Sub-Saharan Africa

Macro Poverty Outlook
Country-by-country Analysis and Projections for the Developing World

AnnualMeetings
2021

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Sub-SaharanAfricaAngolaBenin
Botswana
Burkina Faso
BurundiCabo Verde
Cameroon
Central African Republic
Chad
Comoros
Congo, Dem. Republic
Congo, RepublicCôte d'Ivoire
Equatorial Guinea
Eritrea
Eswatini
Ethiopia
Gabon
The Gambia
Ghana
GuineaGuinea-Bissau
Kenya
Lesotho

MPO 201 Oct 21

Liberia
Madagascar
MalawiMali
Mauritania
Mauritius
Mozambique
Namibia
Niger
Nigeria
RwandaSão Tomé and Príncipe

Senegal
Seychelles
Sierra Leone
SomaliaSouth Africa
South Sudan
Sudan
Tanzania
Togo
UgandaZambiaZimbabwe

ANGOLAKey conditions andchallenges

Table 12020

P o pulatio n, millio n

32.9

GDP , current US$ billio n

58.8

GDP per capita, current US$

1787.2

Internatio nal po verty rate ($ 1.9)

a

49.9
a

71.5

a

88.5

Lo wer middle-inco me po verty rate ($ 3.2)
Upper middle-inco me po verty rate ($ 5.5)a51.3

Gini index

Scho o l enro llment, primary (% gro ss)

b

b

113.5
61.1

Life expectancy at birth, years
To tal GHG Emissio ns (mtCO2e)

112.5

Source: WDI, M acro Poverty Outlook, and official data.
(a) M ost recent value (201 8), 201 1 PPPs.
(b) WDI for School enrollment (201 5); Life expectancy (201 9).

Angola’s economy is returning to modest
growth in 2021 after five years of recession, as declining oil prices and production, and then Covid-19, shrank the country’s GDP by 10.8 percent from its peakin 2015. The long recession and rising
inflation increased poverty. Although theoutlook beyond 2021 remains challenging,ongoing economic reforms and active debt
management have achieved debt reprofiling, more credible monetary policy, and alarger non-oil revenue base, creating thebasis for continued recovery.

Excessive dependence on oil exposes Angola to macroeconomic instability andhinders inclusive growth and poverty
reduction. From a peak of 1.8 million barrels per day in 2015, oil output has declined by 30 percent as existing fields are
depleted and Angola’s remaining blocks
have failed to attract adequate investment.
With lower oil prices and production,
export receipts have fallen 72 percent in2020 from their peak in 2012, yet oil still
makes up 94 of Angola’s exports, highlighting the persistent lack of diversification of the economy. Given global decarbonization, Angola´s transition out of theoil sector becomes even more urgent.
Meanwhile, diversification will require
investments to adapt Angola’s cities andagriculture to the effects of climatechange, with the already-growing numberof droughts and floods expected to increase further.
Oil wealth allowed Angola to engage inlarge-scale borrowing and the debt burden rose sharply once oil prices and thecurrency declined, reaching a peak of 135
percent of GDP in 2020. Debt remains a
concern over the medium term, despite apartial rescheduling of external debt service, including under the Debt Service
Suspension Initiative.
The government has floated the currency
and implemented important macroeconomic reforms since it assumed office in

FIGURE 1 Angola / Real GDP (index, 2014 = 100)late 2017. However, progress on broader
structural reforms has been slower. Pending reforms include privatization of large
state-owned enterprises, overhaul of sectoral regulations to enable competition,and removal of high fuel subsidies andprice controls.
Angola´s income inequality remains high,with about half of its young and fastgrowing population living on less than
US$1.90 per day (2011 PPP) as of 2019.
Years of high inflation, strained publicfinances, and lack of growth and job creation in non-oil sectors have reversed muchof the little progress made on poverty reduction during the oil boom years. Given
growing social pressure and upcoming
elections, there is a risk of measures suchas new subsidies, price controls and import restrictions that may offer some short-term benefits but could further delay the
emergence of a productive private sector.

Recent developments
Angola has avoided high infection rates of
COVID-19 so far. A total of 47,784 cases(145 per 100,000) were registered as of
September 2, 2021, and the 7-day average
incidence peaked at 6.2 per 100,000 in May
2021. However, progress on vaccination
has been slow to date, with only 2.8 percent of the population fully vaccinated asof September 2.
As a result of falling oil output and the
COVID-19-related impact on services, GDP
contracted 5.4 percent in 2020. This marks
the fifth consecutive year of recession, with

FIGURE 2 Angola / Actual and projected poverty rates andreal private consumption per capita

2014=100

Poverty rate (%)

120

100

110

Real private consumption per capita (LCU constant)
24000
23000

80

22000

100

60
21000

90

40
20000

80

20

70

19000

0

60
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Real GDP

Oil sector

2019

2020

International poverty rate
Upper middle-income pov. rate

Non-oil sector

Sources: National Statistics Institute of Angola. World Bank - MTI.

18000
2018

Source: World Bank. Notes: see Table 2.

MPO 202 Oct 21

2021

2022

2023

Lower middle-income pov. rate
Real priv. cons. pc

a total GDP decline of 10.8 percent (seeFigure 1). In the first half of 2021, oil output
remained low but non-oil activity began torecover, rising 3.8 percent year-on-year in
the first quarter.
Higher oil prices in 2021 are generating
higher fiscal and export revenues, evenwith falling production. Tax measures introduced since 2019, including the VAT,
have resulted in increased non-oil revenues
which grew by 45 percent year-on-year in
the second quarter.
The exchange rate, sensitive to oil prices
and concerns about debt sustainability,
depreciated by 37 percent in 2020 but
stabilized in 2021. Although central banknet-reserves declined by 25 percent in2020 and an additional 5 percent by July
2021 (to US$8.3 billion), import coverageremains adequate at about 11 months.
Currency depreciation along with risingcommodity prices and domestic crop failures from a major drought have fueled
inflation, which increased to 25 percent in2020 and has remained at this level
through July 2021. In July 2021, the central bank tightened monetary policy byraising the policy rate to 20 percent (from15.5 percent) to contain inflation.

The employment rate reached 61.7 percent in the second quarter of 2021, remaining below its 2019 level. Moreover,76 percent of new jobs are in the informal
sector, including a heavy reliance on subsistence activities. The Kwenda cashtransfer program was rolled out in 2020
but so far only covers about 9,000 families
out of around 2.7 million families livingon less than U$1.90 per day. The combination of continued high unemployment
and food inflation, along with severe
drought in some parts of the country, areexpected to have increased food insecurity and poverty.

OutlookGDP growth is expected to accelerate toabout 3 percent in 2022–23 as oil production temporarily recovers and non-oil
growth accelerates, benefitting frommarket creating reforms and the lagged
impact of macroeconomic reforms. The
outlook is conditional on COVID-19 remaining relatively well controlled inAngola and vaccination covering

TABLE 2 Angola / Macro poverty outlook indicators

Real GDP growth, at constant market prices
Private Consumption
Government Consumption
Gross Fixed Capital Investment
Exports, Goods and Services
Imports, Goods and Services
Real GDP growth, at constant factor prices
Agriculture
Industry
Services
Inflation (Consumer Price Index)
Current Account Balance (% of GDP)Net Foreign Direct Investment (% of GDP)
Fiscal Balance (% of GDP)
Debt (% of GDP)
Primary Balance (% of GDP)
International poverty rate ($1.9 in 2011 PPP) a,b
Lower middle-income poverty rate ($3.2 in 2011 PPP) a,b
Upper middle-income poverty rate ($5.5 in 2011 PPP) a,b
GHG emissions growth (mtCO2e)
Energy related GHG emissions (% of total)around 52 percent of adults by the endof 2022.
Monetary tightening and a more stableexchange rate are expected to result in
gradual disinflation. Improved supply
conditions through structural reforms
can also accelerate disinflation in thelonger-term. The central government is
expected to run sizable primary fiscal
surpluses, decreasing public debt-toGDP levels, though this remains vulnerable to oil price risks.
Projections, tentative due to limited data,suggest that the share of the Angolan population living on less than US$1.90 per
day (2011 PPP) is expected to peak in
2022, reaching about 53.9 percent, an increase of nearly 3.5 million people since
2018. In 2023, the poverty rate is expected
to fall by 0.2 percentage points. Expansionof the Kwenda program and measures tosupport job creation, especially for youth,
are critical to protect human capital andreduce poverty.
Policy uncertainty and heightened political and social tensions in advance of theAugust 2022 general elections could resultin further delays in the reform agenda.

(annual percent change unless indicated otherwise)
2018
-2.4
-3.4
-1.7
-5.1
1.2
-16.9
-7.5
-7.6
-11.4
-1.7
19.6
7.3
-6.4
2.8
88.6
7.5
49.9
71.5
88.5
-9.3
15.7

2019
-0.6
-1.6
-1.6
-3.1
0.8
0.0
-1.0
-4.4
-2.8
2.0
17.1
5.7
-2.0
0.7
107.3
6.0
51.1
72.3
89.5
-5.8
17.1

2020
-5.4
-4.0
-14.1
-8.9
-6.2
-23.5
-6.3
0.8
-10.2
-2.4
22.3
-0.4
-3.3
-1.9
134.4
4.9
52.9
73.5
90.9
-4.2
16.9

2021 e
0.4
0.6
9.9
-2.2
-4.3
8.5
0.3
-1.9
-0.3
1.3
24.4
5.3
-3.3
2.8
100.1
8.0
53.6
73.9
91.5
5.1
17.4

So urce: Wo rld B ank, P o verty & Equity and M acro eco no mics, Trade & Investment Glo bal P ractices. Emissio ns data so urced fro m CA IT and OECD.
No tes: e = estimate, f = fo recast.
NA(a) P ro jectio n using po int to po int elasticity at regio nal level with pass-thro ugh = 0.7 based o n private co nsumptio n per capita in co nstant LCU.
(b) A ctual data: 2018. No wcast: 2019-2020. Fo recast are fro m 2021to 2023.

MPO 203 Oct 212022 f
3.1
2.4
1.4
9.7
1.5
7.2
3.0
2.6
4.3
1.6
18.1
6.6
-0.3
2.8
92.3
7.5
53.9
74.0
91.6
1.3
17.9

2023 f
2.8
3.7
-1.9
6.8
1.5
6.0
2.6
4.7
3.6
1.1
10.9
4.6
0.6
2.7
88.0
7.1
53.7
74.0
91.5
-0.1
18.6

BENINKey conditions andchallenges

Table 12020

P o pulatio n, millio n

12.1

GDP , current US$ billio n

15.4

GDP per capita, current US$

1272.7

Internatio nal po verty rate ($ 1.9)

a

49.6
a

76.2

a

90.6

Lo wer middle-inco me po verty rate ($ 3.2)
Upper middle-inco me po verty rate ($ 5.5)a

47.8

Gini index

Scho o l enro llment, primary (% gro ss)bbLife expectancy at birth, years
To tal GHG Emissio ns (mtCO2e)

116.7
61.8
29.3

Source: WDI, M acro Poverty Outlook, and official data.
(a) M ost recent value (201 5), 201 1 PPPs.
(b) M ost recent WDI value (201 9).

Spared a major domestic COVID-19
outbreak, Benin’s economy was relatively resilient in 2020 with real GDP
growth decelerating to +3.8 percent. The
fiscal deficit and external debt increased
to support the economy that is expected
to rebound in 2021, due to higher commodity prices, the gradual reopening ofNigerian borders, and continued dynamism in the construction sector. Commodity price volatility, the spread of new
COVID-19 variants, and vaccine rollout cloud the outlook.

Prior to the pandemic, Benin experienced
robust real GDP growth averaging 6.4 percent in 2017-2019, thanks to a relatively favorable external environment and commitment to macroeconomic stability. Growth inrecent years has been boosted by private
investment, higher agricultural production
with record-levels of cotton output, and an
expanding services sector. The Government
Action Plan (PAG) has underpinned investments in infrastructure and focused onstrengthening governance. Fiscal consolidation efforts since 2016 enabled the authorities to respond to the COVID-19 crisis withfiscal stimulus, keeping the GDP deceleration among the lowest in SSA.
The high growth momentum, however,has yet to result in structural change: agriculture still accounts for 40 percent of employment, and productivity growth in theabsorbing services and industry sector has
been slow. The increasing fiscal deficit andhigher external debt levels since the onsetof the global crisis have highlighted thevulnerabilities of the growth model, notably the reliance on exports of raw agricultural commodities and re-export activities
with neighboring countries, the low levelsof human capital, large gender gaps, andstructurally low domestic revenue mobilization that limits productive spending.
While the COVID-19 cases remained relatively contained in 2020, the duration andthe amplitude of future waves convey

substantial downside risks. Price volatility, notably in food products, would negatively impact vulnerable households, increasing food insecurity pressures. A prolonged outbreak would compromise economic recovery, increasing the fiscal andexternal financing requirements and debt
pressures. Weather shocks and increased
regional insecurity could further exacerbate spatial inequalities between the
North and more urban Southern regions.

Recent developments
Real GDP growth decelerated to +3.8 percent in 2020 (1 percent in per capita terms)
driven by lower agricultural output andthe impact of social distancing measureson services during the first half of theyear. On the demand side, public consumption (+19.6 percent y-o-y) and public
investment (+88.4 percent y-o-y) supported growth. Activity continued to reboundin the first quarter of 2021, with growth up+3.9 percent y-o-y. Industrial production
and services were up for the first half of2021. Inflation reached 3 percent in 2020,
driven by higher food prices, before stabilizing at 2.7 percent at end-July 2021.
The current account deficit (including grants)
was almost unchanged at 3.9 percent of GDP
in 2020 as lower re-export activities withneighboring countries contained goods andservices imports, and current transfers werehigher due to increased remittances. As theborder with Nigeria opened up, the tradebalance deteriorated in Q1 2021 with imports
up +9.4 percent for re-export activity.

FIGURE 1 Benin / Budget balance and change in PPG debt

FIGURE 2 Benin / Actual and projected poverty rates andreal GDP per capita

Percent of GDP
25

Poverty rate (%)

Real GDP per capita (constant LCU)

100

100000080

80000060

60000040

40000020200000

20
15
10
5
0
-5

-10

0

0
2011

Change in debt (%GDP)
Source: World Bank.

2013

2015

2017

International poverty rate
Upper middle-income pov. rate

Budget balance (%GDP)

Source: World Bank. Notes: see Table 2.

