Struggling with the weakest growth in two decades, sub-Saharan Africa should consider increasing taxes and removing subsidies to improve economic growth, according to the IMF. David Pollard reports.
African economies: once in the fast lane - but now ever slower. And, says the IMF, in need of drastic action to get them going. Deficits need to be cut. Fuel subsidies ended - taxes hiked. (SOUNDBITE) (English) DIRECTOR, IMF AFRICAN DEPARTMENT, ABEBE SELASSIE, SAYING: "The key for us really, the key risk is really whether or not countries will go ahead and do the required fiscal adjustments. Should they fail to do that I fear vulnerabilities will heighten." Many were at five per cent growth or more before the global commodities slump. That now likely at just 1.4 per cent for sub-Saharan Africa this year. Its big resource-dependent hitter, Nigeria, struggling with its tax base to avoid worse. (SOUNDBITE) (English) DIRECTOR, IMF AFRICAN DEPARTMENT, ABEBE SELASSIE, SAYING: "The low level of debt in Nigeria is a source of strength but urgent action is needed because the economy is already in recession this year that's why we are calling for stronger action as soon as possible." And for Zambia and others that use them, the IMF say that means turning the pumps off - when it comes to fuel subsidies. (SOUNDBITE) (English) DIRECTOR, IMF AFRICAN DEPARTMENT, ABEBE SELASSIE, SAYING: "Fuel subsides take up a huge amount of government resource ... what do you want to use those resources for, fuel subsidies which tend to benefit the rich or do you want to use that for priority spending on health education infrastructure investments so you know as always there is no easy choices." There are exceptions. Kenya managing a healthy six per cent growth rate. And 'justified' in pushing up its deficit to spend on infrastructure, says the IMF ... IF that deficit gets plugged later on. ///////////////////////