Transcript of the April 2023 African Department Press Briefing

April 14, 2023

PARTICIPANTS:

ABEBE AEMRO SELASSIE

Director, African Department

International Monetary Fund

TATIANA MOSSOT

Senior Communications Officer

International Monetary Fund

MS. MOSSOT:
Good morning, good afternoon, and good evening to our viewers around the
world, and welcome to the IMF in D.C. We are happy to welcome you for the
Spring Meetings ’23. I’m Tatiana Mossot with the IMF Communications
Department, your host for the Reginal Economic Outlook for Sub-Saharan
Africa; and I’m pleased to introduce you to the IMF African Department
Director, Abebe Selassie.

The Sub-Saharan Africa’s report is named the Big Funding Squeeze. Please,
can you tell us more about where the region is standing from your team’s
work perspectives, please?

MR. SELASSIE:
Thank you, Tatiana. A very good morning to you all. First, let me thank you
all for coming to the April, to this launch of the IMF’s regional economic
outlook for Sub-Saharan Africa. The region’s resilience is being severely
tested. We project growth to decelerate to 2.6 percent, down from 3.9
percent last year; and an important factor influencing this outcome is the
big funding squeeze their countries are facing. External market access has
been sharply curtailed. Oversees development assistance continues to trend
downward, and the region has seen a recent reduction in other investments
also.

Sub-Saharan Africa is not alone, of course. There is a global slowdown in
the region, as elsewhere, is feeling the effects of tighter monetary
policy, the increased cost of living, and the strength of the dollar which
has appreciated relative to many other currencies.

Our latest regional outlook finds that this big funding squeeze is hitting
countries hard, and many countries are facing tough decisions when it comes
to investing in crucial areas like health, education, infrastructure. This
will not only impact them now but also in the years to come. As by 2040 or
so, a third of new entrance, a new labor market entrance will be from
Sub-Saharan Africa. Skilled educated workers will be vital to the health
and stability of the global economy, but today’s funding squeeze may impact
the region’s ability to provide them.

I’ve always said that this is the African century, but if measures are not
taken to address this funding squeeze now, the region may be held back from
developing its potential. Here at the IMF, we’re playing our part. As of
last month, we had 21 lending arrangements with countries in the region,
and we’ve still more programs under request and under discussion; and
between 2020 and 2022, we provided more than $50 billion dollars through
programs, emergency financing, and special drawing rights allocation. We
also, of course, continue to provide capacity development, and technical
assistant, and training to our members, and will continue to do so in the
coming months.

In terms of policy priorities, we are flagging that there’s a need to first
consolidate public finances and strengthen public finance management. This
needs to rely on continued revenue mobilization that are management of
fiscal risks and more proactive debt management.

In countries where debt levels are elevated and debt is clearly
unsustainable, restructuring is going to be unavoidable, and a
well-functioning debt resolution framework will be vital to create the
required fiscal space.

A second priority is to contain inflation. The inflation rates are varied
across the region but remains elevated much more so than we’ve seen it for
many years now; and monetary policy needs to focus on keeping inflation
firmly on a downward trajectory and make sure that it pertains to Central
Bank’s target range.

Third, I think, is a need to allow, in those countries where exchange rates
are flexible, the exchange rates to adjust while mitigating adverse effects
on the economy.

And then, finally, climate change is, of course, increasingly, something
that is weighing on policy makers in the region, on our people; and
tackling this, including with support from the international community will
be very, very important. The region is not a source of emissions, as you
know but, rather, is at the receiving end of a lot of the climatic changes
that have taken place and pursuing policies to help with climate adaptation
and mitigation in a few cases where that is a challenge will be important
going forward.

Let me stop here and take some questions. Thank you.

MS. MOSSOT: Thank you very much. We will now take your questions please.
Let’s start with the first row. Julians was here. Can you please introduce
yourself, your media, and one question, please? Thank you.

QUESTIONER: Thank you so much. Julian from Nairobi, Kenya, National Media
Group. My question is regarding fuel subsidies in Kenya. Initially, there
was an October 31st sunset date then it became December 31st, last year.
Does the IMF actually have a deal with the Kenyan government as far as
sunset date is concerned; and quickly, Tatiana, if I may, is Kenya one of
the countries who you deem susceptible to debt restructuring whereby
Eurobond maturing $2 billion dollars’ worth in June 2024? Thanks.

