THE IMF at its annual meetings in Washington this week indicated increased support for economic recovery in Africa. The IMF wants to speed up long-delayed debt restructurings for Zambia and Chad to institute by year-end. In Zambia, a combination of tighter monetary and fiscal policies and the elimination of custom duties have tamed inflation to 9.9 percent from 21 percent in the past year.
The Zambian Kwacha has been Africa’s best performing currency, rallying around 18 percent year to date, after Zambia secured a $1.3bn bailout package from the IMF. Prospects remain positive given the debt restructuring plans to be concluded this year in addition to improved global consumption for the copper producing country. Debt restructuring should also help spur recovery for Chad amid a pick-up in oil and agricultural output. In other news from the IMF meetings, the Fund is seeking to include clauses in future debt contracts that will allow borrowers to suspend debt servicing commitments in the event of a climate shock. Meanwhile, Rwanda is set to become the first African country to benefit from a $40bn
Resilience and Sustainability trust fund set up by the IMF to help countries deal with the impact of climate change. A $310 million staff-level agreement reached with the IMF will enable the Rwandan government to integrate climate-related considerations into its overall fiscal reforms.
The Rwandan franc has contracted by about 5 percent in the past year to RWF1,065 per dollar, against a backdrop of inflation soaring to 23.9 percent this year amid continued dependence on Russian wheat and fertiliser. A combination of the country’s economic reforms and an agreed IMF climate change related support programme could be a long-term boost for the currency.