Ms. Jutta Urpilainen, EU Commissioner for International Partnerships, and Ms. Kristalina Georgieva, Managing Director of the International Monetary Fund, today delivered a statement at the 10th African Fiscal Forum entitled 'Fiscal Policy and Reform in the Post-Pandemic Era '. The Forum, to be held on March 10-11, 2022, will include high-level participation from the Fund and the Commission, Mr. Li Bo, Vice President, and Mr. Koen Doens, Director General of International Partnerships, as well as representatives from African finance ministers, policymakers, and representatives of bilateral partners, multilateral institutions, and civil society.
Ms. Urpilainen and Ms. Georgieva said.
"Sub-Saharan Africa (SSA) is recovering from an unprecedented crisis. After a sharp contraction in 2020, growth accelerates in 2021, supported by improved international trade and commodity prices.
However, the outlook remains highly uncertain given the region's slow progress on equitable access to vaccines, limited policy space in many countries, and now the spillover effects of the war in Ukraine. The latter could exacerbate inflationary pressures from food and fuel, worsen the fiscal position of SSA countries, and disrupt capital flows, potentially jeopardizing access to external financing.
Given these additional challenges, the work of African governments and development partners to support recovery and the continent's most vulnerable people has become even more urgent. Africans cannot afford to fall behind. While measures to address the current crisis are underway, the implementation of transformative reforms to unlock the continent's strong economic potential should not be delayed.
Recognizing that necessary reforms must address the concerns of each national stakeholder, we are committed to improving our assessment and consideration of political economy factors as we work with countries to design and implement sustainable, broadly supported fiscal reforms.
The forum focused on four fiscal policy priorities for resilient, inclusive economies.
- Prioritize spending by improving efficiency in government spending, public financial management, and re-centering efforts on public investment in physical and digital infrastructure and a green recovery.
- Return poverty to a downward trend by strengthening social protection programs, investing in health and education, and compensating those who have been negatively affected by necessary reforms.
- Mobilizing tax revenue starts with the difficult actions needed to improve the efficiency and equity of the tax system.
- Debt vulnerability is addressed by setting clear and prudent medium-term fiscal targets, and in many countries fiscal consolidation is carried out in a well-planned and orderly manner, based on a sound institutional framework.
African countries should take strong ownership of reforms, but should not go it alone. Considering the region's growing financing needs and the widening gap with the rest of the world, partnership with the international community is critical. Since the beginning of the pandemic, International Monetary Fund financial assistance to sub-Saharan Africa has totaled more than $26 billion. Europe has committed more than €9.8 billion to Africa's external response to COVID-19. National efforts have also been supported by capacity development. Experts work daily with national authorities to help build the institutions needed to develop and implement sound economic policies. In 2020 and 2021, the Fund has more than 2,000 CD projects per year in the region; this year, we hope to do even more. The European Commission, in close coordination with partner countries and the IMF, is investing heavily in building capacity under our "Collect More Spend Better Approach".
In addition to financing, policy advice, and CDs, the international community should continue to align its operations to better respond to country needs and reduce risks to policy implementation. For example, the IMF plans to launch a new engagement strategy in fragile and conflict-affected countries later this year, offering more tailored conditions and a greater focus on political economy risks. The IMF is also establishing the Resilience and Sustainability Trust Fund-a new lending instrument with longer loan maturities designed to address macro-critical structural challenges, including climate change, pandemic preparedness, and digitization.
Our shared goal is to continue to work closely with African authorities to support post-pandemic recovery and build stronger, more inclusive economies."