MR. SELASSIE: Thank you. On fuel subsidies, first, we always look at the
country’s specific context in which fuel is being subsidized; and our
general approach is to flag that this tends to be a regressive use of
government spending in many countries. Regressive meaning that the benefits
of such subsidies tend to accrue to richer segments of society a lot more
than poorer segments of society; and, in a world where we still have
elevated levels of poverty, elevated levels of development challenges, I’m
not sure that this is best use of resources. And then we leave it up to the
government, whether to sustain those policies or remove them, but what we
ask, and I think what is important is that the cost of this fuel subsidy is
rather than being left as a contingent liability and off-balance sheet is
included in regular appropriation process so that the tradeoffs that the
government is making is being clear.

Now, how governments do this, the extent of the fuel subsidies, of course,
also varies with international market prices. So, that influences the
timing of when governments remove or put or sustain fuel subsidies. A again
with Kenya, I think what we’re asking is that whatever the subsidies the
government wants to pursue, that it’s put on budget and made transparent.

On debt restructuring. I think, just really important, the mere fact that
you have Euro bonds maturing in ’25 or ’26 does not mean that you need debt
restructuring. In terms of how we assess debt restructuring meets debt
sustainability, and we look at the whole panoply, of course, economic
indicators, expectations on how those will evolve; and, importantly also,
what kind of financing is available to rollover or to find other ways to
repay this. It’s a combination of all of these things that allows us to
figure out whether debt is sustainable or not.

MS. MOSSOT: Thank you. Next question.

MR. SELASSIE: Sorry, I should add ‑‑ and we do not, Kenya is not a country
that we are expecting to do debt restructuring.

MS. MOSSOT: Thank you. Lady on the second row, please? If you can introduce
yourself.

QUESTIONER: Hi. My name is (inaudible). I’m from [inaudible] newspaper in
Nigeria. My question is Nigeria specific. Nigeria is actually planning to
take away subsidies as well; and, recently, the World Bank has given
Nigeria $800 million. Do you think this is something that’s sustainable? Is
this a sustainable practice? Is IMF concerned about Nigeria’s indebtedness
to ‑‑ and Sub-Saharan Africa’s indebtedness ‑‑ to China; and, also, lastly,
please, does IMF have any recommended limits for debt to GDP ratio for
African countries? Thank you.

MR. SELASSIE: On fuel subsidies, as I said earlier how and whether to
subsidize and to what extent, honestly, is a varied, deeply domestic and
deeply political question. If governments want to do that, that’s fine;
but, we think, it’s suboptimal, as I said, for reasons I explained earlier
that the benefits of subsidies tend to accrue to richer households. But if
that’s what government is deciding, that’s fine. Removing them also, I
think, is, of course, part of this political and domestic debate that needs
to be had. We know, of course, in Nigeria that food subsidies eat up
tremendous, tremendous amount of resources at the same time that the
government doesn’t have resources to address the huge investment needs
from, health, to education, to infrastructure; but this is a choice for
Nigerian government, Nigerian civil society to make.

We have also heard the discussion that’s going on, the debate that’s going
on whether that is ideal. We try and inform that debate with numbers, with
best practices elsewhere and I think that’s our role; and look forward to
whatever decision the government takes.

On debts, whether debt is sustainable or not, , is not dependent on just
one number, one threshold but, rather, really a lot of ‑‑ you have to look
at a lot of indicators to assess the trajectory, whether debt will be
sustainable in the coming years or not. And, I think, so it’s really, when
we make an assessment and we classify countries as being a moderate risk or
a high risks, or we talk about vulnerabilities being elevated, it takes
into account, what we think out of the kind of policies that the government
is going to pursue; and, of course, certain assumptions about the global
environment. The last several years has been full of shocks, so it has made
countries’ ability, to bring debt under a sustainable trajectory more
difficult but, they have been compensating for that also with stronger
economic policies. For a country like Nigeria also, the future trajectory
of its economy is going to depend on a whole host of variables ‑‑ the
reforms that the government pursues, how effectively it uses the resources
it has, the oil price trajectory. It is a combination of those factors that
will determine the sustainability of Nigeria’s debt.

