Page last updated at 09:59 GMT, Wednesday, 20 May 2009 10:59 UK

IMF push for more help for Africa

South African worker standing in front of the construction site
Africa has been hard-hit by the financial slowdown

The International Monetary Fund (IMF) has warned that Africa's economic growth will plummet because of the world economic downturn.

It predicts that growth in sub-Saharan Africa will slow to 1.5% in 2009, below the rate of population growth.

In March, the IMF was predicting growth of 3.25% but the slump in commodity prices and the credit squeeze were the main factors for the revision.

The IMF said Africa would need more concessional aid to ride out the slump.

Let us not forget the stakes, which given the vulnerability of Africa's population, are higher than in other regions of the world
IMF managing director Dominique Strauss-Kahn

'Innocent victim'

It is a sharp turnaround for the African economies, which had been growing at around 6% per year since 2000, raising hopes that poverty rates could be reduced.

"In many respects, Africa is the innocent victim of this financial tsunami," said IMF managing director Dominique Strauss-Kahn.

But he warned that the "depth and breadth of the crisis" and the "unprecedented collapse in world trade" had meant that demand for African exports was "collapsing fast".

In addition, "although African banks avoided exposure to toxic assets, private capital is retreating, with both portfolio inflows and foreign direct investment drying up".

And, he added, "let us not forget the stakes, which given the vulnerability of Africa's population, are higher than in other regions of the world".

More help

Oil pipeline being built in Ivory Coast
African oil exports have been hit by the sharp fall in prices

The IMF said that Africa would need at least the doubling of aid promised at the Gleneagles summit in 2005.

"Without additional support, poverty reduction and economic development in Africa could be set back several years and political stability might be endangered in some countries," it said.

In addition, the IMF is planning to lend an additional $6bn (£4bn) to African countries at low interest rates over the next two to three years, after the G20 increased its resources at the London summit in April.

The IMF said it was also making its lending programmes more flexible, streamlining its programmes and making the conditions for lending less tough.

"Fiscal targets have been loosened in 80% of African countries," it said, "giving them more breathing space to deal with the crisis."

The IMF is now providing emergency support to a growing number of African countries, but it warned that more help was needed.

"The IMF cannot stand alone. To help countries weather this storm, all development partners need to follow through," Mr Strauss-Kahn said.

He also said that individual countries should give priority to preserving social safety nets "to protect the most vulnerable from the ravages of the crisis".

He will visit the Democratic Republic of Congo and the Ivory Coast later this week to discuss measures to deal with the downturn.



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