lessons that are salient for other sub-Saharan African countries. First, domestic revenue mobilization has clear advantages as a source of fiscal space for countries where the revenue share in GDP is low, but the required institutional reforms take time to implement and should therefore be given priority. Second, improving the efficiency of expenditures is key, but many countries still have a large reform agenda. Third, the possible adverse impact of aid inflows on external competitiveness can be mitigated by frontloading productivity-enhancing expenditures. Fourth, more needs to be done to anchor fiscal policy decisions in a medium-term framework; only a few countries have sophisticated frameworks that provide a link to government objectives and include detailed costing of sector-specific programs while accounting for the recurrent cost implications.