Right now, it looks manageable, but it is really also important, of course,
and contingent on what policies will be pursued in the coming months and
years.

MS. MOSSOT: We will go this side and we will come here. Can we give the mic
to the second, third row, please, to the gentleman who is raising his hand?
Thank you.

QUESTIONER: Thank you. My first question would be about ‑‑

MS. MOSSOT: First, can you introduce yourself and your media?

QUESTIONER: I am [inaudible] for Agence Ecofin, Cote d’Ivoire. My first
question will be about inflation in Africa. You have encouraged Central
Banks to continue tightening the monetary policies to fight inflation, yet,
in Africa, inflation seems to be mainly imported. Although there has been a
slight decline in the rate of inflation. Don’t you think that raising
policy rates is an outdated solution in the context of our region? And the
second question, a few days ago, eight OPEC countries announced a drastic
cuts in their oil production; and given that, many countries of the region
are oil producers, including Nigeria. What impact do you anticipate this
decision will have in the short term, and on the economic revenues of the
Sub-Saharan African countries? Thank you.

MR. SELASSIE: On the inflation challenge, again, this tends to be, of
course, unless you are part of a monetary union, there’s a lot of variation
in inflation, and also a country-specific assessment that has to be done on
the causes of inflation. So, yes, to a significant degree, we have seen
imported, the pressure on inflation has been imported, so if you’re an oil
importing country, you’re facing higher international oil prices right now.
And depending on the extent to which it’s being passed on, that’s a source
of inflation. Similarly, food prices having been elevated after Russia’s
invasion of Ukraine, that also is a channel through which inflation has
risen. But, as we look across the region, there are also countries where
clearly, it’s domestic demand pressure or monetary policy having been loose
in the recent past that is causing inflation. I think you have to look at
the totality of those factors.

But increasingly, I think what we cannot say is, things like interest rates
do not work –- raising interest rates do not work. Of course, they do
because that’s the standard monetary policy response and our economies are
now, more so than in the past I would say, a lot more influenced by the
normal way in which monetary policy transmission works. I think raising
interest rates is part of the answer to addressing inflation, but again,
how you calibrate that depends on country-specific circumstances.

OPEC oil price increase as always in sub-Saharan Africa, it will be
asymmetric. In general, it will be negative because I think out of the 45
countries, only about 8 are net-oil exporters, so those other things being
equal -– whether you have subsidy or not, et cetera -– should benefit from
higher oil prices. But for most other countries, it will be a source of
negative shock. So, it will amplify imports, foreign exchange demand, and
the marginals of inflation.

MS. MOSSOT: We received different questions on Ghana. Where are the
Ghanaians reporters, please?

QUESTIONER: My name is George Wiafe from Joy FM in Accra, Ghana. Two quick
ones. I want to find out from you, as we speak right now, what is the
status of Ghana’s program? Having got the understanding that is has to go
through the department, the African department before both slots, has
[inaudible] for the country. Can you help us update us on that one? And in
terms of the preconditions, the structures that should be put in place, has
Ghana done what it is supposed to do to ensure the necessary structure
reforms are implemented so that we don’t come back again to the Fund? This
would be our seventeenth time at the Fund. Are you convinced about the
ongoing structure reforms that Ghana is supposed to implement under this
program? Thank you so much.

MR. SELASSIE: Thank you. On the status of the program with Ghana, we had
reached staff-level agreement, as you know, last December. And we are now
comfortable that all of the measures required for us to present the program
to our Executive Board are complete, except for the required financing
assurances from external creditors. We are very encouraged by the steps
that the government has taken over the last several months since the
program request. It’s been a very difficult time of course, very difficult,
very significant, measures that have had to be taken, and the initial steps
that the government has taken are very encouraging.

