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IMF’s MD Kristalina speaks on Africa's daunting recovery
The International Monetary Fund is worried that Africa could backtrack on it’s economic gains if countries don’t build resilience to debt and climate change risks. CNBC Africa had a no holds barred exclusive interview with Kristalina Georgieva in her first visit to East Africa.
Fri, 27 Jan 2023 14:59:03 GMT
Disclaimer: The following content is generated automatically by a GPT AI and may not be accurate. To verify the details, please watch the video
AI Generated Summary
- Importance of policy support and financing for sustainable growth amid external challenges
- Emulating Rwanda's success in integrating climate action and environmental sustainability
- Addressing climate financing gap and concerns about global economic outlook
The International Monetary Fund (IMF) has expressed concerns about the potential economic setbacks Africa may face if countries do not prioritize building resilience against debt and climate change risks. In an exclusive interview with CNBC Africa during her first visit to East Africa, IMF Managing Director Kristalina Georgieva highlighted the importance of policy support and financing to help African nations navigate through the challenges posed by the COVID-19 pandemic and the ongoing war in Ukraine. Georgieva commended Rwanda for its strong macroeconomic and financial stability, emphasizing that these factors are critical for sustainable growth and job creation. She noted that Rwanda had been on an impressive growth trajectory before the pandemic, with projections for 2023 showing a growth rate of 6.2 percent. However, external factors such as the pandemic and the war in Ukraine have dampened these growth prospects, erasing about 1.7 percent of the projected growth. The IMF has been engaging with Rwandan leadership, including President Paul Kagame, the Prime Minister, and the Minister of Finance, to provide policy support and funding for Rwanda's ambitious green agenda. Georgieva praised Rwanda's commitment to integrating climate action and environmental sustainability into its development planning, citing initiatives such as wetland restoration projects that not only benefit biodiversity but also enhance urban resilience to climate-related disasters. Rwanda has become the first African country to access the IMF's Resilience and Sustainability Trust, securing a $319 million commitment to support its green development goals. Georgieva underlined the need for African countries to emulate Rwanda's success by focusing on three key prerequisites: strong rule of law policies, clear investment plans that promote innovation and entrepreneurship, and a robust education system that prepares the population for the future. She emphasized the importance of building resilience to climate shocks and transitioning to a low-carbon development path to attract private sector investments and foster sustainable growth across the continent. The IMF Managing Director also addressed the challenge of climate financing, pointing out that there is a significant funding gap of around $2 trillion for climate-resilient growth in emerging markets and developing countries. Georgieva warned that failing to mobilize sufficient resources for climate action would jeopardize global commitments under the Paris Agreement and lead to severe climate consequences. To bridge the financing gap, Georgieva stressed the need to create conditions conducive to private investments in developing countries, leveraging instruments such as first-loss guarantees and blended finance to mitigate investment risks. Additionally, Georgieva expressed concerns about the global economic outlook, citing inflationary pressures triggered by the pandemic and the war in Ukraine. She highlighted the need for central banks to tighten financial conditions and raised uncertainties surrounding the economic recovery in China. Despite global growth projections remaining below three percent, Georgieva urged African countries to focus on strengthening governance and fundamental institutions to build resilience against external shocks. She commended Rwanda for its above-average growth and emphasized the importance of rule of law in attracting private capital and fostering sustainable development. Addressing the debt crisis facing many African countries, Georgieva called for a coordinated international effort to resolve debt burdens promptly to prevent spillover effects to other nations. She acknowledged progress in debt resolutions for countries like Chad, Zambia, and Ghana but emphasized the need for accelerated debt relief initiatives to protect vulnerable economies from financial instability. In conclusion, Georgieva encouraged African leaders to harness the continent's enormous potential by investing in high-quality education, infrastructure, and rule of law. She emphasized the importance of prudent macroeconomic policies and fiscal consolidation to ensure long-term economic sustainability and prosperity for African nations.
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