World Bank warns Nigerian, Ethiopian and Ugandan central banks not to overdo it

by MMC
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The organization highlighted the possible repercussions and indicated “If monetary and fiscal measures are not properly coordinated to bring down inflation, the risk of unanchoring inflation expectations would fuel further inflation, accelerate the rise in interest rates and exacerbate the deceleration in activity economic. »

The World Bank highlighted the persistent inflationary concerns facing most countries in the region in its Africa’s Pulse report.

The World Bank’s Office of the Chief Economist for the Africa Region publishes Africa’s Pulse every two years. It examines the continent’s short-term economic outlook, current development issues and a particular development problem.

The 2023 version of the report attributed inflationary woes to a number of causes, including “a slowdown in global demand, easing supply chain disruptions, lower commodity prices and tighter monetary policies.”

Despite a forecast decline from 9.3% in 2022 to 7.3% in 2023, double-digit inflation still affects 18 countries. The study highlighted the impact on households, particularly the poor, who spend a large part of their income on food, of rising food and fuel prices and the weakening of national currencies. .

The study raised concerns about the slow development of measures to consolidate fiscal policies in several countries regarding fiscal issues. For more than two thirds of the countries in the region, in 2023, budget deficits will be even greater than they were before the epidemic.

The World Bank has highlighted the urgent need to address these concerns and the need to “mobilize domestic resources and spend efficiently” in order to reduce risks associated with fiscal and debt sustainability, halt inflation and space for development spending.

He acknowledged attempts by several countries to adopt tax changes, such as those in Kenya and Ghana, and subsidy reforms in Angola and Nigeria, demonstrating the region’s commitment to fiscal consolidation. Additionally, a new development in the region is the use of digital technologies for tax administration and compliance.

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