MPO 204 Oct 21

2019

2021

2023

Lower middle-income pov. rate
Real GDP pc

Fiscal policy was expansionary with thedeficit (including grants) increasing from
0.5 percent of GDP in 2019, to 4.7 percent
in 2020. Capital expenditures were up +75
percent as infrastructure projects wereused to support the economy. Despite adrop in customs revenue (due to borderclosures and disruptions in trade), total
tax revenues were almost unchanged
mostly due to the outperformance of excise taxes on oil products. Public and publicly guaranteed (PPG) debt increased to46.1 percent of GDP in 2020 (+4.9 ppt compared to 2019), with concessional borrowing representing the bulk of the additional
financing. Benin’s monetary and exchange
rate policies are managed by the Central
Bank of West African States (BCEAO),
which maintains a peg between the CFA
Franc and the Euro. Its reserves have remained stable since 2019 and reached an
estimated 5.8 months of imports in 2020
due to donor support and Eurobond issuance in Cote d’Ivoire. To support the regional economy and COVID-19 related
extra spending, the BCEAO implemented
a set of monetary and macroprudential
measures beginning in March 2020, including a policy rate cut and extended
refinancing operations with 3-month
COVID-19 bonds. These measures wereextended into 2021.

Poverty and vulnerability remain high.
The poverty rate based on the national
poverty line was 38.5 percent in 2019 withstrong spatial disparities, rural poverty
stands at 44.2 percent, +12.8 ppts higher
compared to urban areas. World Bank
estimates suggest that $1.9 a day (2011
PPP) poverty reduction significantly
slowed down in 2020 (-0.9 percent reduction y-o-y) versus 2019 (-3.2 percent reduction y-o-y). Employment data and social
indicators from the first half of 2021 suggest that poverty reduction trends gradually revert to their pre COVID-19 trends.

OutlookReal GDP growth is expected to reboundto 5.5 percent in 2021 (2.7 percent in percapita terms). On the supply side, agriculture, fostered by higher cotton prices, andthe continuous dynamism of the construction sector will be the main drivers of therecovery. On the demand side, exports,
public investments, and a gradual increase in private investment will drive
growth. After reaching 3 percent in 2021,
inflation should ease to 2 percent in 2022.
The current account deficit (including
grants) is expected to widen slightly to 4

TABLE 2 Benin / Macro poverty outlook indicators

Real GDP growth, at constant market prices
Private Consumption
Government Consumption
Gross Fixed Capital Investment
Exports, Goods and Services
Imports, Goods and Services
Real GDP growth, at constant factor prices
Agriculture
Industry
Services
Inflation (Consumer Price Index)
Current Account Balance (% of GDP)Net Foreign Direct Investment (% of GDP)
Fiscal Balance (% of GDP)
Debt (% of GDP)
Primary Balance (% of GDP)
International poverty rate ($1.9 in 2011 PPP) a,b
Lower middle-income poverty rate ($3.2 in 2011 PPP) a,b
Upper middle-income poverty rate ($5.5 in 2011 PPP) a,b
GHG emissions growth (mtCO2e)
Energy related GHG emissions (% of total)

percent in 2021. It will be largely financed
by portfolio flows due to large issuances
in international markets (EUR 1.5 billion).
In August 2021, the BCEAO received 1.4
percent of aggregate GDP in additional
SDR allocations from the IMF, which havebeen temporarily onlent to member countries. The fiscal deficit (including grants)
is expected to decline slightly at 4.5 percent of GDP in 2021, as authorities continue to support the recovery, but should
return to around the WAEMU ceiling of 3
percent of GDP by 2023 as authorities
gradually reduce current spending. PPG
debt is expected to peak at 52.3 percent of
GDP at end-2021, before gradually receding to 40 percent of GDP by 2026. External
debt remains sustainable. In July 2021,
Benin issued the first Sustainable Development Goals (SDG) Bond in Africa.
Poverty reduction is expected to gradually
revert to its pre-crisis levels during the2021-2022 period as the economy rebounds, and on the back of improved employment indicators as COVID-19 restrictions ease and businesses adapt theiroperations to the new environment. The$1.9/day PPP poverty headcount rate is
expected to decrease to 43.8 percent in
2021 (-2.4 percent y-o-y), and to 42.4 percent in 2022 (-3.2 percent y-o-y).

(annual percent change unless indicated otherwise)
2018
6.7
3.5
6.0
16.3
5.0
4.8
6.7
7.3
6.2
6.7
0.8
-4.5
1.2
-2.9
41.1
-1.3
46.8
73.7
90.1
4.1
35.0

2019
6.9
3.5
5.8
8.4
-1.6
-6.1
6.9
7.2
6.2
7.1
-0.9
-4.0
1.3
-0.5
41.2
1.1
45.3
72.1
89.9
3.0
35.8

2020
3.8
3.0
19.6
-1.1
-29.5
-24.7
3.8
5.6
5.2
1.1
3.0
-3.9
0.5
-4.7
46.1
-2.7
44.9
71.7
89.8
1.0
36.1

2021 e
5.5
5.0
-1.0
9.6
28.0
22.5
5.5
5.5
5.8
5.3
3.0
-4.0
1.5
-4.5
52.3
-2.4
43.8
70.8
89.6
3.6
36.4

So urce: Wo rld B ank, P o verty & Equity and M acro eco no mics, Trade & Investment Glo bal P ractices. Emissio ns data so urced fro m CA IT and OECD.
No tes: e = estimate, f = fo recast.
NA(a) Calculatio ns based o n 2015-EM ICOV.A ctual data: 2015. No wcast: 2016-2020. Fo recast are fro m 2021to 2023.
(b) P ro jectio n using neutral distributio n (2015) with pass-thro ugh = 0.7 based o n GDP per capita in co nstant LCU.

MPO 205 Oct 212022 f
6.5
6.0
7.7
7.4
7.0
6.9
6.5
7.8
7.0
4.8
2.0
-4.3
1.0
-3.8
48.9
-2.2
42.4
69.6
89.3
4.2
37.4

2023 f
6.5
6.5
4.7
7.8
8.1
8.2
6.5
8.6
5.7
5.1
2.0
-4.4
1.0
-3.0
46.3
-1.5
41.0
68.6
89.0
4.6
38.3

BOTSWANA
Table 1

Key conditions andchallenges
2020

P o pulatio n, millio n

2.4

GDP , current US$ billio n

15.1

GDP per capita, current US$

6291.7

Internatio nal po verty rate ($ 1.9)

a

14.5

Lo wer middle-inco me po verty rate ($ 3.2)
Upper middle-inco me po verty rate ($ 5.5)
a

a

a

36.5
59.1
53.3

Gini index

Scho o l enro llment, primary (% gro ss)bbLife expectancy at birth, years
To tal GHG Emissio ns (mtCO2e)

103.2
69.6
64.0

Source: WDI, M acro Poverty Outlook, and official data.
(a) M ost recent value (201 5), 201 1 PPPs.
(b) WDI for School enrollment (201 5); Life expectancy (201 9).

Botswana’s economy is expected to rebound to 8.5 percent in 2021 following an
8.5 percent contraction last year. Carefulmanagement of mineral resources allowed
Botswana to enter the pandemic withmore fiscal space than most peers. Addressing structural impediments to higher
medium-term growth is needed to improve living standards. The unemployment rate currently stands at 24.5 percent. Poverty is expected to decline by 2
percentage points to 57.6 percent, basedon the upper middle-income country
poverty line in 2021.

Botswana’s macroeconomic policy framework is anchored on prudent macroeconomic policies and good governance.
However, the economy is largely dependent on a single commodity, diamonds,
making it vulnerable to external shocks.
The ongoing COVID-19 crisis and structural rigidities mean that Botswana’s
growth outlook remains vulnerable toexternal shocks.
Structural challenges pre-dating the pandemic led to weak growth and widening
fiscal deficits over the past 4 years. Thishighlighted the need for Government tosupport policies to diversify the economy
and to speed up implementation of theplanned fiscal consolidation to create sustained, high, job-rich growth and preserve macroeconomic stability. Unemployment is structurally high, at 19.8 percent over the last 5 years. Inequality remains among the highest in the world,
while the COVID-19 crisis set back thegains in poverty reduction from the previous 4 years. Measures to improve export competitiveness, encourage inward
investments by promoting a favorable
business environment, and preserve fiscal
sustainability would all support higher
inclusive growth.
The country experienced a spike in
COVID-19 cases over the winter, withrising infections and deaths amidst shortage of vaccines leading to a slower than

anticipated vaccine rollout. In response,
government maintained containment
measures translating in a slower reboundin economic activity. Key risks to theeconomy include continued resurgenceof COVID-19-related cases and rising
deaths domestically and globally. Economic activity remains stagnant amid
fears of travelling amongst tourists; delays in roll out of vaccines and potential
lockdowns. The resurgence of cases also
has the potential to cause great uncertainty in the global, regional and domestic economies, with implications on demand, especially for diamonds.

Recent developments
Real GDP increased by 0.7 percent in Q1
on an annual basis, driven by diamondtrading and wholesale and retail trade.
Provisional results for the seven sights of2021 show an increase in diamond sales,
highlighting recovering demand for the
key export. Other sectors’ activity remained subdued as the third wave of local
infections prompted additional restrictions. The latest figures show unemployment at 24.5 percent in Q4 2020, an
increase from previous years, while poverty under the upper middle income poverty line also increased in 2020 by 3 percentage points. Household consumption
contracted by 2.7 percent in Q1 on an annual basis. Though rising, household debt
remains manageable at 25 percent of disposable income in Q12021 compared to23.7 percent in Q12020.

FIGURE 1 Botswana / Diamond sales and diamond extraction

FIGURE 2 Botswana / Poverty rates and real GDP per capita

CaratsUS$

Poverty rate (%)

7000

2,500

70

6000

2,000

5000

Real GDP per capita (LCU constant)

100000

60

80000

50

4000

1,500

3000

1,000

2000
500

1000

40

60000

30

40000

20
20000

10

0

0

0

0
2009

Extraction (rhs)
Source: Statistics Botswana.

2011

2013

2015

2017

International poverty rate
Upper middle-income pov. rate

Sales (lhs)

Source: World Bank. Notes: see Table 2.

MPO 206 Oct 21

2019

2021

2023

Lower middle-income pov. rate
Real GDP pc

CPI inflation averaged 5.2 percent over
January-July 2021 compared to 1.9 percent
in 2020. Inflationary pressures are on an
upward trajectory following the rebound in
oil prices, and increases in fuel levy, VAT
rate, and administered prices. Bank of Botswana maintained an accommodative
monetary policy stance, keeping the repo
rate at 3.75 percent to support the recovery
as it anticipates inflationary pressures to betransitory. Real exports of goods and services increased by 84.3 percent in Q1 2021,
driven by diamonds. Foreign exchange
reserves declined to an estimated P50.8
billion as of July 2021, but import coverage,
at 9.4 months, remains sound.
Government expenditure has faced pressures from the pandemic. On the other
hand, measures to increase revenue mobilization have been implemented, including broadening the tax base, increasing
VAT by two percentage points to 14 percent, fuel and sugar levies, a tax on plasticbags and withholding tax adjustments, allestimated to yield about 1 percent of GDP.
A tax amnesty to reduce tax arrears andan increase in service fees should increase
revenue collection this year by an additional 0.5 percent of GDP. Nevertheless,amid elevated financing needs, Botswana
has sought budget support from multilateral banks amounting to US$387 million.

Outlook
Growth is expected to be robust in 2021,
at 8.5 percent, although GDP is projected
to remain below its 2019 level until 2022.
The recovery will be driven by a reboundin mining, supported by the global recovery. This will mainly translate into a positive contribution to growth from net exports while the domestic drivers ofgrowth will remain constrained by the
pandemic. Poverty levels under the upper
middle-income poverty line are expected
to decline to 57.6 percent in 2021 due tothe economic recovery. The vaccination
rollout has gained traction with 21.6 percent of the eligible 1.5 million population
fully vaccinated adding renewed optimism to economic activity. Improved
domestic demand will boost the recovery
of other sectors as the implementation of
the Economic Recovery and Transformation Plane (ERTP) unfolds to pursue

TABLE 2 Botswana / Macro poverty outlook indicators

Real GDP growth, at constant market prices
Private Consumption
Government Consumption
Gross Fixed Capital Investment
Exports, Goods and Services
Imports, Goods and Services
Real GDP growth, at constant factor prices
Agriculture
Industry
Services
Inflation (Consumer Price Index)
Current Account Balance (% of GDP)Net Foreign Direct Investment (% of GDP)
Fiscal Balance (% of GDP)a
Debt (% of GDP)
Primary Balance (% of GDP) a,b
International poverty rate ($1.9 in 2011 PPP) c,dLower middle-income poverty rate ($3.2 in 2011 PPP) c,dUpper middle-income poverty rate ($5.5 in 2011 PPP) c,d
GHG emissions growth (mtCO2e)
Energy related GHG emissions (% of total)

an outward looking growth strategy thatspurs private sector development andcompetitive external trade. Growth is expected to average around 5.1 percent over2022-23 and poverty is projected to decline
further to around 56 percent.
The current account deficit is expected tonarrow to 2.6 and 2.2 percent of GDP in
2021 and 2022, respectively, as the rebound in diamond production and favorable terms of trade are expected to morethan offset the projected drop in SACU
revenue. The recent allocation of SDR
189m by the IMF will strengthen reserve
buffers and resilience in the medium term.
The fiscal deficit is expected to decline to
6.6 percent of GDP in 2021/22, driven byhigher revenue collection (mining andrevenue mobilization measures) while
expenditure remains. Public debt is estimated to reach 28.3 percent this year and30.2 percent by 2023, driven by a rise inexternal borrowing.
The pandemic continues to pose a majorrisk to the anticipated upturn in economic
activity as new variants and uncertainties
surrounding vaccines could lead to further lockdowns and subsequently weaken
global demand for diamonds in the future.

(annual percent change unless indicated otherwise)
2018
4.0
4.4
1.4
8.6
11.9
15.9
4.0
10.3
5.5
2.7
3.2
0.7
1.2
-5.1
19.9
-4.5
12.1
32.7
56.4
-1.7
27.1

2019
3.0
3.5
9.8
10.2
-7.1
11.9
3.2
3.0
-1.5
6.8
2.8
-8.4
1.3
-6.2
21.4
-5.5
12.0
32.5
56.2
-0.1
27.0

2020
-8.5
-2.7
3.6
-7.7
-18.1
5.2
-8.9
-1.7
-20.6
-0.8
1.9
-10.6
-0.1
-8.9
21.2
-8.1
15.0
37.1
59.4
-2.3
25.1

2021 e
8.5
2.3
-0.3
6.6
41.8
5.3
8.5
3.0
40.6
-9.7
5.0
-2.6
1.4
-6.6
28.1
-5.7
13.1
34.2
57.6
4.7
26.4

So urce: Wo rld B ank, P o verty & Equity and M acro eco no mics, Trade & Investment Glo bal P ractices. Emissio ns data so urced fro m CA IT and OECD.
No tes: e = estimate, f = fo recast.
NA(a) Fiscal balances are repo rted in fiscal years (A pril 1st -M arch 31st).
(b) Refers to P ublic and P ublicly Guaranteed debt.
(c) Calculatio ns based o n 2015-B M THS.A ctual data: 2015. No wcast: 2016-2020. Fo recast are fro m 2021to 2023.
(d) P ro jectio n using neutral distributio n (2015) with pass-thro ugh = 0.87 based o n GDP per capita in co nstant LCU.

