Africa must reduce fiscal deficits – IMF

ByAgency Reporter

Tuesday, 26 Oct 2010

Sub-Saharan African governments must begin trimming fiscal deficits as economic growth in the world’s poorest region returns to the levels it reached before the global financial crisis, the International Monetary Fund has said.

A report from Bloomberg in Johannesburg quoted the Head of IMF’s Africa department, Mr. Antoinette Sayeh, as saying,  Africa must begin rebuilding the policy buffers that helped to offset the worst of the crisis last year, by increasing their foreign exchange reserves and tightening budgets.

Sub-Saharan African governments maintained spending levels as the global recession slashed exports last year, pushing up fiscal deficits to an average of 7.2 per cent of gross domestic product, according to the IMF. With economic growth recovering to five per cent this year and 5.5 per cent in 2011, African governments must start reining in spending, the IMF said.

“Expansionary fiscal policies will need to be tempered to make sure that public finances return to a sustainable path and public debt levels remain manageable,”Sayeh said.

Source: Punch


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