Disclaimer: The views expressed herein are those of the author and should not be attributed to the IMF, its Executive Board, or its management. The Financial Crisis and Decades of Reforms: Options for Africa’s Future Reforms May 2009 Antoinette Monsio Sayeh Director, African Department International Monetary Fund

Agenda What can we learn from Africa’s reform successes and how can these reforms be preserved or deepened? How should African governments handle the domestic fallout of the ongoing crisis and push forward with economic and trade reforms? What is the role of the state vis-à-vis the private sector in weathering the storm? What can we learn from Africa’s reform successes and how can these reforms be preserved or deepened?

Reform success stories 17 high-growth countries: (4 oil exporters, 4 middle- income, and 9 LICs) 14 low-growth countries (12 of them fragile states) 13 medium-growth countries Sub-Saharan Africa: GDP per Capita Growth Rates Source: IMF, World Economic Outlook

African success stories: Getting the critical basis right Macroeconomic stability Avoiding major policy failures Reinforcing institutions Proactive role of government Higher aid

Fallout from the ongoing global crisis 2008 and Current Forecast for 2009 Source: IMF, African Department database

All countries will be affected by the crisis, including some star performers Source: IMF staff estimates Impact of the Crisis on Growth in Sub-Saharan Africa 1

How can the challenges be dealt with in the short-term? Use available fiscal space Where possible, ease monetary policy and let the exchange rate adjust to the external environment Closely monitor financial vulnerabilities and be prepared to act promptly Strengthen social safety nets

What are the implications of the crisis for structural reforms? It is important now to move ahead with planned structural reforms in: Public financial management Social safety nets Cost of doing business Countries also need to avoid new restrictions on trade flows as they work to mitigate the impact of the global crisis.

Role of the state versus the private sector in a time of crisis? Near-term  More active aggregate demand policies  Strengthening of financial sector surveillance Medium-term  Larger focus on improving supervisory and regulatory environment  Private sector as engine of growth

How can the international community help? African countries require the support of the international community to respond effectively to the global crisis. The international community should endeavor to meet or exceed the G-8 Gleneagles commitments.

The Role of the IMF The IMF is taking important steps to help African countries meet the challenges of the crisis: Doubling concessional lending to low income countries Working on a proposal to increase the general SDR allocation Revising its lending instruments to make them more flexible Continuing to provide policy advice and extensive technical assistance for strengthening economic policymaking in Africa