MPO 207 Oct 212022 f
5.9
3.7
-3.4
13.1
9.0
5.5
5.9
3.0
9.0
3.2
4.5
-2.2
1.5
-4.6
30.4
-3.3
12.1
32.7
56.3
1.2
27.1

2023 f
4.4
4.1
-0.6
4.9
7.9
5.5
4.4
2.8
4.4
4.4
4.1
-0.1
1.5
-1.3
29.9
0.1
11.4
31.6
55.7
1.1
27.7

BURKINA FASO
Table 1

Key conditions andchallenges

2020

P o pulatio n, millio n

The primary sector contributes a quarterof the country’s GDP. Cotton, once thelargest export commodity, remains the
major cash crop. The secondary sector
contributes a similar share to the economy, almost 75 percent of which is generated by a booming mining industry, withgold now accounting for about 85 percent
of export proceeds. Services account for
about half of GDP, with retail, transportation, and the public sector generating
most jobs and value addition. Public service delivery has been facing an increasingly difficult security context outside thecapital city of Ouagadougou with growing violence and conflict and an unprecedented increase in internally displaced
persons (IDPs). For the poor, access tobasic services such as electricity and wateris extremely limited and has seen little
progress over time. Absolute levels ofaccess are still very low compared to theregional average, while the gap in progress between those at the top 60 percent
and bottom 40 percent of the consumption
distribution has widened.
Burkina Faso’s prospects are fraught withuncertainties. The COVID-19 pandemic
continues to subject the economy to significant risks, as lockdowns and slow vaccination rollout could lead to further waves ofinfections and subdue domestic demand.
An extended negative shock to foreign
demand could impede foreign investment

20.9

GDP , current US$ billio n

15.9

GDP per capita, current US$

760.8

Internatio nal po verty rate ($ 1.9)

a

43.8
a

76.7

a

92.3

Lo wer middle-inco me po verty rate ($ 3.2)
Upper middle-inco me po verty rate ($ 5.5)a

35.3

Gini index

Scho o l enro llment, primary (% gro ss)

b

94.5

b

61.6

Life expectancy at birth, years
To tal GHG Emissio ns (mtCO2e)

65.5

Source: WDI, M acro Poverty Outlook, and official data.
(a) M ost recent value (201 4), 201 1 PPPs.
(b) M ost recent WDI value (201 9).

Economic growth is expected to reboundslightly above its potential in 2021 associated with some inflationary pressure,especially of food products. The current
account deficit will widen with less favorable terms of trade and strong importdemand. The fiscal deficit will remain
large at 5.5 percent of GDP in 2021
before gradually returning to the
WAEMU convergence criteria by 2024.
Over the medium term, annual per capita income growth is projected at around
2.4 percent, contributing to a modest
pace of poverty reduction.

inflows and keep the tourism and hospitality sector in a state of crisis. The terms oftrade could also quickly shift back to thedisadvantage of Burkina Faso, expanding
the trade deficit. The security crisis could
further destabilize an already fragile situation, affecting mining activities and/or
disrupting labor supply in the agricultural
sector. Finally, the agricultural sector remains highly vulnerable to climate shocks
andnaturaldisasters,
particularly
droughts, floods, and locust invasion.

Recent developments
In the wake of the COVID-19 shock, real
GDP only rose by 1.9 percent (-1 percent
in per capita terms) in 2020. The primarysector sustained relatively high production levels throughout the year, both forsubsistence crops and cotton. The secondary sector suffered some early losses in theyear but bounced back strongly, supported by gold extraction (+25 percent). In
contrast, the tertiary sector contracted in
2020, severely affected by mass closures ofbusinesses
andsocialdistancing
measures. Strong growth was reported in
2021-Q1 (+14.7 percent y/y). By August
2021, CPI inflation picked up to 2.8 percent (y/y), driven by a rise in food prices(+6.3 percent y/y) that continues to put
pressure on food security. High gold andlow oil prices positively impacted thecountry’s trade balance. The fiscal balance
deteriorated to 5.7 percent in 2020, mostly
on account of unforeseen COVID-19related expenditures, translating into an

FIGURE 1 Burkina Faso / Real GDP growth and contributions to real GDP growth

FIGURE 2 Burkina Faso / Actual and projected poverty
rates and real GDP per capita

Percent, percentage points

Poverty rate (%)

81005000008040000060

30000040

20000020

100000

6
4

Real GDP per capita (LCU constant)

2

0
-2

0
-4

0

2009
2016

2017

Agriculture

2018

2019

Industry

Source: World Bank staff estimates.

2020

2021

Services

2022

2023

2011

2013

2015

International poverty rate
Upper middle-income pov. rate

GDP Growth

Source: World Bank. See Table 2.

MPO 208 Oct 21

2017

2019

2021

2023

Lower middle-income pov. rate
Real GDP pc

increase in public debt. Burkina Faso’s
monetary and exchange rate policies aremanaged by the Central Bank of West
African States (BCEAO), which maintains
a peg between the CFA Franc and the Euro. Its reserves have remained stable since2019 and reached an estimated 5.8 monthsof imports in 2020, due to large donor
support and Eurobond issuances. To support the regional economy and COVID-19
related extra spending, the BCEAO implemented a set of monetary and macroprudential measures beginning in March
2020, including a policy rate cut and extended refinancing operations of the 3month COVID-19 bonds. These measures
were extended into 2021.
The extreme poverty rate measured by the
US$1.9 a day (2011 PPP) poverty line was 38
percent in 2019. Simulations suggest that in2020 the COVID-19 crisis increased the extreme poverty rate by about one percentage
point. This increase in the poverty rate combined with the fast increase in population
growth results in additional 330,000 extreme poor people. Findings from eightwaves of high frequency surveys conducted
between 2020 and 2021 suggest that the
pandemic negatively impacted economic

activities and led to an increase in unemployment and a sharp reduction in households’ incomes. With less or no sources ofincome, many households were not able to
make ends meet, and about 50 percent of
the interviewees reported that they can nolonger meet their dietary needs. At the sametime, the intensifying insecurity in the country has put more people (especially the poorand vulnerable) at risk of being displacedand deprived of employment opportunities
and access to basic services. The coverageand generosity of social protection programs have been limited and not always
well targeted. Only 8.8 percent of households declared receiving COVID-19-related
assistance.

Outlook
The economy is expected to rebound in
2021 with growth projected at 6.7 percent—before falling back to its mediumterm potential of around 5.3 percent (2.4
percent per capita). CPI inflation is projected to stabilize at around 2.5 percent in
the medium term. The CAD is expected to

TABLE 2 Burkina Faso / Macro poverty outlook indicators

Real GDP growth, at constant market prices
Private Consumption
Government Consumption
Gross Fixed Capital Investment
Exports, Goods and Services
Imports, Goods and Services
Real GDP growth, at constant factor prices
Agriculture
Industry
Services
Inflation (Consumer Price Index)
Current Account Balance (% of GDP)Net Foreign Direct Investment (% of GDP)
Fiscal Balance (% of GDP)
Debt (% of GDP)
Primary Balance (% of GDP)
International poverty rate ($1.9 in 2011 PPP) a,b
Lower middle-income poverty rate ($3.2 in 2011 PPP) a,b
Upper middle-income poverty rate ($5.5 in 2011 PPP) a,b
GHG emissions growth (mtCO2e)
Energy related GHG emissions (% of total)increase in 2022 as the negative trade balance continues to widen on account ofhigher imports in the mining and healthsectors and a deterioration in the terms oftrade. The fiscal deficit is projected to remain high at 5.5 percent of GDP in 2021,
but to gradually converge toward
WAEMU’s 3 percent of GDP target by2024. As grants are projected to decline toabout 2 percent of GDP, an increase inmining revenues and further improvements in tax collection are expected tosupport the revenue base. Public debt isprojected to peak at below 50 percent of
GDP in 2023 and to decline thereafter.
With about half of the debt stock on concessional terms the risk of debt distressremains moderate. In August 2021, theBCEAO received 1.4 percent of aggregate
GDP in additional SDR allocations fromthe IMF. The SDRs have been temporarily
on-lent to member countries, with Burkina
Faso receiving the equivalent of 0.9 percent of its 2020 GDP.
The poverty rate is projected to fall backto pre-COVID (2019) levels by 2021. However, due to fast population growth, thenumber of poor people will fall back to
pre-COVID (2019) levels only in 2023.

(annual percent change unless indicated otherwise)
2018
6.7
2.0
8.1
16.1
10.1
7.7
6.7
13.3
2.8
5.6
2.0
-4.1
1.2
-4.3
39.4
-3.2
39.7
74.6
91.5
0.9
9.0

2019
5.7
3.5
13.4
3.3
4.8
2.5
5.7
1.7
2.3
9.6
-3.2
-3.3
0.9
-3.2
43.9
-1.9
38.1
73.8
91.2
4.1
9.3

2020
1.9
1.2
8.0
-19.8
15.4
-0.7
1.9
5.2
12.2
-5.1
1.9
-0.1
0.6
-5.7
47.8
-4.4
38.6
74.1
91.3
4.1
9.7

2021 e
6.7
11.0
7.7
21.3
8.0
25.2
6.7
4.7
7.9
7.0
3.5
-2.5
0.5
-5.5
49.5
-3.9
36.6
73.0
90.9
4.1
10.0

So urce: Wo rld B ank, P o verty & Equity and M acro eco no mics, Trade & Investment Glo bal P ractices. Emissio ns data so urced fro m CA IT and OECD.
No tes: e = estimate, f = fo recast.
NA(a) Calculatio ns based o n 2009-ECVM and 2014-EM C.A ctual data: 2014. No wcast: 2015-2020. Fo recast are fro m 2021to 2023.
(b) P ro jectio n using annualized elasticity (2009-2014) with pass-thro ugh = 1based o n GDP per capita in co nstant LCU.

MPO 209 Oct 212022 f
5.6
7.9
0.9
13.3
5.7
12.0
5.6
5.0
4.1
6.8
3.0
-4.1
0.5
-4.8
49.8
-2.9
35.2
72.2
90.5
4.1
10.3

2023 f
5.3
6.9
-2.1
6.9
3.4
4.3
5.3
5.0
5.5
5.3
2.5
-4.3
0.6
-4.0
49.8
-2.4
34.0
71.5
90.3
4.1
10.7

BURUNDI

Key conditions andchallenges

Table 12020

P o pulatio n, millio n

11.9

GDP , current US$ billio n

3.2

GDP per capita, current US$

268.9

Internatio nal po verty rate ($ 1.9)

a

72.8
a

89.6

a

96.9

Lo wer middle-inco me po verty rate ($ 3.2)
Upper middle-inco me po verty rate ($ 5.5)a

38.6

Gini index

Scho o l enro llment, primary (% gro ss)bbLife expectancy at birth, years
To tal GHG Emissio ns (mtCO2e)

119.0
61.6
9.5

Source: WDI, M acro Poverty Outlook, and official data.
(a) M ost recent value (201 3), 201 1 PPPs.
(b) M ost recent WDI value (201 9).

Economic growth is projected at 2 percent in 2021 from 0.3 percent in 2020,
driven by a recovery in services andcontinued growth in agriculture. Industrial growth will be subdued due to mining disputes. Growth is expected to improve further to 2.5-3 percent in 20222023, but it remains below population
growth, resulting in rising extreme poverty, which is estimated to reach 87.1
percent in 2021. Burundi faces severe
macroeconomic challenges, including
large external imbalances, fiscal pressures, and growing public debt.

Burundi’s development has been hampered by structural weaknesses. The
challenges are numerous and can bemost readily summarized in the persistent over-reliance on low-productivity
subsistence agriculture, which reflects
limitedjob-creating,productivityenhancing private sector growth. An unconducive business climate, weak governance, high aid dependence, and low
and volatile public and private investments constrain development of the private sector. High population growth andfood insecurity add to the human development challenges. These weaknesses
have been exacerbated since 2015 bylarge external imbalances, fiscal pressures, constrained access to forex, exchange rate overvaluation and fiscal
dominance of monetary policy.The
COVID-19 pandemic poses additional
challenges to households, firms, andmacroeconomic performance. A survey
revealed large proportions of householdswith declining off-farm incomes and facing food insecurity as well as large proportions of businesses with declining
sales, difficulty accessing inputs and cash
flow crunches because of the pandemic.
The effects of the pandemic have also
intensified macroeconomic imbalanceswith lower economic growth and persistently high fiscal and external deficits.
The National Development Plan 2018-2027 outlines growth drivers, associatedwith the objectives of improving infrastructure provision, human development, and environmental management.
However, acceleration of economic
growth will depend on adequate financing and reforms to address key weakness
in economic management.

Recent developments
Growth in 2021 is projected at 2 percent,up from 0.3 percent in 2020. This has been
supported by an easing of COVID-19 related restrictions, including a lifting ofquarantine requirements and re-openingof borders. The services sector is expected
to rebound, while agricultural growth isalso expected to pick up slightly. Industrial sector growth is expected to decline due
to a suspension of mining. On the demand-side, growth was supported by private
consumption and recovery in investment.
Inflation is projected to remain high at 7
percent in 2021 mainly due to higher foodprices and likely by the monetization of
the fiscal deficit.
The fiscal deficit is expected to decline
but remain high at 4.9 percent of GDP in
2021 from 6.5 percent of GDP in 2020 and
4.9 percent in 2019. The projected increase in revenue collection is insufficient
to offset expenditures, especially withcostly recurrent COVID-19 related expenditures. Fiscal deficit financing led tofurther increases in public debt projected
to reach 68 percent of GDP (of which 74
percent is domestic).

FIGURE 1 Burundi / Real GDP growth, public debt, fiscal
and current account deficit

FIGURE 2 Burundi / Actual and projected poverty rates andreal GDP per capita

Percent of GDP
Percent of GDP
10
80
8
70
6
60
4
50
2
40
0
30
-2
20
-4
10
-6
0
-8
-10
-10
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Poverty rate (%)

Public domestic debt (rhs)Real GDP growth
Current account deficit (rhs)120200000100

15000080
60100000

40
50000
20
0

Public external debt (rhs)
Fiscal deficit

Sources: Official statistics and World Bank calculations.

Real GDP per capita (constant LCU)

0
2006 2008 2010 2012 2014 2016 2018 2020 2022
International poverty rate
Upper middle-income pov. rate

Source: World Bank. Notes: see table 2.

