African Countries with IMF Programs or in the process of negotiating an IMF bailout

A country’s existence during economic turbulence is guaranteed by an IMF bailout, which also ensures that crucial sectors and economic institutions continue to function. The impacted nation may also receive technical assistance from the IMF on how to execute reforms to enhance its institutions and economy.

The IMF’s requirements could lead to lower government expenditure and greater taxes, which historically have not been popular with the population and frequently ended in upheaval. It can damage the nation’s reputation in the eyes of investors and foster a feeling of dependence on outside assistance.

Instead, to provide nations affected by crises some breathing room while they implement measures to reestablish economic stability and growth, the IMF offers financial assistance. Additionally, it offers preemptive financing to aid in crisis prevention. IMF lending is regularly improved to match the shifting needs of nations. Let’s have a quick look at the long list of African countries with IMF programs or in the process of negotiating an IMF bailout.

List of African Countries with IMF Programs or in the process of negotiating an IMF bailout

1. Kenya

2. Zambia

3. Rwanda

4. Tanzania

5. Sudan

6. Ethiopia

7. Uganda

8. Senegal

9. Benin

10. Cameroon

11. Chad

12. Gabon

13. Mozambique

14. Congo Brazzaville

15. Equatorial Guinea

16. Niger

17. Liberia

18. Sierra Leone

19. Central African Republic

20. Gambia

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21. Cape Verde

22. São Tomé and Principe

23. Madagascar

24. Ghana

25. Ivory Coast

26. Sudan

27. Seychelles

28. DRC

29. Tunisia

30. Malawi

31. Somalia

32. Egypt

How did the governments of all these countries suddenly become bad managers of their economies?

IMF loan process in five steps

  • A member nation first approaches the IMF with a request for financial aid.
  • The government of the nation and IMF personnel then talk about the country’s economic and financial position and financing requirements.
  • Before the IMF lends money to a country, the government and the IMF often come to an agreement on a set of economic policies. The pledges a government makes to implement particular policy measures, also referred to as policy conditionality, are typically an essential component of IMF lending.
  • The policy programme underlying a deal is presented to the IMF Executive Board in a “Letter of Intent” and in more detail in a “Memorandum of Understanding” when the terms have been agreed upon. The Executive Board receives a recommendation from the IMF staff to support the nation’s policy goals and extend finance. The Emergency Funding Mechanism of the IMF allows for the acceleration of this procedure.
  • Following the Executive Board’s approval of a loan, the IMF keeps track of how its members carry out the underlying policy measures. Returning a nation to economic and financial stability ensures that IMF loans are paid back and available to other members.

What requirements must be met before receiving an IMF bailout?

Some structural reforms, such as fiscal transparency, tax reforms, and reforms in state-owned firms, may be one of the requirements set forth for a government seeking financial assistance from the IMF. Opponents claim that because these reforms are frequently determined by authorities from other countries, they may be difficult for the general public and may be influenced by geopolitics.

Supporters contend that these requirements are required for the IMF to successfully lend because nations with policies that inhibit economic growth and stability would not be able to repay their debts. According to the IMF, macroeconomic factors like monetary and credit aggregates, foreign reserves, fiscal balances, and external borrowing are also related to the terms for IMF lending.

How does the IMF acquire its funding?

The three sources of IMF funding are member quotas, multilateral borrowing agreements, and bilateral borrowing agreements. The main source of funding for the IMF is quotas, which are distributed to each member according to their relative standing in the global economy.

With its current total resources of approximately SDR 977 billion, the IMF has a lending capability of approximately SDR 713 billion (almost US$1 trillion). Other lenders include China, India, Saudi Arabia, South Africa, Kuwait, and members of the Paris Club of creditor nations like the United States, France, and Japan.

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