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At a gloomy IMF Spring meeting in foggy bottom, President Trump's tariffs are putting more pressure on African economies trying to negotiate new help from the fund. If you balance your baja now, you loat offer services to the people, and no one will accept to pay taxes if they're
not receiving services. While ghanem and Zambia have turned their economies around with IMF help, Kenya, Mozambique and Senegal find themselves having to try and negotiate new IMF programs at a time when there's less help to be found.
We are downgrading our forecasts for almost all countries as a result of trade pensions.
On this week's Next Africa Podcast, we look at what the mood is like at the Spring meetings and what African governments can hope to get from the IMF and whether they can sell that back home. I'm Jennifer Zabasaja, and this is the Next Africa Podcast, bringing you one story each week from the continent driving the future of global growth with the context only Bloomberg can provide. Joining us to discuss this week is our reporter Matthew Hill.
He's based in Cape Down that has been following these IMF proceedings very closely this week and also for the past few years. Matthew, thank you so much for joining us. Great to have you on the pod.
Hi Jen, Yeah, thanks very much for having me. I'm doing well. How about you? Good? Good?
And you know, really fascinating times to be talking to you and to be watching how finance ministers and central bank governors are navigating a lot of the discussions right now around the Spring meetings. Let's just start with the backdrop of the Spring meetings. It's it's been based on some of the studies that have been coming out over the past few days, quite a gloomy outlook on the
glove glible economy. What exactly have we heard from the IMF about where we're at right now and potentially where they're expecting us to go?
Just to set the scene a little bit, every year, during the Spring Meetings in Washington, the IMF announces its latest World Economic Outlook that has all kinds of forecasts about growth, commodity prices, and other numbers that investors and governments pay very close attention to. This month, just a couple of weeks ahead of the meetings, President Trump dropped his tariff bondshell at the White House Rose Garden, and
that's basically changed everything. You can imagine the IMF economists just a couple of blocks away scrambling to revise all their numbers and get the World Economic Outlook redone to reflect the outsized impact. The result, in short is slower growth. And for Sub Saharan Africa, the Fund cut its expansion forecast for twenty twenty five by more than the global average, to three point eight percent from the four point two percent it saw as recently as January.
So three point eight percent growth for twenty twenty five for Sub Saharan Africa is that what you're saying?
That's right? In January this year, the IMF gave an update to its World Economic Outlook that saw growth at four point two percent for twenty twenty five. So cutting that now to three point eight percent in its outlook that it released this week, that's a pretty sharp cut.
What does that say, Matt about the Sub Saharan African economy right now? What more should we expect the IMF to expand on based on these numbers that you were just outlining there.
The main thing I guess are what the lower commodity prices and slower global growth mean for African economies. For oil exports like in Golan Nigeria, the impact is quite pronounced. On the other hand, gold prices keep hitting new highs, and for the continent's biggest producer of gold, Garner, it will benefit from that. Oil importers like South Africa will also benefit because of low inflation. And I'm also watching out for what all of this means for debt sustainability
on the continent. That's been a big theme in recent years after the pandemic, and we've already seen Zambia, Garner, and Ethiopia defaulting on their debt and seeking debt restructuring. With slower global growth and lower commodity prices, that means that the risks are are only growing for other countries. And we've already seen the continents governments were on average spending twenty seven percent of their revenue, so that's more than a quarter of their total revenues on interest payments
last year. So this really just makes the strings much higher.
Well, let's talk more about that, Matt, because you have been following some of these IMF programs very closely, in particular Zambia. Of course, as far as Zambia and Ganna Go and their IMF programs, maybe let's start with the assessment of these two countries and how these programs have gone with the IMF at this point.
Yeah, that's an interesting question. I interviewed the Zambian Finance minister just a few days ago and he spoke quite glowingly about how Zambia's IMF program has worked out for them. The government essentially had to get on an IMF program when it defaulted on its debt back in twenty twenty
and announced that it needed to restructure it. It sought to do that using the Group of Twenties Common Framework, which is basically a set of guidelines for poor countries to use to restructure their debt that requires an IMF program to be in place. But with that IMF program,
the country's economy has done quite well. Even with the worst drought in decades that it suffered last year, growth was still at four percent, which was much higher than what the initial expectations were, and the government still sees the economy expanding by six point six percent this year, which would be the best outcome for Zambia since twenty twelve. Copper production, which is Zambia's main export, is booming and the government's forecasting that it could reach a million tons
this year for the first time. And though the debt restructuring process has taken years and it's still not one hundred percent complete, the economy really does seem to have turned a corner. We're also seeing inflation coming down. The government expects that it's going to be within its target band of four to eight percent for the first time in years by the end of the year, and the
government's restored budget credibility. It's also at the same time managed to boost spending in crucial areas like education two even with the pretty strict targets that the IMFs set right.
And we've talked about the Common Framework and some of the criticisms around that in the past, Matt, can you talk to us about then Ghana and how that story is different.
Gan has also done quite well. It's performed better under its economic program, its IMF program, though we did see some slippage last year as the government increase spending ahead of very elections. The new administration has committed to bringing the program back on course by returning to a primary budget surplus this year after a deficit last year. And for both Zambia and Ghana, they both made big strides in restructuring their debt, thanks in part to support from the IMF.
And stick with us, Matthew. When we come back, we'll talk about some of the countries that are having a bit tougher over time with the IMF and the programs, and what hope there might be for renegotiation. We'll be right back and welcome back.