MPO 210 Oct 21

Lower middle-income pov. rate
Real GDP pc

Driven by higher oil prices, the current
account deficit (CAD) remained high at an
estimated 13.5 percent of GDP, reinforcing
concerns about its financing and sustainability. The rebound in exports was limited
by weak mining exports as the government suspended the activities of multinational mining companies to renegotiate
contract. The exchange rate remained overvalued with the parallel market premium
averaging 70 percent in end-June 2021,
while the official exchange rate depreciated only by 3.2 percent year-on-year. International reserves remained low covering
0.8 months of imports in June 2021.
GDP growth per capita remains negative. Poverty has been estimated at 87.1
percent in 2021 (based on international
poverty line of $1.90/capita/ day, in 2011
PPP), up from 72.8 percent in 2013 (thelast year with data availability). Progress has been made in education andhealth, yet Burundi’s Human CapitalIndex remains low at 0.39. Literacy rates
remain particularly low among womenand rural residents and stunting rates
are alarmingly high, affecting an estimated 57.6 percent of children under 5.
COVID-19 is likely exacerbating thesevulnerabilities.

OutlookConsidering only the limited economic
reforms that have been announced, economic growth is projected at 2.5-3 percent
during 2022-23, supported by gains in all
sectors. Assuming favorable rainfall, agriculture will grow faster in 2022 as borders
are reopened for regional trade. Industrial
activity is projected to pick up assuming a
resolution in mining disputes and increased power generation from a regionalhydroelectric dam that is expected to becompleted by end-2021. On the demandside, private consumption and investment in public and private sectors areprojected to remain high under the gradual economic recovery.
The fiscal deficit is expected to narrow in
2022-23, driven by measures to bolster
revenue collection. However, it will remain above 4 percent of GDP as the paceof increase in revenue mobilization andexternal support will only pick up gradually. With limited external grants, public
debt is expected to rise further to 77 percent of GDP in 2023 due to issuance of
new external and domestic debt. The

TABLE 2 Burundi / Macro poverty outlook indicators

Real GDP growth, at constant market prices
Private Consumption
Government Consumption
Gross Fixed Capital Investment
Exports, Goods and Services
Imports, Goods and Services
Real GDP growth, at constant factor prices
Agriculture
Industry
Services
Inflation (Consumer Price Index)
Current Account Balance (% of GDP)Net Foreign Direct Investment (% of GDP)
Fiscal Balance (% of GDP)
Debt (% of GDP)
Primary Balance (% of GDP)
International poverty rate ($1.9 in 2011 PPP) a,b
Lower middle-income poverty rate ($3.2 in 2011 PPP) a,b
Upper middle-income poverty rate ($5.5 in 2011 PPP) a,b
GHG emissions growth (mtCO2e)
Energy related GHG emissions (% of total)

CAD is expected to remain high at
around 14 percent of GDP in 2022–23, as
the overvalued exchange rate leads real
growth in imports to outstrip export
growth (expected to be driven by minerals alongside traditional exports). The
deficit will continue to be financed primarily by trade credits and external government borrowing. Forex reserves are
expected to improve significantly with
SDR allocations. Poverty (measured
against the US$ 1.90 poverty line) is projected to reach 87.5 percent in 2022–23.
Given the country’s continued dependence on agriculture and growing risks ofweather variability due to climate change,
the growth outlook is subject to especiallyhigh risks. The outlook is also vulnerable
to the COVID-19 pandemic as Burundi
has only now taken a first step towards
the AVAT initiative but has not yet started a national vaccination campaign. On
the upside, the Government’s efforts toreengage with development partners
could help resume aid flows though it islikely to take time to translate into significant increases in external support. Reforms such as in forex, monetary policy
and public financial management would
accelerate growth.

(annual percent change unless indicated otherwise)
2018
1.6
3.5
6.7
24.9
11.0
19.0
1.7
3.0
2.4
0.7
-2.6
-11.9
0.0
-4.9
50.9
-4.5
82.9
95.8
99.6
1.3
14.5

2019
1.8
3.1
8.3
32.9
-0.5
17.1
1.8
3.1
2.1
0.9
-0.8
-13.4
0.0
-4.9
58.5
-4.3
84.0
96.5
99.9
2.4
14.4

2020
0.3
0.3
19.2
-16.6
-14.9
3.4
0.3
2.8
1.8
-1.7
7.5
-10.9
-0.1
-6.5
63.6
-5.2
86.2
97.7

2021 e
2.0
2.7
0.4
14.4
4.8
6.0
2.0
3.1
1.6
1.4
7.0
-13.5
-0.1
-4.9
68.0
-3.3
87.1
98.3

2022 f
2.5
3.1
0.5
11.8
7.7
5.8
2.5
3.2
2.2
2.1
6.0
-14.1
-0.1
-4.6
73.5
-3.0
87.5
98.5

2023 f
3.0
3.3
1.1
11.9
7.9
5.7
3.0
3.2
2.5
3.0
5.4
-14.1
-0.1
-4.2
76.6
-2.5
87.4
98.5

2.9
14.1

4.3
12.2

4.1
11.5

4.5
10.9

So urce: Wo rld B ank, P o verty & Equity and M acro eco no mics, Trade & Investment Glo bal P ractices. Emissio ns data so urced fro m CA IT and OECD.
No tes: e = estimate, f = fo recast.
NA(a) Calculatio ns based o n 2006-QUIB B and 2013-ECVM B .A ctual data: 2013. No wcast: 2014-2020. Fo recast are fro m 2021to 2023.
(b) P ro jectio n using po int-to -po int elasticity (2006-2013) with pass-thro ugh = 1based o n GDP per capita in co nstant LCU.

MPO 211 Oct 21

CABO VERDE
Table 1

Key conditions andchallenges
2020

P o pulatio n, millio n

0.6

GDP , current US$ billio n

1.7

GDP per capita, current US$

2833.3

Internatio nal po verty rate ($ 1.9)

a

3.4
a

15.4

a

41.3

Lo wer middle-inco me po verty rate ($ 3.2)
Upper middle-inco me po verty rate ($ 5.5)a

42.4

Gini index

Scho o l enro llment, primary (% gro ss)

b

104.0

b

73.0

Life expectancy at birth, years
To tal GHG Emissio ns (mtCO2e)

0.7

Source: WDI, M acro Poverty Outlook, and official data.
(a) M ost recent value (201 5), 201 1 PPPs.
(b) WDI for School enrollment (201 8); Life expectancy (201 9).

The COVID-19 crisis led to a contraction
in real GDP of 14.8 percent in 2020, exacerbating pre-existing fiscal, debt, andexternal imbalances. Progress in poverty
reduction since 2015 was erased. A modest recovery is projected in 2021, led by
the gradual recovery of tourism. Over the
medium-term, growth should pick up as
tourism and foreign direct investment
rebound. The outlook is subject to substantial downside risks stemming fromnew COVID-19 variants, the speed of
global recovery, and climatic shocks.

Political stability, democratic institutions,and pro-market reforms have generated
significant economic and social progresssince independence in 1975. However,Cabo Verde’s development model, based
on tourism and Foreign Direct Investment(FDI) has shown signs of fatigue since the2008 Global Financial Crisis. The subsequent sluggish recovery in Europe reduced the influx of funds, with dwindlingprivate investment and growth. Ineffective expansionary fiscal policy between
2010-2015 led to growing fiscal financing
needs and public debt. To put public debt
on a sustainable path, authorities initiateda fiscal consolidation program in 2016,
including reform of key loss-making StateOwn Enterprises (SOEs).
The impact and persistence of the
COVID-19 pandemic exacerbated thevulnerabilities of the growth model. In
addition to the adverse economic effectsof domestic containment and mitigation
measures,international
travelrestrictions led to a sharp contraction intourism and related activities. Rising
global uncertainty also depressed FDI.
Authorities responded to the crisis byexpanding public health services andsocial protection programs, as well as
providing financial support to small
businesses and hard-hit sectors. However, poverty reduction gains made overthe past five years were reversed driven

largely by substantial temporary job
losses, particularly in the tourism sector.
The pace of the economic recovery is tied
to the duration of the pandemic, the emergence of new COVID variants, and the
speed of global recovery, particularly international tourism from Europe. Fiscal
risks are high as the government is exposed to contingent liabilities in sectorsthat are particularly vulnerable to the crisis. A protracted pandemic would aggravate the current crisis, potentially triggering these liabilities and leading to macroeconomic instability. Cabo Verde remains
significantly exposed to natural disasters
that could further weigh on external andfiscal balances.

Recent developments
Economic activity contracted by 14.8 percent in 2020, the largest contraction onrecord. The deceleration was driven by the
shutdown of the tourism sector. The services sector contracted by 19.2 percent,while industrial and agriculture output
declined by 2 and 6.3 percent, respectively.
During the first quarter of 2021, real GDP
continued contracting by 10.9 percent(year-on-year). Leading indicators showthat growth resumed in the second quarter, driven by a small recovery in tourism.
The Current Account Deficit (CAD) increased from 0.4 percent of GDP in 2019 to
16.5 percent in 2020, due to the collapse inservices exports. The CAD was financed
primarily by grants and concessionalloans. International reserves stood at 7.8

FIGURE 1 Cabo Verde / GDP per capita and debt outlook

FIGURE 2 Cabo Verde / Actual and projected poverty rates
and GDP per capita

Percent of GDP

Poverty rate (%)

Billions, CVE

170%

160%

205

150%

168

140%
130%

151.3%

120%
110%

140.9%

125.9% 124.7% 124.9%

134.0%

126.4%

100%
2017

2018

2019

2020e

2021f

2022f

250

60

200

50

150

40

100

30

50

20

0

10

Real GDP per capita (LCU constant)
3100003000002900002800002700002600002500002400002023f
0Public Debt (LHS)

2300002007 2009 2011 2013 2015 2017 2019 2021 2023

Real GDP: Post-COVID-19 forecast

International poverty rate
Upper middle-income pov. rate

Real GDP: Pre-COVID-19 forecast
Sources: World Bank and IMF staff estimates. Note: Pre COVID-19 GDP forecast
refers to the 2019 Annual Meetings Macro-.poverty Outlook.

Source: World Bank. Notes: See Table 2.

MPO 212 Oct 21

Lower middle-income pov. rate
Real GDP pc

months of imports. In the first quarter of2021, the CAD improved, relative to theprevious three quarters, as the trade andservice balance deficits declined.
The overall fiscal deficit reached 8.8 percent of GDP in 2020, driven by a fall of 20
percent in tax revenue and an increase of
0.7 percent in current expenditure. Financing needs of 11 percent of GDP were covered by concessional credits, grants, domestic borrowing, and resources freed by
the Debt Service Suspension Initiative(DSSI). The stock of public debt climbed to155.2 percent in 2020. The risk of external
and total debt distress is high but public
debt remains. The overall deficit continued
deteriorating in the first quarter of 2021,
recorded a deficit of 2.1 percent of GDP.
Cabo Verde’s monetary policy is alignedwith the Eurozone, as the Escudo ispegged to the Euro. Despite an accommodative monetary policy stance, inflation
remained subdued at 0.6 percent in 2020.
The pandemic erased gains in poverty
reduction achieved since 2015. The population living under the lower-middle income
country poverty line of $3.2/day (2011)
increased from 11.8 percent in 2019 to 16.3
percent in 2020. The large contractions intourism and related sectors, particularly

Boa Vista and Sal islands influence theincrease in poverty.

Outlook
The economy will recover modestly fromthe pandemic. Real GDP growth is projected to be 4 percent in 2021 and gradually accelerate to 6.1 by 2023 with GDP per
capita reaching the 2019 level by 2024. In
the short-term, the recovery will be driven
by a gradual reactivation of the tourism
sector. Over the medium-term, private
consumption and investment in tourism
and the blue economy will contribute toclosing the output gap. The outlook is
subject to substantial downside risks
stemming from climate shocks, delays in
the recovery of tourism, financial flows,
and SOE reforms.
The CAD is projected to reach 13.5 percent of GDP in 2021, converging to 3.7 by2023. Medium-term external financing
needs are expected to be covered mainly
by FDI, which is expected to reach 4.2
percent of GDP in 2023. International
reserves would remain steady at about 6
months of imports.

TABLE 2 Cabo Verde / Macro poverty outlook indicators

Real GDP growth, at constant market prices
Private Consumption
Government Consumption
Gross Fixed Capital Investment
Exports, Goods and Services
Imports, Goods and Services
Real GDP growth, at constant factor prices
Agriculture
Industry
Services
Inflation (Consumer Price Index)
Current Account Balance (% of GDP)Net Foreign Direct Investment (% of GDP)
Fiscal Balance (% of GDP)
Debt (% of GDP)
Primary Balance (% of GDP)
International poverty rate ($1.9 in 2011 PPP) a,b
Lower middle-income poverty rate ($3.2 in 2011 PPP) a,b
Upper middle-income poverty rate ($5.5 in 2011 PPP) a,b
GHG emissions growth (mtCO2e)
Energy related GHG emissions (% of total)

Authorities are committed to macroeconomic stabilization in the short-term andfiscal consolidation in the medium-term.
Consolidation measures will include theremoval of some COVID-19 measures,enhanced management of fiscal risks, notably from SOEs, and revenue mobilization. The primary deficit is projected toreach 11.1 percent of GDP in 2021 andimprove over the medium term to 1 percent by 2023. The public debt-to-GDP ratio
is expected to fall to 139.6 by 2023. The
decision to reverse the privatization ofCabo Verde Airlines further exacerbate
fiscal risks. Inflation is projected to remain
below 1.5 percent over the medium-term.
The poverty rate (using the low-middle
income poverty line of $3.2/day) is projected to decline to 15.5 percent in 2021 and13.2 percent by 2023. Social protection
reforms in response to COVID-19 supporting the poorest and most vulnerable
households will support poverty reduction. In 2020, 5,450 additional households
received emergency cash transfers, morethan doubling the regular coverage. And
In 2021 the Government further expanded
the temporary emergency cash transfers,
reaching a total of over 22,000 households
in July 2021.

(annual percent change unless indicated otherwise)
2018
4.5
1.5
2.2
4.1
11.7
5.7
4.5
-18.5
8.1
6.3
1.3
-6.6
4.7
-2.7
124.7
-0.2
2.6
13.1
36.8
4.4
87.2

2019
5.7
5.9
4.8
-6.3
8.7
0.8
5.7
-6.8
7.5
6.3
1.1
-0.4
4.2
-1.8
124.1
0.8
2.3
11.8
35.1
3.9
88.4

2020
-14.8
-11.3
0.8
19.7
-58.4
-22.5
-14.8
-6.3
-2.0
-19.2
0.6
-16.5
4.2
-8.8
155.2
-5.9
3.8
16.3
42.5
-6.0
89.1

2021 e
4.0
3.8
1.9
1.1
20.2
7.9
4.0
0.1
3.1
4.7
1.0
-13.5
4.1
-13.7
158.8
-11.1
3.4
15.5
41.5
-1.7
92.2

So urce: Wo rld B ank, P o verty & Equity and M acro eco no mics, Trade & Investment Glo bal P ractices. Emissio ns data so urced fro m CA IT and OECD.
No tes: e = estimate, f = fo recast.
NA(a) Calculatio ns based o n 2015-IDRF.A ctual data: 2015. No wcast: 2016-2020. Fo recast are fro m 2021to 2023.
(b) P ro jectio n using neutral distributio n (2015) with pass-thro ugh = 0.87 based o n GDP per capita in co nstant LCU.

