News & Analysis: Fiscal policy
“Gambia stands to lose $292 million as global travel restrictions imposed in the wake of the coronavirus pandemic wreak havoc with the country’s tourism, a key source of foreign exchange. Government revenue from the hospitality industry is forecast to decline by $108 million this year, while the sector as a whole is forecast to suffer a loss of $184 million, according to an impact assessment by the national bureau of statistics.”
“The effectiveness of fiscal measures to drive mitigation and recovery will depend on how well a country is managed. Governments now have the opportunity, the imperative in fact, to look beyond the immediate crisis to make the structural changes necessary to drive market innovation and adaptation in a post-COVID-19 world.”
“The sizeable costs of a COVID-19 response in the health sector will escalate, particularly if transmission increases. Instituting early and comprehensive measures to limit the further spread of the virus will conserve resources and sustain the response.”
“Fiscal vulnerabilities among African sovereigns had been building up in the years leading to 2020’s pandemic, driven by challenging economic conditions; unfavourable changes in exchange rates and commodity prices; in addition to significant borrowing, including loans from China, which today is Africa’s largest bilateral lender, alongside greater bond issuance.”
“We don’t know how long the COVID-19 pandemic will last, but the prospect of finding an effective vaccine is likely. In contrast, the risk of climatic shocks remains. Many countries in the Southern Africa region have taken the first steps in increasing their financial preparedness to respond to shocks.”
“The recent exposé of massive misappropriation of the COVID-19 funds allocated for relief was a disturbing revelation to the nation… Finance Minister Tito Mboweni vowed to quickly cancel the emergency procurement processes and reintroduce the usual supply chain procedures to improve transparency. There are now reports, however, that this has not yet been done.”
“The South African government is investigating reports of large-scale ‘looting’ of its $26 billion coronavirus rescue package, launched to cushion the economic impact of the pandemic on struggling households.”
“For sub-Saharan African economies, interest repayments constitute the highest expenditure portion – and fastest-growing expenditure – of budgets.”
“The Executive Board of the International Monetary Fund approved the Kingdom of Eswatini’s request for emergency financial assistance of SDR78.5 million (about US$110.4 million, 100 percent of quota) under the Rapid Financing Instrument to meet the urgent balance of payment needs stemming from the COVID-19 pandemic.”
“Of the 25 countries eligible for the debt relief, only four have requested assistance – Cameroon, Côte d’Ivoire, Ethiopia and Senegal. The majority have either refused to apply, or have not yet requested a debt moratorium.”
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