Africa needs additional financing for an adequate COVID-19 response at around $285 billion through 2025, $135 billion of which is for low-income countries, said Managing Director of the International Monetary Fund (IMF) Kristalina Georgieva.
Georgieva made her statements during the press conference held on Tuesday at the conclusion of the Paris Summit on the financing of African Economies.
She added that the cost of restoring the pre-pandemic economic growth levels in the continent will be roughly twice as much.
Africa needs to grow faster than the world — at 7 to 10 percent — and to secure a fair shot against the virus for everyone in order to meet the aspirations of its youthful populations and become more prosperous and more secure, especially amid the severe impacts of the COVID-19 pandemic, according to Georgieva.
“Last year, the pandemic-caused recession shrank the GDP of the continent by 1.9 percent — the worst performance on record. This year, we project global growth at 6 percent, but only half that — 3.2 percent — for Africa. This is a dangerous divergence,” said Georgieva.
On vaccines, Georgieva expounded that the IMF could target vaccinating at least 40 percent of the population of all countries by the end of 2021, and at least 60 percent by mid-2022, adding that for a cost of $50 billion, faster vaccination can result in a higher global output of $9 trillion between now and 2025.
“This would require, among other priority actions, the donation of 500 million vaccine courses in 2021 from countries with excess supply, and it requires boosting vaccine production capacity by 1 billion doses in early 2022,” Georgieva illustrated.
Moreover, bilateral and multilateral development financing — including grants and concessional loans — ought to increase, according to Georgieva.
With respect to the finances the IMF extended to African countries over 2020, Georgieva mentioned that the fund has swiftly ramped up its financing for the continent, providing 13 times its average annual lending to sub-Saharan Africa.
She added that the IMF is working with its membership to do much more.
“We have received support to increase access limits so we can scale up our zero-interest lending capacity through the Poverty Reduction and Growth Trust. Our membership backs an unprecedented new allocation of Special Drawing Rights of $650 billion — by far the largest in our history. Once approved, which we intend to achieve by the end of August, it will directly and immediately make about $33 billion available to our African members. It will boost their reserves and liquidity without adding to their debt burden,” Georgieva explained.
Meanwhile, Georgieva said that the crisis is an opportunity for transformational domestic reforms that increase domestic revenue, improve public services, and strengthen governance in Africa, adding that digitalisation can improve tax administration, revenue collection, and the quality of public spending.
With radical transparency, Africa can tap into new sources of finance — such as carbon offsets — according to Georgieva.
Furthermore, reforms of international taxation can also support Africa’s growth, according to Georgieva
“For a long time, we have been in favour of minimum corporate tax rates to reduce the race to the bottom and tax avoidance, and we strongly support an international agreement on digital tax; something France has been a leading voice for. It is important to secure fair distribution of tax revenues, so they can contribute to closing Africa’s financial gap,” said Georgieva.