MPO 213 Oct 212022 f
5.2
4.9
1.1
4.3
28.1
13.1
5.2
0.8
4.7
5.8
1.5
-7.5
4.2
-5.4
151.9
-2.4
3.1
14.4
39.3
2.6
92.7

2023 f
6.1
5.8
1.0
4.0
17.6
8.6
6.1
1.1
5.3
6.8
1.5
-3.7
4.2
-3.7
139.6
-1.0
2.6
13.2
37.1
3.9
92.8

CAMEROON
Table 1

Key conditions andchallenges
2020

P o pulatio n, millio n

26.5

GDP , current US$ billio n

39.6

GDP per capita, current US$

1494.3

Internatio nal po verty rate ($ 1.9)

a

26.0

Lo wer middle-inco me po verty rate ($ 3.2)
Upper middle-inco me po verty rate ($ 5.5)

a

47.0

a

71.0

a

46.6

Gini index

Scho o l enro llment, primary (% gro ss)

b

105.7

b

59.3

Life expectancy at birth, years
To tal GHG Emissio ns (mtCO2e)

124.4

Source: WDI, M acro Poverty Outlook, and official data.
(a) M ost recent value (201 4), 201 1 PPPs.
(b) M ost recent WDI value (201 9).

Cameroon's economy is recovering,with real GDP growth projected toreach 3.4 percent in 2021 (up from 0.7
percent in 2020) and 4.4 percent by
2023. The pandemic is likely to haveincreased poverty for the first time in a
decade. Continued expenditure controls
and improved revenue mobilization will
support fiscal consolidation in the medium term. The country remains athigh risk of debt distress, but public
debt is assessed as sustainable.

Cameroon is a commodity- and oildependent country, representing 45 percent of the Central African Economic andMonetary Community’s GDP in 2020,
making it the largest economy in the region. The oil sector accounted for 2.9 percent of GDP in 2020, 13.6 percent of fiscal
revenues and more than 40 percent ofexport earnings, highlighting the country’s high dependency on commodities
and vulnerability to demand and prices.
In addition to the challenges brought in by
the pandemic, Cameroon faces significant
development challenges including high riskof debt distress, incomplete implementationof fiscal reforms, climate change issues,
attacks by Boko Haram in the Far North,and a sociopolitical crisis in the North-Westand South-West regions. The debt stock has
been increasing since 2016, which calls for
improved debt sustainability to support theeconomic recovery and attracting new investment. Between 2007 and 2014, the country managed to reduce the share of the population living in extreme poverty, but thepoverty rate at $1.90 a day has stagnated ataround 25 percent since then. The COVID19 crisis has reversed progress in poverty
reduction, with the poverty rate estimatedto have increased in 2020. Going forward,
improving governance, and achieving
greater transparency to build public trust
are critical to achieve more inclusive andsustainable growth.

Recent developments
Economic activity started to pick up in
2020Q3 and has been sustained since then.
On the supply side, this performance isattributable to the positive contribution of
the secondary sector, including the textile
and chemical industries and the strong performance of construction and public works
in the run-up to the 2021 and 2022 footballcompetitions. The primary sector has also
had a positive contribution to growth as the
Cameroon
Development
Corporation(CDC), one of the major agribusiness companies, resumed its banana exports after
shutting down due to conflicts in the SouthWest and North-West regions since 2016.
Domestic consumption improved in
2021Q1, as reflected by increased food, beverage, and housing prices. The current account deficit widened by 0.2 percent ofGDP, year-on-year, at end-2021Q1, driven
by an increase in imports since early 2021.
Higher-than-expected oil prices, good VAT
collection due to light containment, andpublic spending reprioritization, helped
contain the fiscal deficit at 3.8 percent of
GDP in 2020 (from 3.3 percent of GDP in2019). Since the beginning of 2021, recovering oil prices as well as digitalization of tax
and customs procedures further supported
the increase in public revenues. Meanwhile,
expenditure control measures reduced public spending by 0.4 percent of GDP, year-onyear, in 2021Q1, reflecting reduced staff
expenses and savings from Cameroon's
renewed participation in the Debt Service
Suspension Initiative (expected to last until

FIGURE 1 Cameroon / Real GDP growth and contributions
to real GDP growth

FIGURE 2 Cameroon / Poverty rate and GDP per capita

Percent, percentage points
10

Poverty rate (%)

Real GDP per capita (LCU constant)

100

70000080

65000060

6000004055000020500000

8
6

4
2
0

-2
-4
-6

2010

2013
Gov. cons.
Inventories
Statistical disc.

Source: World Bank.

2016
Exports
Private cons.
GDP

2019

2022

0

4500002007 2009 2011 2013 2015 2017 2019 2021 2023

GFCF
Imports

International poverty rate
Upper middle-income pov. rate
Source: World Bank. Notes: see Table 2.

MPO 214 Oct 21

Lower middle-income pov. rate
Real GDP pc

December 2021). The overall fiscal balance
showed a surplus of 0.3 percent of GDP at
end-March 2021. The latest Debt Sustainability Analysis (July 2021) assessed Cameroon at high risk of external and overallpublic debt distress.
A national phone survey on the COVID-19
impact revealed a slowdown in businessactivities, and job and income losses. Containment measures, including the closureof the air and land borders, have impacted
vulnerable jobs in both the formal andinformal sectors.
The vaccination campaign started in midApril 2021, with the gradual supply of
vaccines from COVAX, AVATT and Sinopharm. However, only 2.6 percent of
the population has received at least one
dose of the vaccine.

OutlookCameroon's economic activity is expected to gradually recover from 2021

onwards on the back of dynamic secondary and tertiary sectors, coupled withimproved external demand. Higher oil
production and prices, together with arebound in services and external demand, are expected to translate into
more robust private consumption andinvestment. With an average real GDP
growth rate of 3.9 percent over 20212023, per capita GDP should return to its
pre-COVID-19 level by 2023. The steadyrollout of COVID-19 vaccines across theworld will support a faster growth recovery. As imports and transfers fromabroad increase, the current accountdeficit is projected to widen from 3.4
percent of GDP in 2020 to 3.7 percent of
GDP in 2021 but will narrow to 3.5 percent of GDP by 2023. The deficit will befinanced through foreign direct investment and the Eurobond issuance of
US$812.20 million to partially buy backthe 2015 Eurobond. Meanwhile, thecountry’s fiscal deficit is expected to narrow from 3.8 percent of GDP in 2020 to
2.8 percent of GDP in 2023, reflecting theTABLE 2 Cameroon / Macro poverty outlook indicators

Real GDP growth, at constant market prices
Private Consumption
Government Consumption
Gross Fixed Capital Investment
Exports, Goods and Services
Imports, Goods and Services
Real GDP growth, at constant factor prices
Agriculture
Industry
Services
Inflation (Consumer Price Index)
Current Account Balance (% of GDP)
Fiscal Balance (% of GDP)
Debt (% of GDP)
Primary Balance (% of GDP)
International poverty rate ($1.9 in 2011 PPP) a,b
Lower middle-income poverty rate ($3.2 in 2011 PPP) a,b
Upper middle-income poverty rate ($5.5 in 2011 PPP) a,b
GHG emissions growth (mtCO2e)
Energy related GHG emissions (% of total)

government’s fiscal consolidation efforts.
The new allocation of Special Drawing
Rights from the International Monetary
Fund, equivalent to $370 million (0.87
percent of GDP) will provide additionalliquidity to meet some of the country’s
financing needs. Poverty projections
suggest that the rate of extreme poverty
will remain high (around 25 percent)and almost unchanged between 2021
and 2023. The number of poor households will continue to increase, with anadditional 166,000 people falling into
extreme poverty in 2021. Poverty rates
are expected to remain above prepandemic estimates till 2023. Poverty
reduction efforts are expected to resume
in the medium term as economic growth
returns to pre-pandemic levels. Downside risks include possible renewed restrictions due to the recent surge in
COVID-19 cases and a slower rollout
and take-up of vaccines.

(annual percent change unless indicated otherwise)
2018
4.1
5.7
-0.2
7.9
1.8
8.1
4.1
5.1
3.1
4.4
1.1
-3.6
-2.5
39.3
-1.6
24.7
45.9
69.4
0.4
9.3

2019
3.7
4.5
1.8
8.1
5.1
10.5
3.6
2.8
3.6
3.9
2.5
-4.4
-3.3
43.0
-2.4
24.5
45.7
69.1
1.4
9.6

2020
0.7
3.0
2.3
2.4
-19.1
-5.4
0.7
0.1
1.3
0.6
2.5
-3.4
-3.8
45.8
-2.9
25.3
46.4
70.2
-0.6
10.0

2021 e
3.4
3.6
2.1
9.1
2.8
9.0
3.4
4.1
4.1
2.9
2.5
-3.7
-3.6
44.3
-2.5
25.4
46.5
70.3
5.0
10.9

So urce: Wo rld B ank, P o verty & Equity and M acro eco no mics, Trade & Investment Glo bal P ractices. Emissio ns data so urced fro m CA IT and OECD.
No tes: e = estimate, f = fo recast.
NA(a) Calculatio ns based o n 2009- and 2014-ECA M -IV.A ctual data: 2014. No wcast: 2015-2020. Fo recast are fro m 2021to 2023.
(b) P ro jectio n using po int to po int elasticity at regio nal level with pass-thro ugh = 1based o n GDP per capita in co nstant LCU.

MPO 215 Oct 212022 f
4.0
3.8
1.4
8.2
4.1
7.0
4.0
4.8
4.4
3.5
2.5
-3.2
-3.4
41.2
-2.3
25.3
46.4
70.3
2.6
11.4

2023 f
4.4
4.0
1.0
6.7
8.8
7.0
4.4
5.6
4.5
4.0
2.5
-3.5
-2.8
38.4
-1.9
25.1
46.2
70.0
2.6
11.9

CENTRALAFRICAN REP.
Table 12020

P o pulatio n, millio n

4.9

GDP , current US$ billio n

2.2

GDP per capita, current US$

449.0

a

56.2

Gini index

Scho o l enro llment, primary (% gro ss)

b

102.0

b

53.3

Life expectancy at birth, years
To tal GHG Emissio ns (mtCO2e)

Recent developments

Key conditions andchallenges

89.4

Source: WDI, M acro Poverty Outlook, and official data.
(a) M ost recent value (2008), 201 1 PPPs.
(b) WDI for School enrollment (201 6); Life expectancy (201 9).

Renewed insecurity is expected to push
the Central African Republic’s (CAR)
economy into a recession in 2021. The
outlook is subject to downside risks arising from a fragile security environment
and uncertainties related to the COVID19 pandemic, especially with delays indeploying vaccines—only 7 percent of
adults are fully vaccinated as of August24, 2021. The republican dialogue which
was announced in June 2021 to normalize
the political climate following the recent
conflict is important to pave the way forpeace and reconciliation.

Continued political instability and cyclesof violence since independence have madeCAR one of the most fragile and poorest
countries in the world. While endowedwith ample natural resources, CAR’s economy is poorly diversified, with agriculture
and forestry constituting the backbone of
economic activities. The agriculture sector
accounts for more than 75 percent of total
employment, and timber, cotton, coffee,
diamond, and gold represented more than75 percent of total exports in 2020. Poverty
is elevated, with more than seven in ten
Central Africans living below the international poverty line (US$1.90 per day, 2011
PPP). Inadequate social protection systems
and limited access to education andhealthcare facilities are major bottlenecks
for human capital accumulation. The formal private sector is small and constrainedby several structural challenges, including
limited access to medium- and long-term
financing, a weak regulatory framework,
poor infrastructure (e.g., energy and transportation), lack of skilled labor, and a volatile security environment. The humanitarian situation remains precarious, with 57
percent of the population facing food insecurity, and has been exacerbated by the
COVID-19 pandemic and renewed conflicts. As of July 2021, there were 699,000
refugees outside the country—the highest
level since December 2013—and 691,000
internally displaced persons.

CAR’s economic growth decelerated from
3.1 percent in 2019 to 0.8 percent in 2020
due to the COVID-19 pandemic. Disruption in global value chains delayed private
investment in the construction, telecommunication, and manufacturing sectors.
Public investment increased from 5.6 percent of GDP in 2019 to 11.4 percent of
GDP in 2020. The Constitutional Court’s
decision in December 2020 to block a former president from running in the presidential elections amid an already tense
political situation sparked a new round of
conflict. Renewed insecurity, coupled withthe protracted effects of COVID-19, is expected to push CAR’s economy into a
recession in 2021. Economic growth isprojected to decline by 0.8 percent in 2021.
Containment measures contributed tosignificant inflationary pressures in thefirst half of 2020. However, inflation decelerated markedly during the second half of2020 as containment measures abated. As
a result, inflation reached an average of
2.3 percent in 2020—below the 3 percent
regional ceiling. Post-election disputes led
to a blockade of the Bangui-Douala corridor for three months, which had a significant impact on prices in 2021Q1. Although
inflationary pressures have abated, inflation is projected to settle above the regional convergence criteria in 2021, before declining in the medium term.
The overall fiscal balance worsened froma surplus of 1.7 percent in 2019 to a deficitof 3.3 percent in 2020, driven by higher

FIGURE 1 Central African Republic / Real GDP growthand contributions to real GDP growth

FIGURE 2 Central African Republic / Actual and projected
poverty rate and real GDP per capita

Percent, percentage points
8

Poverty rate (%)
80

6

70

4

60

2

50

0

40

-2

30

-4

20

Real GDP per capita (LCU constant)
250000200000150000100000
50000

10

-6

2015

2016

2017

2018

Exports
Government Consumption
Real GDP growth
Source: World Bank.

2019

2020

2021

2022

2023

0

0
2008

Gross Fixed Investment
Private Consumption

2010

2012

2014

2016

International poverty rate
Source: World Bank. Notes: see Table 2.

MPO 216 Oct 21

2018

2020

2022
Real GDP pc

public spending to fight and contain the
COVID-19 pandemic. Pressures on public finances are projected to remain highin 2021 and lead to a wider fiscal deficit.
Security expenses are also on the risebecause of the war effort. Meanwhile,budget support from development partners has been paused or delayed for avariety reasons, including the lack ofclarity and transparency surrounding
the financing of certain security services
and customs-related technical assistance.
The recent cash flow plan indicated apotential liquidity shortage (‘fiscal cliff’),
implying that the government will accumulate domestic arrears and be unable
to pay wages and salaries. To prevent
such a situation, the government borrowed on the domestic market in May
and August 2021.
The current account deficit widened
from 4.8 percent of GDP in 2019 to 8.7
percent in 2020 because of weak external
demand and high non-oil imports. The
increase in project grants improved thecapital account, while global uncertainty
related to COVID-19 translated to a
sharp contraction of foreign direct investment by more than 60 percent. The
current account balance is projected to

improve in 2021, owing to lower imports
as internal demands slows.
Conflict and COVID-19 are hampering
progress in reducing extreme poverty,
with an expected 72 percent of the population living in extreme poverty in 2021.