At the same time, what is important to recognize is the challenges that
Ghana has are something that need to be addressed over the course of the
program period over the next three, four years to bring the fiscal deficit
to the level it requires. And underpinning that, the reforms that are
needed, initiatives like revenue mobilization that are going to be really
important to be done in a multi-year process. So, this is a really very
important first step to reducing the macroeconomic imbalances Ghana faces
in a durable. It is really the only way to move beyond having to rely on
exceptional financing of the type that the IMF provides.

Again, to loop back to where I started, we’re very comfortable where –-
with all the steps that Ghana has done, and that is why we are also urging
creditors to step forward and provide the financing assurances needed for
us to present the program to the Board as soon as possible. We are very
optimistic and keeping fingers crossed this will happen in the next few
weeks.

MS. MOSSOT: We will take two questions online because we have also some
journalists connected, and we will go to Mozambique with [Ana Paula Pires
from Lusa, and she’s asking, Mozambique was hit earlier this year by
multiple shocks, natural disasters to join the instability in Notrte. What
impact does the IMF foresee they might have?

MR. SELASSIE: Thanks. Earlier I mentioned about, the effects of climate
change increasingly weighing on policy makers. I think Mozambique was hit
twice by Cyclone Freddy, as well as of course Malawi and other countries in
the region. And it shows, kind of, how dealing with such natural disasters
is increasingly becoming very much part of the policy-making discussion
that we’re having with governments.

In the case of Mozambique, of course, we are -– we have a team going out in
a couple of weeks to –-in the context of a program review where the effects
that this cyclone has had will be discussed. And, in the past also of
course, when Cyclone Idai hit the country, we were moving forward with
providing exceptional financing, and we’ll continue to support the country
as needed to cope with this.

MS. MOSSOT: We have online Matthew Hill from Bloomberg.

QUESTIONER: I just wanted to ask, firstly, on Ethiopia. If you can give us
any information about how much funding Ethiopia has requested from the IMF
under the proposed program, and how feasible that quota could be looking at
Ethiopia’s SDR quota? And then also, just related to timing as to when
Ethiopia might reach a staff-level agreement with the IMF by?

MR. SELASSIE: Matt, as you know, I recuse myself from answering questions
on Ethiopia because that’s my home country. We will have somebody, my
colleague Annalisa Fedelino is available here and she’ll answer all the
questions related to Ethiopia after I get off this stage.

MS. MOSSOT: We will organize a brief for Ethiopia right after the press
conference. We remain online for one last question on South Africa from
Hillary Joffe.

QUESTIONER: It’s Hillary Joffe here from Business Day in Johannesburg. I
wanted to know, you’ve got a very, very low growth forecast for South
Africa, very close to zero. How likely do you think it is that South Africa
this year goes into recession, into negative growth, and what would cause
that?

And may I just add to that, given the risks that you flagged in terms of
raising capital, how likely is a capital stop, and would South Africa be
one of the countries that could be affected if capital flows really
stopped? Thanks very much.

MR. SELASSIE: Thanks Hillary. On the growth projection, it’s largely being
influenced, of course, by the electricity production difficulties that the
country’s having. I think that’s by far the most important influence in the
projections that we have. Of course, the external environment being
difficult is a factor also. I think 0.1 is the number we have. We think
either thing being equal, probably the country will scrape through with a
small expansion, but honestly, there’s a big confidence interval around
that.

In terms of the financing squeeze, one of the great things about South
Africa that has withstood it well over the years, of course, is the fact
that it has deeper liquid financial markets, and the government almost
entirely relies on this market to fund itself. So, that’s a source of quite
a bit of strength for South Africa. In the past, global financial crisis,
for example, in 2008/09, the country was subjected to a really big funding
squeeze but managed it by allowing the exchange rate to move and relying on
domestic markets. So, I think that is an important funding source that
will, I think, see through both the government but also private markets who
can also rely on this -– private companies that can rely on this market.

MS. MOSSOT: Thank you. Back to the audience. We have a reporter back in the
room, he’s standing back in the room next to you. Thank you.

QUESTIONER: Hi, my name is Paul Shalala from Zambia. I work for Zambia
National Broadcasting Corporation. Just want to get an update on the IMF
program that Zambia is running. I think the first installment came in last
year, and Zambia is due for the second one. Just want to get an update, how
is Zambia performing? Are we meeting the benchmarks, and what is the
prospect in terms of the next installment?