Today.
We're looking into the IMF Spring meetings that happened in Washington over the past two days. Matthew Hill, our Bloomberg reporter, is joining us. So, Matthew, we've talked about some of the winners, so called winners from the IMF programs, but it's not all good news for Sub Saharan African economies, especially Kenya and Mozambique, both which have had to scrape their IMF programs. How do these compare to some of these other countries that you just outlined.
For us, the difference has been pretty significant and violent in the cases of Kenya and Mozambique. I mean, for Kenya, the big problem has been to meet the targets of its IMF program. After massive resistance from citizens against tax increases, the government tried to push through last year and ultimately the government had to withdraw the proposed legislation that would
significantly increase the tax burden on citizens. Last month, the IMF announced that Kenya wouldn't complete its existing program and the government had instead asked for a new one, and our colleagues in Nairobi have done some great reporting around that and the reasons why, and largely because it missed revenue benchmarks that had agreed to with the IMF. We've
seen a similar situation with Mozambique. The IMF last Friday announced that its program with the Southeast African nation would also end prematurely and talks on a new one would start soon. Mozambique is in a really tight spot economically at the moment. We've seen unprecedented protests after its elections in October. Those really hit the economy hard and government revenues with it, and the government had already been struggling to keep in line with its IMF program even before
the elections. There were big problems with the civil servants wageable especially and now social tensions are still really fragile after the election protests, and debt servicing is placing huge strain on the government's finances. So it is a really, really tough time for the government to be trying to push through any aggressive reforms that could come with a fresh iron left program.
Yeah, and I mean many people probably remember some of those pictures from Mozambika, Maputo and also in Nairobi. When you think about what these governments are facing, are they stuck between a rock and a hard place? Because on the one hand, they do see some of these other countries like Ghana and Zambia who have at least been able to usher in some new policies and make some changes, But then when these governments try to do so, they're
met with resistance. So have we heard anything from them about negotiations, whether or not that's even on the table during these spring meetings.
Yeah, that's a very important point. Obviously. Now with the global economic backdrop becoming like Gloomia, that also makes it even more difficult. In both of these countries, the governments are faced with incredibly difficult decisions. Both need the financing from what's known as the lender of last resort, and with the soarrowing borrowing costs in commercial debt markets, those have made it unattractive to borrow for now, maybe even impossible.
And another element is that the IMF deals usually bring with them more concessional financing from others like the Bank and the African Development Bank too. But to agree to the frameworks that the governments can sell to both their own populations as well as the IMF back in Washington is not an easy task. And I think some of those tough discussions are taking place this week.
And Matt, what if any impact does the US's pullback in aid to Sub Saharan Africa have to do with some of these negotiations. Could it play into these discussions.
A very important point. It's easy to forget that before the tariffs, we had this huge pullback in aid from the US, which really just adds to pressures and complexities of these talks and adds to the headache that governments like Mozambique face when drawing up their budgets. There's millions of dollars tens or hundreds of millions of dollars that used to be that simply aren't anymore, and of course
it's not just the US. We've seen the UK also announcing that it plans on cutting its aid budget in favor of defense spending, and there's other European countries that are following suit too. So rarely for low income African countries that were relying on all of this aid, they have to either cut spending or try find the money elsewhere.
Matt, Before I let you go, I wanted to ask this question that I think has been up for debate for quite a while when it comes to the IMF and some of these programs, and you mentioned it earlier, the Common Framework. Do you expect this to continue to be the framework that is used to support some of
these Sub Saharan African economies. Are we seeing enough good examples of how this could potentially work or could we potentially get some new discussions in place for other options, especially when you look at the global backdrop right now?
Yeah, I guess that's quite a difficult question that some governments are going to be grappling with in the coming months. For now, the G twenty Common Framework for Restructuring debt is basically all that low income countries have to work with. We've seen that in gn A, Zambia now Ethiopia, which is also defaulted and is restructuring its debt using the Common Framework. The process has taken years, it has improved as things have gone along, and there have been efforts
under the IMF. They've got what is known as the Global Sovereign Debt Round Table, which seems to make sure that processes are expedited and work more efficiently. But for now,
the Common Framework is what we have. I mean, there's also an expectation that a lot well, that more countries might be going to the International Monetary Fund for financial assistance this year amid all this uncertainty on lower revenues, and of course for countries already in discussions with the IMF, the economic shock that we're seeing right now could inject a new sense of urgency into those talks.
And you can read all of our coverage on the IMF Spring meetings across Bloomberg platforms. Now here's some of the other stories we've been following across the region this week. Traders raise their bets that South Africa's Central Bank will resume its rate cutting cycle next month after inflation slowed to its lowest level in almost five years in March, taking it below the floor of the central Bank's target range. The annual inflation rate fell to two point seven percent
last month. That was less than the three percent median estimate of fifteen economists in a Bloomberg survey. And South Sudan will send on to Washington in the coming days to discuss the return of one hundred and thirty seven nationals the US intends to deport. Earlier this month, the US suspended visas for all South Sudanese nationals after the East African nation refused to receive a deportee who it insisted wasn't a citizen. South Sudan later reversed its decision.
And you can follow these stories across Bloomberg, including the Next African Newsletter. We'll put a link to that in the show notes. This program was produced by Adrian Bradley. Don't forget to follow and review this show wherever you usually get your podcasts. I'm Jennifer's Abasaja. Thanks as always for listening.