Outlook
Provided that stability and security returns and the COVID-19 vaccination campaign is effectively rolled out, economic
growth is expected to average 4 percent in
the medium term, supported by solid agricultural and industrial output on the
supply side and high private consumption
on the demand side. Under these assumptions, per capita income is expected toreturn to its pre-COVID-19 level by 2023,
implying 4 years of loss in per capita income growth. Extreme poverty is projected to remain at a high level, with a slow
decline between 2021 and 2023.
Inflation is expected to remain below theconvergence criteria in the medium term,
contingent on stable and improved security conditions in the Douala-Bangui corridor. The fiscal position is projected to

TABLE 2 Central African Republic / Macro poverty outlook indicators

Real GDP growth, at constant market prices
Private Consumption
Government Consumption
Gross Fixed Capital Investment
Exports, Goods and Services
Imports, Goods and Services
Real GDP growth, at constant factor prices
Agriculture
Industry
Services
Inflation (Consumer Price Index)
Current Account Balance (% of GDP)
Fiscal Balance (% of GDP)
Debt (% of GDP)
Primary Balance (% of GDP)
International poverty rate ($1.9 in 2011 PPP) a,b
GHG emissions growth (mtCO2e)
Energy related GHG emissions (% of total)

2018
3.7
1.3
14.1
26.0
3.8
8.0
3.6
3.4
1.5
4.4
1.6
-8.0
-1.0
50.0
-0.6
71.1
0.5
39.2

improve in 2022 onward, driven by agradual increase in domestic revenue collection, sound expenditure management,
and greater donor financing. CAR has
received a new allocation of Special Drawing Rights from the International Monetary Fund equivalent to 5.8 percent of 2021
GDP, providing additional liquidity tomeet some of its financing needs. Public
debt is projected to remain sustainable
and fall below 40 percent of GDP in 2023.
The current account balance is projected
to improve in the medium term, reflecting
an improvement in the trade balance, butshould remain structurally in deficit.
This outlook remains subject to significant improvement in the security situation throughout the country. A deterioration of the security context could delay
the pace of reforms and increase poverty
and vulnerabilities. The humanitariansituation could deteriorate further andfuel a renewed cycle of violence and fragility. A protracted conflict could lead toa high-country risk premium, heighten
investment uncertainty, and undermine
private sector development. Finally, prolonged delays in rolling out COVID-19
vaccines could expose CAR to a newwave of contamination.

(annual percent change unless indicated otherwise)
2019
3.1
5.7
7.7
-9.6
1.9
4.9
2.6
3.1
2.1
2.3
2.8
-4.8
1.7
47.9
2.0
70.7
1.4
39.3

2020
0.8
-4.2
21.1
28.9
-3.5
1.0
0.8
4.5
0.0
-1.3
2.3
-8.7
-3.3
44.1
-3.0
71.1
1.2
39.1

2021 e
-0.8
0.7
-6.5
-2.0
-7.9
-2.1
-0.8
2.3
-0.2
-3.1
3.8
-6.2
-7.1
46.2
-6.8
72.1
-2.0
40.1

So urce: Wo rld B ank, P o verty & Equity and M acro eco no mics, Trade & Investment Glo bal P ractices. Emissio ns data so urced fro m CA IT and OECD.
No tes: e = estimate, f = fo recast.
NA(a) Calculatio ns based o n 2008-ECA SEB .A ctual data: 2008. No wcast: 2009-2020. Fo recast are fro m 2021to 2023.
(b) P ro jectio n using neutral distributio n (2008) with pass-thro ugh = 0.7 based o n GDP per capita in co nstant LCU.

MPO 217 Oct 212022 f
3.5
2.5
-5.5
-14.9
28.8
-1.0
3.5
3.2
0.3
4.8
2.6
-6.2
-0.6
44.0
-0.1
71.5
1.1
40.7

2023 f
4.5
3.3
0.6
13.6
3.9
4.0
4.5
4.5
1.0
5.7
2.5
-5.6
1.5
39.5
2.0
70.8
2.0
41.4

CHAD

Recent developments

Key conditions andchallenges

Table 12020

P o pulatio n, millio n

16.4

GDP , current US$ billio n

10.6

GDP per capita, current US$

646.3

Internatio nal po verty rate ($ 1.9)

a

38.1
a

66.3

a

86.2

Lo wer middle-inco me po verty rate ($ 3.2)
Upper middle-inco me po verty rate ($ 5.5)a

43.3

Gini index

Scho o l enro llment, primary (% gro ss)

b

89.2

b

54.2

Life expectancy at birth, years
To tal GHG Emissio ns (mtCO2e)

114.7

Source: WDI, M acro Poverty Outlook, and official data.
(a) M ost recent value (201 1 ), 201 1 PPPs.
(b) M ost recent WDI value (201 9).

The COVID-19 pandemic led to a GDP
contraction of 0.9 percent in 2020, withthe poverty rate increasing to 41.7 percent and highlighting Chad’s difficulties
in servicing external debt. The sudden
death of the President exacerbated sociopolitical tensions and paralyzed economic
activities in the second quarter of 2021.
The pandemic, growing insecurity, andclimate risks, along with the dependenceon oil, have heightened Chad’s economic
vulnerabilities. Recovery will be fragileand subject to significant downside risks
related to these sources of vulnerability.

Since the 2015-2016 oil prices shock,
Chad's oil-dependent economy has been
performing below potential, keeping thecountry at the bottom of most development rankings. Notwithstanding a recovery during 2018-19, annual GDP
growth contracted by 0.9 percent on average over the past five years, which,given the rapidly growing population,translated into an annual decrease in percapita income of 3.9 percent. Living conditions and access to essential services
remain poor due to the combined effects
of severe weather conditions, cyclicalinsecurity, political unrest, weak governance, including in the management of oilrevenues, poor trade networks, low human capital investment, and the lack ofinfrastructure.
The pandemic and the political uncertainty have exacerbated Chad’s socioeconomic vulnerabilities linked to its oil
dependency and exposure to conflictand climatic shocks. The combination of
the global recession, disruptions in supply
chains,COVID-containment
measures, and financial disruptions
have taken a heavy toll on the economy.
In an already fragile setting, Chad has
not been able to strengthen regional
integration, economic transformation, or
social inclusion, with poor quality
health care and limited access to electricity and digital technologies.

Chad entered into recession in 2020 as the
economy contracted by 0.9 percent, andthe output gap widened to 4.3 percent.
Agriculture and the oil sector remain themain growth drivers, contributing 1.1 percentage points (pp), while services contributed negatively (-2 pp). The impact of containment measures on domestic supply
chains pushed up prices, and inflation rosefrom -1 percent in 2019 to 3.5 percent in2020. The passing of President Deby deepened the slowdown in economic activity inthe second quarter of 2021, as the new authorities shifted public resources from critical investments toward the political transition and security-related spending.
The current account deficit widened from
4.9 percent of GDP in 2019 to 7.9 percent
in 2020. The value of exports decreased by
32.4 percent, driven by a sharp drop in oil
prices, although exports grew by 1.1 percent in volume terms. Import growth did
not adjust proportionately.
Chad’s monetary and exchange rate policies are managed by the regional Bank ofCentral African States (BEAC). In order tocushion the pandemic’s impact, BEAC
relaxed the monetary stance by cutting thepolicy interest rate from 3.5 to 3.25 percent
in March 2020. Regional reserves stayed attheir 2019 level of 3.5 months of imports in2020 and in the first half of 2021.
Despite a significant increase in oil revenue, due to the one-year lag in oil-revenue
taxation, Chad posted a fiscal deficit, excluding grants, of 3.5 percent of GDP in

FIGURE 2 Chad / Actual and projected poverty rates andreal GDP per capita

FIGURE 1 Chad / GDP growth, current account and fiscal
balance
Percent, Percent of GDP
6

Real GDP per capita (LCU constant)

Poverty rate (%)

100

5000008040000060

30000040

20000020

100000

4
2
0
-2

-4
-6
-8
-10
2017

2018

2019

2020

2021

2022

2023

0

Source: The World Bank.

0

2011

Fiscal balance (% of GDP)
Current account balance (% of GDP)
Real GDP growth

2013

2015

2017

International poverty rate
Upper middle-income pov. rate
Source: World Bank. Notes: See table 2.

MPO 218 Oct 21

2019

2021

2023

Lower middle-income pov. rate
Real GDP pc

2020, as it increased spending to mitigate
the impact of the pandemic. A significant
increase in grants resulted in an overall
fiscal surplus, including grants and on acommitment basis, of 1 percent of GDP.
Nevertheless, increasing liquidity needs,
partly stemming from growing politicaland security expenses and high levels ofdebt service relative to domestic revenue,
have constrained Chad’s ability to improve the delivery of basic services andinfrastructure. Hence, the Government
requested a debt restructuring to help
restore a sustainable fiscal balance.
The international poverty rate (US$1.9/
day, 2011 PPP) has increased by 1.6 pp
between 2019 and 2020 to stand at 41.7
percent. It implies an increase in the number of poor from 6.4 to 6.8 million. In 2020,
two-thirds of households reported a loss
in their total income, 57 percent of therecipients of transfers, a decline in thissource of income, and a fifth of households, not getting access to health carewhen needed.

Outlook
Economic growth is projected to gradually rise due to the recovery in global oil

markets, international trade, and economic activity in agriculture and industry.
While oil exports have already picked up,
the recovery is projected to be modest in
2021, with a growth of 0.9 percent due toeconomic disruptions resulting from insecurity and political unrest that heavily
affect services. The rollout of COVID-19
vaccines in 2021-22 might slightly boost
the recovery in 2022-23, with economic
growth reaching 2.4 percent on average.
However, the delay in debt restructuring(necessary for donor support) could hamper the economic recovery in 2021. Inflation should decelerate to 3 percent in 2021
and remain below the CEMAC convergence criteria as the effects of supply
chain disruptions subside.
The current account deficit is projected tonarrow, driven by stronger crude oil export growth. Still, the current accountdeficit will remain substantial, averaging
5.2 percent of GDP over 2021-23. Foreign
direct investment and financial support
from donors are expected to help financethe deficit. CEMAC regional reserves areprojected to remain below five (5) monthsof imports by 2023.
The fiscal balance, including grants, willturn into a deficit of 1.2 percent of GDP in
2021. Fiscal revenues are projected to decrease by 13.8 percent due to a sharp fall

TABLE 2 Chad / Macro poverty outlook indicators

Real GDP growth, at constant market prices
Private Consumption
Government Consumption
Gross Fixed Capital Investment
Exports, Goods and Services
Imports, Goods and Services
Real GDP growth, at constant factor prices
Agriculture
Industry
Services
Inflation (Consumer Price Index)
Current Account Balance (% of GDP)
Fiscal Balance (% of GDP)
Debt (% of GDP)
Primary Balance (% of GDP)
International poverty rate ($1.9 in 2011 PPP) a,b
Lower middle-income poverty rate ($3.2 in 2011 PPP) a,b
Upper middle-income poverty rate ($5.5 in 2011 PPP) a,b
GHG emissions growth (mtCO2e)
Energy related GHG emissions (% of total)in oil revenue in 2020. An increase in security spending will dampen the effect of thegradual removal of COVID-related spending. By 2022, the fiscal balance shouldreach a surplus of 0.5 percent of GDP owing to the government’s efforts to mobilize
domestic revenues, a rise in oil revenue,
and the gradual removal of COVIDrelated spending. In the absence of a significant debt restructuring, Chad will not
be able to service its debts while increasing social and investment spending tomeet the population's basic needs.
The adverse effects of the COVID-19 crisis
on poor and vulnerable households are
expected to last for several years, with thepoverty rate expected to increase to 42.9
percent by 2023 and the number of poor
reaching 7.7 million. The downside risks
related to domestic and external shocks
put at risk of falling back into poverty alarge share of vulnerable households living just above the international poverty
line. Moreover, the low coverage of social
protection programs and lack of structural
economic transformation limit the spacefor poverty reduction.

(annual percent change unless indicated otherwise)
2018
2.4
0.7
-11.8
5.4
4.6
1.4
2.3
4.0
0.6
1.0
4.0
-4.7
1.5
49.1
3.0
40.2
68.0
87.4
2.8
1.6

2019
3.2
1.4
1.7
6.6
6.0
4.0
3.3
4.6
0.9
2.5
-1.0
-4.9
-0.6
51.1
1.0
40.1
68.0
87.4
4.7
1.5

2020
-0.9
0.3
11.1
-9.2
1.1
1.8
-0.9
2.4
-0.2
-5.3
3.5
-7.9
1.0
49.4
2.7
41.7
69.3
88.2
4.3
1.4

2021 e
0.9
0.8
-4.4
-3.0
5.0
4.0
0.9
4.8
0.8
-4.3
3.0
-4.6
-1.2
45.9
0.3
42.2
69.8
88.4
5.5
1.3

So urce: Wo rld B ank, P o verty & Equity and M acro eco no mics, Trade & Investment Glo bal P ractices. Emissio ns data so urced fro m CA IT and OECD.
No tes: e = estimate, f = fo recast.
NA(a) Calculatio ns based o n 2011-ECOSIT-III.A ctual data: 2011. No wcast: 2012-2020. Fo recast are fro m 2021to 2023.
(b) P ro jectio n using neutral distributio n (2011) with pass-thro ugh = 0.7 based o n GDP per capita in co nstant LCU.

MPO 219 Oct 212022 f
1.8
2.3
3.4
8.8
0.7
4.1
1.7
3.2
1.6
-0.6
3.0
-5.3
0.2
46.1
1.5
42.9
70.1
88.6
5.0
1.2

2023 f
2.9
2.6
2.8
16.3
0.4
4.1
2.9
2.8
1.6
3.4
3.0
-6.4
-0.8
46.2
0.6
42.9
70.1
88.6
4.8
1.1

COMOROS

Key conditions andchallenges

Table 12020

P o pulatio n, millio n

0.9

GDP , current US$ billio n

1.2

GDP per capita, current US$

1333.3

Internatio nal po verty rate ($ 1.9)

a

19.1
a

39.7

a

64.6

Lo wer middle-inco me po verty rate ($ 3.2)
Upper middle-inco me po verty rate ($ 5.5)a45.3

Gini index

Scho o l enro llment, primary (% gro ss)bbLife expectancy at birth, years
To tal GHG Emissio ns (mtCO2e)

99.5
64.3
0.7

Source: WDI, M acro Poverty Outlook, and official data.
(a) M ost recent value (201 3), 201 1 PPPs.
(b) WDI for School enrollment (201 8); Life expectancy (201 9).