MR. SELASSIE: Program performance in Zambia has really been very strong. I
was with the Managing Director in January for a visit to the country, and
we could see it with our eyes, how much effort the government had made. We
heard also from the private sector and civil society about the generally
better direction in which the economy is heading. We just had a team
conclude the review and, it was very satisfied with the progress that has
been made under the program. So, we hope to present the review to the Board
as soon as the Memorandum of Understanding that Zambia is discussing with
its creditors is signed.

We are again very hopeful that this can happen soon. There’s been a lot of
questions our creditors have raised; the government has addressed these
very robustly. We have an indication that there will be further discussions
next week. As soon as that takes place and we have a decision, we will
present our review to the Board.

MS. MOSSOT: We have the lady on the second row, here, please. Thank you.

QUESTIONER: Hi. Good morning. Thank you for taking my question. Kemi
Osukoya from the Africa Bazaar Magazine. I have two questions. The title of
this report is Big Funding Squeeze. Can you talk about the thought process
and the mechanism that went into that? And I would also like you to talk -–
I know we’re talking about debt; I would like you to talk about some of the
positive parts on the continent for private sectors investors that are
looking to invest in Africa right now.

MR. SELASSIE: Thank you. Good question on the thought process that goes
into what we highlight. This of course, again, as I say all the time, a
very heterogenous region, so really the circumstances differ incredibly
across the region. From growth to fiscal outcomes, to the debt picture. And
a lot of the conversation though about Africa, the narrative has been about
debt, debt, debt. And indeed, the debt vulnerabilities are the most
elevated they’ve been in many years, I would say maybe even since the turn
of the century. But one thing which we felt was –- not enough attention had
been paid to was the role that the scarcity of financing from external
sources was playing. So, we titled it Big Funding Squeeze because that’s
right now strikes us as one of the big cross-cutting challenges that many
countries in the region are facing.

So, debt levels go up as a result of what fiscal policies governments
pursue, first and foremost, but also whether countries have access to
favorable terms of financing. And over the years, official development
assistance — which was a major source of financing for sub-Saharan Africa
–- has been declining, countries have instead been relying on more costly
forms of market borrowing of course, and these are also factors that have
contributed to debt levels rising in the region.

Last but not least, right now we are at a moment when countries do not have
access to funding markets from outside. So, this exacerbates the situation,
and there are countries that are not facing fundamentally a solvency
problem, but rather a liquidity problem. And because of exogenous
circumstances, even these countries facing liquidity problems may fall
afoul of that sustainability consideration. So, we wanted to highlight the
complexity of the story, and also identify and draw attention to the fact
that we need to support the region, including through significant
counter-cyclical financing of the type that, international institutions
like this provide.

Again, as I said, the region is quite exogenous and I also want to stress
we’re a resilient region, and I see resources of resilience, particularly
in the private sector, even in countries where the public sector is facing
balance sheet problems. We see quite a lot of resilience in the private
sector across the region really, and in terms of countries, we also see
very inspiring projects being discussed, so in meeting with delegations,
yesterday, for example, I was hearing about the green hydro project that
Namibia’s launching, so there are a lot of bright spots in the region also.

MS. MOSSOT: The first row.

QUESTIONER: Simon Ateba Today News Africa in Washington, D.C. Mr. Selassie,
first of all, I don’t understand why you have to recuse yourself with
Ethiopia. I understand that you come from there, but knowing this, asking
you to talk about the war in Tigray, the conflict in Ethiopia, you’re an
economist, and you can talk about the report that you have, but let me go
to Nigeria. There was a pushback yesterday in Nigeria after the World Bank
President said that Nigeria should respond to some of the trade protections
that the President put in place in the past few years. Is that your opinion
here at the IMF that some of the trade protections that were put in place
should be dismantled by the incoming administration, and if you can talk
more broadly since you can’t talk about Ethiopia about the Horn of Africa
and the instability there, and the conflict there. Thank you.

