|The recent allocation of Special Drawing Rights (SDRs) to African countries is a good shot in the arm but it might not be sufficient, a World Bank (WB) report said.|
In August this year, the International Monetary Fund (IMF) approved a general allocation of SDRs equivalent to US$650 billion to address the long-term global need for reserves, build confidence and foster the resilience and stability of the global economy.
Of the US$650 billion in SDRs issued by the IMF, about 3.6% is allocated across Sub-Saharan African countries—that is, the equivalent of their IMF quota share. The Zimbabwean government received its allocation of SDR from the IMF amounting to US$961 million.
SDR allocations are part of the solution, intended to complement rather than substitute other financing channels.
“The international community needs to continue exploring different options that would enable rich countries to share their surplus SDRs voluntarily with the poor countries in the region with the greatest financing needs.
“An extension of the Debt Service Suspension Initiative (DSSI) may help participating countries redirect their limited resources to the recovery effort,” WB’s Africa’s Pulse report stated.
It said tackling debt problems at their root would require accelerating the process of countries seeking relief from the Common Framework for Debt Treatments beyond the DSSI.
“Meeting the region’s development goals will require contributions from all potential sources— including international financial institutions and the private sector,” said WB.
Economic recovery in Sub-Saharan Africa remains timid and fragile as the slow pace of vaccination continues to expose the region to emerging strains of coronavirus, holding back economic performance, according to WB.
Growth in economic activity for the region is projected at 3.5% in 2022 and 3.8% in 2023. However, these projections are subject to substantial uncertainty around the pace of vaccination.
WB revealed that faster vaccine deployment would accelerate growth to 5.1% in 2022 and 5.4% in 2023 in Sub-Saharan Africa—as containment measures are lifted faster than in the baseline and spending increases – Harare