IMF in Talks on Financing Boost for Drought-hit Africa

  • IMF discusses extra resources for Djibouti, Kenya through existing loans
  • New concessional loans can be quickly made available if requested
  • Scope seen for work to increase effectiveness of disaster-relief assistance
  • In an interview, IMF African Department Director Antoinette Sayeh said that there is also room to boost disaster-relief aid effectiveness.

    Sayeh was speaking ahead of an August 25 pledging conference in Addis Ababa, Ethiopia, convened by the African Union to raise financing for drought relief in East Africa. In a separate statement, IMF Managing Director Christine Lagarde welcomed support from the international community that has been pledged so far in a twin-track approach to provide immediate relief and ensure food security in the long term.

    IMF Survey online: What is the impact of the drought on the countries in the Horn of Africa?

    Sayeh: The Horn of Africa is undergoing its worst drought in some 60 years. In the case of Somalia, the World Food Program, for example, has concluded that the famine there is a catastrophe. We have some 800,000 refugees who have fled Somalia to go to Ethiopia, Kenya, and Djibouti. Food prices in the region as a whole have increased significantly, creating severe hardship for people both in rural and urban areas.

    And on the economic front we have seen increased inflation across the subregion. In Kenya and Tanzania inflation is now in double digits, around 13–14 percent, as a result of significantly increased food prices.

    In relation to import bills, because of the dependence of this region on hydropower for electricity, many countries are seeing shortages in power and are forced then to import fuel to facilitate generation of power. In addition to that, we expect some negative impact on overall growth because of the adverse consequences for agriculture.

    Let me also underscore the significant pressures upon the budgets of countries in the region, because they are forced to make available emergency food supplies, which are only partly covered by international aid being provided in response to the drought.

    IMF Survey online: You’ve described a very dire situation. What can the international community do, and especially the IMF, to help those countries?

    Sayeh: The Fund will work in the context of a broader international coordinated effort. First and foremost, disaster relief is the priority. The World Food Program has made an appeal for some $2.4 billion in financing for disaster relief to...

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