MR. SELASSIE: I recuse myself honestly because I’ve been saying this to
people also — I’m privy as much to information from anecdotal sources of
information than just professional sources. I think it’s best to allow my
colleagues that deal with the country to give you the full picture, so it’s
not because of any malign intent or issue.

Second, on Nigeria, there’s a lot of speculation about what’s going to
happen, what’s not. I think it’s really difficult to respond on
hypotheticals. I think a source of frustration for the Government itself,
policymakers, businesses, over the last several years has been that the
trade regime, the foreign exchange regime, have all been very challenging
and have not allowed Nigeria to robust the very strong rates of growth that
the country needs desperately. Second, I think it’s appropriate that you
look at policies in terms of their effectiveness, so the question that we
have is the policies that have been pursued over the last three, four
years, have they indeed helped achieve the diversification that it was
intended to achieve.

The new administration will see what they do. We will be supportive of
measures, policies that respond and are effective, in terms of addressing
the diversification objective Nigeria has, but also addressing the
near-term challenges that macroeconomically the country is facing from
revenue mobilization to ensuring that there are sufficient resources to
spend on health, education, infrastructure. I think that’s all I can tell
you.

On the Horn, absolutely, we are very worried about, of course, on top of
the global challenges that the countries of the Horn have been facing, the
drought has also been a very important source of drag on growth, but,
what’s the long — the wellbeing of people, and it’s something that’s all
about programs or discussions with the countries of the Horn takes into
account.

MS. MOSSOT: Can we go to the lady in pink, please?

QUESTIONER: My name is Heidi Giokos from South Africa eNCA. You briefly
answered the question, but you had revised down growth for South Africa to
0.1 percent for 2023. Our Finance Minister has said that the IMF is looking
at the worst-case scenario when it comes to our energy crisis, and they are
confident they will be able to stabilize us. Do you think that we will be
able to stabilize our energy prices, and it is solely revised down to 0.1
because of load shedding and the unreliable electricity supply?

MR. SELASSIE: The short answer is yes, I wouldn’t say solely, but very much
to a large extent it is on account of the energy challenges that we have
revised down our growth numbers. Whether our numbers prove to be more
conservative, too conservative, time will tell, but you when we revise
these numbers, I think it’s something that we were fairly comfortable with.
Sometimes we have differences with country authorities on account of the
timing when, projections are made, and I think our projections came well
after the budget numbers had been produced, so maybe that accounts for some
of the differences. And then we see where things end up.

MS. MOSSOT: We have another question on the WebEx from Severin from Africa
24.

QUESTIONER: My question is related to me. The world bank’s April 2023
update suggests a lower GDP growth outlook for sub-Saharan Africa of 3.1%
in 2023, down from 3.6% in 2022. However, these figures are still high
compared to the global growth forecast for 2023, estimated at 2.6% by the
OECD in March. Does that mean sub-Saharan Africa is an investment-friendly
region?

How can African countries achieve growth driven by private investment and
not public spending which has an impact on debt growth as is currently the
case? How can governments also better capture financing opportunities such
as those available through climate finance?

MR. SELASSIE: On growth and whether we can still say the region is an
attractive one. I’m a little bit partial. Of course, I’m biased, of course.
I’m going to answer that in the affirmative. The potential of the region is
perhaps the least tapped globally. I think investment opportunities are
galore. Why aren’t these investment opportunities not being taken up partly
on account of policy, partly information asymmetry? There’s a range of
factors that must be addressed. Sometimes it’s a lack of infrastructure.
But, I have absolutely no doubt about the potential of the region. The
second question wasn’t very clear to me.

I think something that we’ve been flagging over the last many years is what
we saw in the last ten or 15 years is indeed growth that has been
influenced much more so by, government spending, the investment in
infrastructure, in health and education. And we need a handover of growth
from the public sector to the private sector. And the policies that are
going to be required will vary from country to country.

MS. MOSSOT: The second question was: How can African countries achieve
growth driven by private investments and not public spending, which has an
impact on debt growth?

MR. SELASSIE: Something that we’ve been flagging over the last many years
is what we saw in the last ten, 15 years is indeed growth that has been
influenced much more so by government spending, the investment in
infrastructure, in health and education, and we need the handover of the
growth from the public sector to the private sector, and the policies that
are going to be required will vary from country to country, yeah?

