COVID-19 to create $1 trillion financial gap in Africa, IMF warns

Managing Director of the International Monetary Fund (IMF), Kristalina Georgieva, yesterday, raised the alarm over the continued ‘excruciating crushing’ of Africa’s economy by the novel coronavirus.

She said the crisis could create over $1 trillion financial gaps on the continent if the leaders fail to act now.

Georgieva, during a virtual press briefing at the organisation’s ongoing yearly meeting, stressed that decision-makers in the world’s second-largest continent must be wary of the adverse impact the deficit would impose on the people and “step up transparency and accountability” to make the best use of available financial aid.

She warned that the situation could be worse if the global community withdraws the requisite support.

The IMF chief, therefore, urged swift action, since according to her, the world “still does not have an idea on how to feed the huge population of Africa and other low-income regions.”

Georgieva argued that the continent would necessarily require financial “grants and debt reliefs” to stay afloat, even as she suggested that the global debt burden could equal the world’s Gross Domestic Product (GDP) next year.

The Bulgarian mentioned “ambitious reforms” as one of the areas the regional leaders must prioritise to attract investments and mitigate the loss put at three per cent by year-end.

She listed some of the financial packages the Word Bank Group had rolled out to cushion the effects, promising that the Bretton Woods institutions “will continue to do more for Africa.”

Georgieva advised leaders against pulling the rug “prematurely”, saying the world is still in the middle of the crisis, which she suggested, would cost the global economy about “$28 trillion in losses” in the coming years.

The European warned of widespread bankruptcy if governments stop providing the needed financial assistance to individuals and businesses.

“Do not cut the financial lifeline. Palliatives will continue for sometimes. Build a more resilient and inclusive economy. The crisis could be an opportunity. Supporting workers as they transit to new jobs is part of the inclusive economy,” she added.

Georgieva equally charged countries to channel support where “they will make the greatest difference” in reducing poverty and business failures.

She added: “About $9 trillion could be added to the global economy by 2025 if we do the right things. We must dare to face our most daunting challenges now.”