Comoros has been negatively affected by
the COVID-19 pandemic as the economy
marginally contracted in 2020. Subject tothe containment of the virus at the national and international levels, and an
adequate vaccine roll-out, real GDP
growth could pick-up in 2022 and 2023.
However, the economic expansion will be
constrained by limited fiscal space to increase the aggregate demand, poor business environment and weak institutions.
Poverty at the lower middle-income poverty line ($3.2) is projected to remain
above 39 percent in 2021-2023.

Comoros pronounced institutional weaknesses and structural challenges explain
the stagnant per capita GDP growth of 1
percent recorded over the past decade.
Challenging geography, characterized byremoteness, a small and fragmented domestic market, and red tape, hinder private sector development. Most jobs areconcentrated in informal and low-skilled
sectors, as the private sector remains small.
Limitations to public service delivery, particularly in healthcare and education, undermine the contribution of human capitalto productivity growth. Overreliance on
remittances has underpinned a consumption-driven growth trajectory and uneven
progress towards shared prosperity. The
monetary agreement with France (peg tothe Euro) has contributed to relatively low
inflation rates, with no signs of significant
currency misalignment in recent years.
Effective state policies prevented the
spread of the virus, but the consequencesof the Covid-19 pandemic nonethelessincreased pre-existing vulnerabilities in
the financial and public sectors. Limited
fiscal space and the deterioration of debt
sustainability have left Comoros in a
weak position to extensively use the fiscal
policy to support the real economy andreduce poverty.
There are significant downside risks tothese outlooks, including a third wave of
Covid-19 linked to variants and existing

vulnerabilities in the financial sector. Fiscal
risks are high as the government is exposed to contingent liabilities from financially weak SOEs. Comoros remains highly
exposed to climate shocks, which could
further weigh on external and fiscal balances. Finally, GDP growth will remain
below its potential due to challenging business environment and weak institutions.

Recent developments
Mobility restrictions and the suspensionof international travel slowed down thefirst wave of the pandemic, but affectedeconomic activity, with GDP contracting
by 0.1 percent in 2020. Throughout 2020,
the government introduced a series ofpolicy measures, including increased
spending on health, subsidized pay forworkers in key SOEs and cash transfers to
the poor, which helped to mitigate theeconomic and social costs of the pandemic. The elevated financial needs were met
by significant external budget support,
including through savings from the debt
service suspension. As a result, the current
account deficit deteriorated to 3.5 percent
of GDP in 2020 from 3.2 percent of GDP in2019 and the fiscal deficit improved to 1.0
percent of GDP in 2020 from 4.3 percent of
GDP in 2019. Supported by government
measures to reduce imported prices, inflation remained contained in 2020. However, the risk of debt distress increased tohigh from medium following a new nonconcessional loan to finance a government’s project in the tourism sector.

FIGURE 1 Comoros / Selected macroeconomic indicators,
2015-2023

FIGURE 2 Comoros / Actual and projected poverty rates andreal GDP per capita

Percent of GDP
35

Poverty rate (%)

Percent of GDP
4

Real GDP per capita (LCU constant)

70

500000490000

30

2

60

25

0

50

20

-2

40

15

-4

30

10

-6

20

5

-8

0

-10

480000470000460000Fiscal Balance

43000004200002004 2006 2008 2010 2012 2014 2016 2018 2020 2022
International poverty rate
Upper middle-income pov. rate

Current Account Balance

Sources: National authorities, and World Bank staff estimates and forecasts.

440000102015 2016 2017 2018 2019 2020 2021f 2022f 2023f
Debt

450000Source: World Bank. Notes: see Table 2.

MPO 220 Oct 21

Lower middle-income pov. rate
Real GDP pc

The first semester of 2021 was characterized by the impact of a second Covid-19
wave which resulted in the reinstatementof controls on movement and activities.
Despite data limitations, it is estimatedthat private consumption and investment,
and the tertiary sector were significantly
affected. Private credit growth decreased
by 0.1 percent in 2021Q1 (year-on-year),and non-performing loans remained at 23
percent of total loans at end-Q1.
Amidst this challenging economic situation, consumer prices fell slightly in
2021Q1 (-5.4 percent, year-on-year) but
rising inflationary pressures were observed in July 2021 (+3.1 percent, m-o-m,
for food products) because of higher
food and oil prices, supply chain andlogistic issues. Based on the poverty line
for middle-income countries (US$3.20),
poverty has increased from 39.0 percent
in 2019 to 40.0 percent in 2020. High frequency phone surveys, indicate that asignificant share of household heads losttheir jobs during the pandemic, faced
food shortages and difficulty in accessing health services.

OutlookDespite a resurgence of Covid-19 in early
2021, economic recovery is expected to befaster than projected earlier (1.3 percent
compared to 0.2 percent in April 2021).
Growth drivers are linked to the progressive pick-up of economic activity associated with deconfinement, and an increase indomestic demand.
As public capital expenditures and socialtransfers increase in 2021, the fiscal deficit
is projected to widen to 4.2 percent of
GDP in 2021. With imports representing
about 38.9 percent of GDP and tourism
arrivals being still subdued, rising domestic demand will widen the current accountdeficit to 5.8 percent of GDP in 2021. A

TABLE 2 Comoros / Macro poverty outlook indicators

Real GDP growth, at constant market prices
Private Consumption
Government Consumption
Gross Fixed Capital Investment
Exports, Goods and Services
Imports, Goods and Services
Real GDP growth, at constant factor prices
Agriculture
Industry
Services
Inflation (Consumer Price Index)
Current Account Balance (% of GDP)
Fiscal Balance (% of GDP)
Debt (% of GDP)
Primary Balance (% of GDP)
International poverty rate ($1.9 in 2011 PPP) a,b
Lower middle-income poverty rate ($3.2 in 2011 PPP) a,b
Upper middle-income poverty rate ($5.5 in 2011 PPP) a,b
GHG emissions growth (mtCO2e)
Energy related GHG emissions (% of total)

deterioration of the twin deficits is envisaged within the ongoing IMF Staff Monitored Program (SMP). Inflation is projected to increase on the back of rising international prices.
Growth is expected to rebound during2022-23 to an average of 3.1 percent if the
spread of the Covid-19 is contained at the
global and national levels, and Comoros
accelerates the vaccine rollout. As of August, only 14 percent of Comorians were
fully vaccinated. These projections assume
a broad-based return to normality in thetertiary sector and stronger demand for
agricultural products.
In the post-pandemic stage, it is expectedthat poverty will remain at a higher levelin 2022 at 41.0 percent and decline slightly
to 39.8 percent in 2023. This pandemic islikely to have long lasting consequences,
exposing the most vulnerable. In the medium run there is an even stronger case to
make growth more inclusive and broadbased, accompanied by job creation.

(annual percent change unless indicated otherwise)
2018
3.6
2.4
0.0
19.2
19.2
12.1
3.0
5.5
2.6
2.0
1.7
-2.4
-1.3
16.6
-1.2
18.4
38.9
63.9
2.5
45.4

2019
1.8
3.6
1.6
-8.4
9.0
5.5
1.8
0.9
4.0
1.8
3.3
-3.2
-4.3
20.6
-4.1
18.5
39.0
64.0
0.6
46.0

2020
-0.1
0.4
2.5
0.1
-31.4
-10.9
-0.3
0.3
-1.0
-0.5
1.4
-3.5
-1.0
21.8
-0.8
19.2
40.0
65.0
0.5
45.6

2021 e
1.3
3.5
5.3
0.5
5.0
9.0
1.3
4.0
2.7
-0.2
0.9
-5.8
-4.2
26.0
-3.9
20.0
41.0
65.7
1.9
45.6

So urce: Wo rld B ank, P o verty & Equity and M acro eco no mics, Trade & Investment Glo bal P ractices. Emissio ns data so urced fro m CA IT and OECD.
No tes: e = estimate, f = fo recast.
NA(a) Calculatio ns based o n 2013-EESIC.A ctual data: 2013. No wcast: 2014-2020. Fo recast are fro m 2021to 2023.
(b) P ro jectio n using neutral distributio n (2013) with pass-thro ugh = 0.87 based o n GDP per capita in co nstant LCU.

MPO 221 Oct 212022 f
3.2
3.2
5.5
0.8
14.1
6.0
3.2
3.0
2.2
3.5
1.4
-7.6
-4.7
29.4
-4.3
20.0
41.0
65.7
2.7
46.1

2023 f
2.9
3.3
-6.2
4.6
16.2
6.2
2.9
1.3
1.8
4.0
1.5
-8.8
-4.0
32.2
-3.5
19.2
39.8
64.9
2.4
46.7

Key conditions and
DEMOCRATIC
challenges
REP. OF CONGO
Table 1

The DRC economy relies heavily on extractives as key drivers of economic
growth, while the country’s infrastructure
remains weak. Copper and cobalt accountfor over 80 percent of exports, 40 percentof which are absorbed by China. This exposes the country to volatile global commodity prices and demand. With large
untapped potential in agriculture, DRC isa net food importer with adverse effect onfood security. Meanwhile, major structural constraints lead to under-developed
service and manufacturing sectors. Improving the business environment andnarrowing the infrastructure gap areneeded to achieve economic diversification. Additionally, improving domestic
revenue mobilization to sustainably widen fiscal space is crucial to unlock longterm growth constraints.
Political stability and good governancehave also been long-standing challenges.
Following a period of political stalemate,president Tshisekedi launched in late 2020a new governing coalition. While raising
the prospects for reforms, risks associatedwith fragile and nascent alliances, given
broad coalitions of several parties andtheir diverging political considerations,might affect policymaking.
Strengthening the healthcare system remains a key challenge as the country continues to address both COVID-19 and Ebola outbreaks. A slow pace of vaccination,

2020

P o pulatio n, millio n

89.5

GDP , current US$ billio n

47.8

GDP per capita, current US$

534.1

Internatio nal po verty rate ($ 1.9)

a

77.2
a

91.4

a

97.9

Lo wer middle-inco me po verty rate ($ 3.2)
Upper middle-inco me po verty rate ($ 5.5)a

42.1

Gini index

Scho o l enro llment, primary (% gro ss)

b

118.5

b

60.7

Life expectancy at birth, years
To tal GHG Emissio ns (mtCO2e)

682.4

Source: WDI, M acro Poverty Outlook, and official data.
(a) M ost recent value (201 2), 201 1 PPPs.
(b) WDI for School enrollment (201 8); Life expectancy (201 9).

Economic growth in the DRC is expected
to rebound to 3.6 percent in 2021 despite
pandemic-related uncertainties. With favorable global commodity prices and demand, the current account deficit shrank
while consolidation efforts narrowed thefiscal deficit and helped maintain relatively stable exchange and inflation rates.
Growth prospects for 2022 are favorable
and poverty is expected to slightly decline,
but uncertainty around the pandemic aswell as political stability continue toweigh on medium-term prospects for economic growth and poverty reduction.

FIGURE 1 Democratic Republic of Congo / Real GDP
growth and contributions to real GDP growth

weak public health system and resurgent
waves of the virus mean the pandemic willcontinue to loom over economic growtheven without restrictions on most activities. With weak digital development, aprolonged pandemic could weigh negatively on private consumption and investment thus delaying economic recovery.
This could also widen fiscal deficit as theGovernment raises spending on health totackle COVID-19.
DRC is second only to Nigeria in SubSaharan Africa on the number of extreme
poor (estimated at 77.2 percent in 2012,
representing over 53 million people). Poverty remains widespread in the country,
including in urban areas, although significant geographical disparities exist, withextreme poverty concentrated in central
and northwestern provinces. Despitesome improvement, social and humandevelopment indicators remain weak withthe country ranking at the bottom end interms of human capital level (HCI: 0.37).

Recent developments
After a pandemic-induced slowdown to 1.7
percent in 2020, economic growth is expected to moderately rebound to 3.6 percent in 2021 driven by a robust growth inmining (8.7 percent), owing to rising commodity prices and production capacity
expansion since May 2021 with the KamoaKakula copper project commencing production. Non-mining sectors (particularly
agriculture and services) are expected togradually recover, growing at 1.4 percent

FIGURE 2 Democratic Republic of Congo / Actual andprojected poverty rates and real GDP per capita

Percent,percentage points

Poverty rate (%)

8120Real GDP per capita (LCU constant)

160000

6.9

6
4

4.8

4.4

3.7

5.1

120000
80

3.6

2.4

2

140000100

5.8100000

60

1.7

0

40

-2

20

80000
60000
40000
20000

0

-4
2015

2016

Non-Mining

2017

2018

2019

Mining sector

2020

2021

2022

SSA growthInternational poverty rate
Upper middle-income pov. rate

GDP

Sources: Democratic Republic of Congo Statistical Authorities and World Bank.

02004 2006 2008 2010 2012 2014 2016 2018 2020 2022

2023

Source: World Bank. Notes: see Table 2.

MPO 222 Oct 21

Lower middle-income pov. rate
Real GDP pc

in 2021 as the economy remains open despite some COVID-related restrictions.
The current account deficit (CAD) is projected to narrow to 2.0 percent of GDP in
2021 (from 2020: 2.3), reflecting a strong
growth in mineral exports and global prices of copper and cobalt. FDI and international support (including the recent SDR
issuance by the IMF) are likely to finance
the CAD and raise international reserves
to an estimated 3.4 weeks at end-2021(from 2020: 1.9 weeks), putting downward
pressures on local currency and inflation.
As inflation moderated, the central bankalso eased monetary policy to support
economic recovery.
The fiscal deficit is projected to narrow to
1.7 percent of GDP in 2021, from 2.1 percent in 2020 . The deficit will be partially
funded by the IMF ECF disbursements andproject loans, which offset the repayment ofT-bills. Domestic revenue collection is expected at 10.2 percent of GDP (up from2020: 8.7), as economic recovery generates
higher income taxes and VAT. This may
allow the government to increase current
expenditures to address high public sector
wage bills, COVID-19-related spending
and emergency expenditure related to theGoma volcano eruption of May 2021 whileremaining on a path of fiscal consolidation.
Poverty is estimated at 73.1 percent in
2020, an increase of 0.5 percentage points

compared to 2019, due to the pandemic.
This increase may be underestimatedsince, according to COVID-19 High Frequency Phone surveys in Kinshasa, adverse socio-economic consequences ofthe pandemic include declines in laborand non-labor income (over 10 percent
of households have seen members lose
their jobs while remittances also
dropped) and disruptions in both goods
and services (mainly health and education) markets.