MS. MOSSOT: Let’s go back to the room where the second row, the gentleman
with glasses.

QUESTIONER: I want to get a more nuanced answer from you on monetary policy
transmission. In Africa. Take Nigeria, for example, where consumption
accounts for around 80% of GDP. And credit is very low. What is it about
monetary policy and rising interest rates that makes you confident in the
tackle against inflation? Or are you thinking more about anchoring
expectations or that higher rates would attract investors into the country
for higher returns and then the exchange rate goes up? And that’s the way
you’re thinking about how monetary policy helps. So just want to get a more
nuanced answer on monetary policy.

MR. SELASSIE: As always, the extent to which monetary policy will help
address inflation is going to be dependent on a whole range of factors. I
think if you have largely negative real interest rates, I’m not sure that
that is conducive to the kind of signaling effect that you want to have,
either in terms of supporting the exchange rate or the credits channel.
When you have multiple exchange rates, that also becomes a lot more
complicated, right? Do you which exchange rate
do you use as a benchmark? So, all those things must be factored in. Again,
we’re not dogmatic that it’s always must be about interest rates increases.
So that will work through the credits channel, as you said, for a large
sum, thereby mobilizing a bit more savings. But there are cases also where
we support, management, managing liquidity, even other cases where the
financial markets are even more rudimentary. So outright monetary
targeting, explicit money targeting is what will work. I think it depends
on a combination of those factors. I think you are very nuanced
policymakers in Nigeria

QUESTIONER: You opened, talking about the need for a well-functioning debt
restructuring mechanism. I wanted to ask you; do we have that now? Are we
seeing any progress? This week on the Chinese in particular, getting on
board some of the debt restructuring and the creditors paying back late
into that? What do you think needs to be done to replace the expired The.
Do you have any opinions about that? And then more generally on US-China
decoupling, we’ve heard warnings all week about the cost of that. Do you
have figures on how that impacts Africa in particular? And if you don’t,
more generally, why is Africa vulnerable to decoupling between the U.S. and
China?

MR. SELASSIE: On that last question, I think the answer is straightforward.
We have a small section in an annex and one of the analytical focuses on
the potential implications of these fragmentation type tensions on the
region. I will ask you to look at that. Do we have a functioning sovereign
debt restructuring framework? I think that the creation of the common
framework was really a very, very important initiative. We didn’t have a
framework which brought together outside the Paris Club old official
creditors. The fact that this was created honestly was a fantastic
initiative, and I’m not sure it would have come about. I’ve had a pandemic.
The urgency that that creates now, I think, allowed the common frameworks
to be created and important discussions and conversations have been taking
place. So relative to the architecture of that, we have three or four years
ago, the BSI and then subsequently the creation of the common framework has
been an important one and we have had some success. I think Chad is, of
course, an important example, but also it was under the common framework
that again, and the assurances that we were able to proceed with the,
presenting the program on Zambia forward. But the common framework, as you
know, also needs, of course, to be a lot timelier in terms of facilitating
final district restructuring outcomes. And that’s what’s lacking. And what
we are urging. What we are urging when we flag that, we need much more
nimble, much more agile. You know that restructuring framework for
countries that already are facing difficulties and down the road may need
some in terms of overarching approach to debt restructuring. I think the
complexity of the creditor base now is going to lead to more and more work
on an individual country basis rather than cross-cutting basis. I think we
see that, how different the debt treatment is going to have to be in Zambia
versus Ghana, for example. Going forward, I think we’ll be seeing more
country specific cases and again, strengthening the need for a mechanism
globally that’s that is much more efficient than the one we have now.

MS. MOSSOT: Thank you very much. Unfortunately, we don’t have the time to
take more questions, but for future questions on Ethiopia, please you can
reach out to my colleagues, Nicolas, who is in the room, and for all the
questions, of course, we will be able to take care, you can send us email
for the different press offices. Thank you very much for being with us in
this informative exchange with journalists and rendezvous in Morocco for
the Annual Meeting.

MR. SELASSIE: Thank you. Thank you, Tatiana. Thank you all for your
interest in coming here today.