Growth in sub-Saharan Africa is expected to slow to 3.6 percent as a"big funding squeeze", tied to the drying up of aid and access to private finance, hits the region. This is the second consecutive year of an aggregate decline in SSA growth.
Sub-Saharan Africa is far from powerless. Four policies can help navigate the current turmoil: i) consolidating public finances and strengthening public financial management, ii) containing inflation, iii) allowing exchange rates to adjust, while mitigating the adverse effects on the economy, and iv) ensuring important efforts to tackle climate change do not crowd out financing for basic needs like health and education.
Public debt and inflation are at levels not seen in decades, with double-digit inflation present in half of countries--eroding household purchasing power and striking at the most vulnerable. "People in sub-Saharan Africa are feeling the effects of a funding crisis. Since Russia's invasion of Ukraine, cost of living is more expensive, borrowing costs have increased and access to cheaper funding is dwindling," said Mr. Selassie.
Sub Saharan Africa is far from powerless. To address macroeconomic imbalances, Mr. Selassie pointed to four priorities