OutlookIn the medium term, the DRC economy
is expected to recover gradually its precrisis path. Real GDP growth is projected at 4.8 percent in 2022, before reaching 5.1 percent in 2023. The mining sector remains among the key drivers ofgrowth, thanks to favorable commodity
prices, and following the second phaseof production of the Kamoa-Kakula copper project expected in late 2022. Recovery in service sectors, mainly trade andtelecommunications (digital development), would also positively contributeto growth.
The fiscal deficit should decline slightly
given moderate economic recovery and

TABLE 2 Democratic Republic of Congo / Macro poverty outlook indicators

Real GDP growth, at constant market prices
Private Consumption
Government Consumption
Gross Fixed Capital Investment
Exports, Goods and Services
Imports, Goods and Services
Real GDP growth, at constant factor prices
Agriculture
Industry
Services
Inflation (Consumer Price Index)
Current Account Balance (% of GDP)
Fiscal Balance (% of GDP)
Debt (% of GDP)
Primary Balance (% of GDP)
International poverty rate ($1.9 in 2011 PPP) a,b
Lower middle-income poverty rate ($3.2 in 2011 PPP) a,b
Upper middle-income poverty rate ($5.5 in 2011 PPP) a,b
GHG emissions growth (mtCO2e)
Energy related GHG emissions (% of total)

2018
5.8
2.7
8.4
-29.5
25.7
5.9
5.9
1.5
12.1
1.3
29.3
-3.6
0.1
10.4
0.4
73.0
89.2
97.2
-0.7
2.1

2019
4.4
1.4
20.2
14.4
-2.5
-7.6
4.3
2.8
6.8
2.1
4.7
-3.2
-2.0
10.2
-1.6
72.6
89.1
97.1
0.0
2.2

efforts to improve domestic revenue mobilization. The CAD is also projected tonarrow to 1.6 percent by 2023 as higher
commodity prices improve terms of trade.
Given the lingering adverse effects of
COVID-19 and with high population
growth likely to partially offset economic
growth, extreme poverty is projected toonly slightly decline by 1.1 percentage
points between 2020 and 2023.
Risks to the outlook are substantial. The
Covid-19 crisis may re-emerge given potential new variants and delays in vaccination campaigns. Resurgence of Covid
at a global level could dampen commodity prices and demand, while at the domestic level it may lead to renewed restrictions on mobility. Underperformancein the projected revenue mobilization
coupled with substantial spending pressure associated with a prolonged pandemic, could worsen fiscal imbalancesand generate further arrears. Finally,
renewed political uncertainty might
weaken investment.
Thus, the immediate challenge for DRC is
to maintain political stability and mitigate
macroeconomic imbalances to avoid tensions that may lead to major decline ineconomic activity. In addition, diversification is indispensable to overcome vulnerabilities associated with the high concentration of exports.

(annual percent change unless indicated otherwise)
2020
1.7
-1.0
7.4
-20.8
13.9
5.6
1.7
1.9
4.4
-1.6
11.2
-2.3
-2.1
10.8
-1.9
73.1
89.3
97.2
0.1
2.2

2021 e
3.6
1.6
6.8
13.6
7.6
8.8
3.6
2.8
5.1
2.0
10.5
-2.0
-1.7
10.3
-1.5
72.9
89.2
97.2
0.9
2.3

So urce: Wo rld B ank, P o verty & Equity and M acro eco no mics, Trade & Investment Glo bal P ractices. Emissio ns data so urced fro m CA IT and OECD.
No tes: e = estimate, f = fo recast.
NA(a) Calculatio ns based o n 2012-E123.A ctual data: 2012. No wcast: 2013-2020. Fo recast are fro m 2021to 2023.
(b) P ro jectio n using neutral distributio n (2012) with pass-thro ugh = 0.7 based o n GDP per capita in co nstant LCU.

MPO 223 Oct 212022 f
4.8
1.5
8.0
36.4
6.3
9.7
4.8
3.2
6.4
3.2
7.0
-1.8
-1.2
9.8
-0.9
72.5
89.0
97.1
0.4
2.4

2023 f
5.1
1.0
6.7
32.3
6.3
8.0
5.1
3.2
4.4
7.0
5.0
-1.6
-1.1
9.7
-0.8
71.9
88.7
97.0
0.4
2.5

REPUBLIC OFCONGOTable 1

Key conditions andchallenges

2020

P o pulatio n, millio n

5.5

GDP , current US$ billio n

10.8

GDP per capita, current US$

1963.6

Internatio nal po verty rate ($ 1.9)

a

39.6
a

64.1

a

83.9

Lo wer middle-inco me po verty rate ($ 3.2)
Upper middle-inco me po verty rate ($ 5.5)a

48.9

Gini index

Scho o l enro llment, primary (% gro ss)bLife expectancy at birth, years
To tal GHG Emissio ns (mtCO2e)

b

106.6
64.6
20.0

Source: WDI, M acro Poverty Outlook, and official data.
(a) M ost recent value (201 1 ), 201 1 PPPs.
(b) WDI for School enrollment (201 2); Life expectancy (201 9).

In 2020, the Republic of Congo’s economy
contracted for the sixth consecutive year,with GDP growth estimated at -7.9 percent. It continues to be impacted by the
pandemic and is expected to further contract by 1.2 percent in 2021, while thepoverty rate is projected to increase from48.5 percent in 2019 to 53.3 percent in
2021. Although the country is in debt
distress because of outstanding arrears,
recent debt restructuring agreements,
higher oil prices, and improved debt management are moving the country back to
debt sustainability.

The Republic of Congo’s (ROC) economy
has been contracting since 2015, withGDP growth averaging -5.3 percent in2015–20, primarily due to the country’s
high dependency on oil. The exposure toswings in oil prices and weak governance, reflected in high levels of nonconcessional borrowing, have resulted in
debt distress, with the debt-to-GDP ratio
increasing from 42.3 percent in 2014 to
81.9 percent in 2019. While debt restructuring agreements, higher oil prices, andimproved debt management, including
restricting new external financing to concessional terms, are moving the country
back to debt sustainability, the ROC is
still running arrears with some externaland domestic creditors. Natural resource
revenues have not translated into higher
growth and human capital development,
owing to the undiversified economy andweak governance in key sectors. The proportion of the population living below theinternational extreme poverty line of
US$1.90 PPP per day increased from 39.1
percent in 2015 to 48.5 percent in 2019.
While employment is gradually returning
to pre-pandemic levels, recent households
surveys show that 56 percent of surveyed
households still experienced income losses related to the pandemic in April 2021.
As a result, one-third of households areunable to pay their rent and health feesand meet their food needs. The pandemic

FIGURE 1 Republic of Congo / Real GDP growth andcontributions to real GDP growthcontinues to be a risk to the ROC’s economic stability, and the slow pace of vaccination threatens the recovery. The country began its vaccination campaign inMarch 2021, but only about 2.7 percent of
the population has been fully vaccinated,
as of September 7, 2021.

Recent developments
In 2020, the ROC’s economy was hit hardby lower global and domestic demand as
well as COVID-19 containment measuresthat disrupted oil operations and delayedinvestments, resulting in a GDP contraction of 7.9 percent (Figure 1). The pandemic continues to impact the country,
and while oil prices have recovered fromthe COVID-19 slump, oil production in
the ROC declined further in 2021H1, partly due to postponed investments, technical challenges, and maturing oil fields.
With the decline in oil production, government finances remain under significant
pressure. Although revenues were up 6.6
percent, year-on-year, in 2021H1, they
were lower than expected, and the budget
registered a deficit in 2021H1. This
prompted the government to revise its
2021 budget law in August. As a result of
the pandemic, public debt reached 102.6
percent of GDP at end-2020. The ROC’s
participation in the G20 Debt Service Suspension Initiative resulted in the suspension in debt service payments of US$146
million between May and December 2020and of US$116 million between Januaryand June 2021, freeing up fiscal space for

FIGURE 2 Republic of Congo / Actual and projected
poverty rates and real GDP per capita
Poverty rate (%)
100

Percent, percentage points
8

Real GDP per capita (LCU constant)
1400000
1200000

4

80

0

60

800000-4406000001000000

400000

-8

20

-12
-16

Oil GDPNon-oil GDP

Net Taxes

Real GDP00
2005 2007 2009 2011 2013 2015 2017 2019 2021 2023
International poverty rate
Upper middle-income pov. rate

2014 2015 2016 2017 2018 2019 2020e 2021f 2022f 2023f
Source: World Bank.

200000Source: World Bank. Notes: see Table 2.

MPO 224 Oct 21

Lower middle-income pov. rate
Real GDP pc

the country to fight the pandemic. Despite
lower oil production in 2021H1, recent
higher oil prices have increased the valueof exports, and the external position is set
to improve compared to 2020.
The crisis has also worsened existingsocial challenges. GDP per capita fell by
10.3 percent in 2020, raising the poverty
rate to 52.5 percent in 2020, an increaseof 4 percentage points in one year
(Figure 2). Headline inflation stood at 1.4
percent in 2020 and remained moderate
in 2021H1, averaging 1.6 percent. However, with COVID-19 restrictions,transport inflation rose above 4 percent
in 2020 and 2021H1, disproportionallyaffecting low-income households.

Outlook
The economy is set to contract by 1.2 percent in 2021, driven primarily by a contraction of the hydrocarbon sector by 1.8
percent. The non-oil sector also remains

fragile, with the sector expected to contract by 0.5 percent in 2021 due to the slow
pace of the COVID-19 vaccine rollout andthe remaining domestic arrears. The overall GDP contraction is estimated to be
deeper than the Spring World Bank forecast of -0.1 percent, owing to lower-thanexpected oil production in 2021.
Economic activity is expected to pick up
in 2022 as both the oil and non-oil sectors
recover, with growth averaging 3.1 percent in 2022-23. The new allocation of Special Drawing Rights from the International
Monetary Fund equivalent to US$221 million will provide policy space that could
be used to enhance the recovery. The poverty rate is expected to rise to 53.3 percent
in 2021–23, consistent with GDP per capita
growth. Assuming the economy grows by
an annual average of 5 percent starting in
2024, GDP per capita will only return topre-COVID-19 levels by 2028, and it willremain below the 2014 level. Meanwhile,
the poverty rate is projected to return topre-pandemic levels by 2026. Lower
growth will further delay the recovery of

TABLE 2 Republic of Congo / Macro poverty outlook indicators

Real GDP growth, at constant market prices
Private Consumption
Government Consumption
Gross Fixed Capital Investment
Exports, Goods and Services
Imports, Goods and Services
Real GDP growth, at constant factor prices
Agriculture
Industry
Services
Inflation (Consumer Price Index)
Current Account Balance (% of GDP)Net Foreign Direct Investment (% of GDP)
Fiscal Balance (% of GDP)
Debt (% of GDP)
Primary Balance (% of GDP)
International poverty rate ($1.9 in 2011 PPP) a,b
Lower middle-income poverty rate ($3.2 in 2011 PPP) a,b
Upper middle-income poverty rate ($5.5 in 2011 PPP) a,b
GHG emissions growth (mtCO2e)
Energy related GHG emissions (% of total)

income per capita. This highlights theimportance of reforms to protect and develop human capital and infrastructure, as
well as to improve the business environment for faster, sustained, and inclusive
economic growth.
Consistent with the 2021 revised budget
law, fiscal consolidation is expected toresume in 2021, owing to high oil prices
and contained public expenditure. Meanwhile public debt is projected to fall
sharply to 86.6 percent of GDP in 2021,
driven by high external debt amortization
payments tied to oil prices, and higher
nominal GDP. The government is also
taking steps to improve domestic resource mobilization, including the ongoing digitalization of tax declaration andtax payments, the ongoing implementation of the new Forest Code and a onestop-shop for tax payments, and the increase in excise taxes on tobacco and oldvehicles in 2021. Downside risks include
highly volatile oil prices, uncertainties
related to the pandemic and oil production, and low vaccination rates.

(annual percent change unless indicated otherwise)
2018
-4.8
4.6
-4.7
-25.2
11.4
5.1
-6.0
-1.1
-7.9
-4.2
1.2
8.9
3.0
5.4
77.0
7.6
47.9
71.6
89.3
2.1
20.1

2019
-0.1
1.6
-18.7
-2.3
7.4
3.2
-0.6
0.2
0.2
-1.8
2.2
-0.8
3.2
3.4
81.9
8.0
48.5
72.1
89.6
0.3
20.0

2020
-7.9
-4.2
-1.4
-15.4
-9.2
-10.4
-7.9
-6.0
-7.7
-8.7
1.4
-1.0
2.0
-1.3
102.6
0.5
52.5
74.5
91.0
-1.5
18.7

2021 e
-1.2
-1.3
-1.7
-0.1
-1.3
-1.0
-1.2
2.7
-1.8
-1.2
2.0
8.5
2.5
2.7
86.6
4.6
53.3
75.3
91.3
-0.3
18.5

So urce: Wo rld B ank, P o verty & Equity and M acro eco no mics, Trade & Investment Glo bal P ractices. Emissio ns data so urced fro m CA IT and OECD.
No tes: e = estimate, f = fo recast.
NA(a) Calculatio ns based o n 2011-ECOM .A ctual data: 2011. No wcast: 2012-2020. Fo recast are fro m 2021to 2023.
(b) P ro jectio n using neutral distributio n (2011) with pass-thro ugh = 0.7 based o n GDP per capita in co nstant LCU.

MPO 225 Oct 212022 f
3.2
2.2
-1.3
4.3
4.6
4.5
3.2
2.3
3.5
3.0
2.2
6.4
3.0
2.5
78.3
4.3
53.4
75.4
91.4
0.9
18.8

2023 f
3.0
2.0
-1.8
8.4
4.5
6.5
3.0
2.3
3.0
3.2
2.5
4.2
3.4
2.2
73.4
4.9
53.2
75.2
91.2
0.8
19.1

CÔTE D’IVOIRE Key conditions andchallenges

Table 12020

P o pulatio n, millio n

26.4

GDP , current US$ billio n

60.3

GDP per capita, current US$

2284.1

Internatio nal po verty rate ($ 1.9)

a

29.8
a

59.1

a

83.2

Lo wer middle-inco me po verty rate ($ 3.2)
Upper middle-inco me po verty rate ($ 5.5)a

41.5

Gini index

Scho o l enro llment, primary (% gro ss)

b

100.3

b

57.8

Life expectancy at birth, years
To tal GHG Emissio ns (mtCO2e)

49.9

Source: WDI, M acro Poverty Outlook, and official data.
(a) M ost recent value (201 5), 201 1 PPPs.
(b) M ost recent WDI value (201 9).

The Ivorian economy proved relatively
resilient throughout the pandemic, growing by 2 percent in 2020. However, poverty rose as per capita growth declined by
0.6 percent. A strong rebound in private
investment and exports underpins therecovery in 2021, despite temporary electricity supplies disruptions. Headwinds
prevail, including from further waves of
COVID, a slower global recovery andsecurity vulnerabilities. In the mediumterm, the new National Development
Plan (NDP) should bolster private investment, growth, and poverty reduction.

Over the last decade, Côte d’Ivoire has
been one of the fastest-growing economies
in sub-Saharan Africa. Real GDP growth
averaged 8.2 percent annually (5.7 percent
in per capita terms) over 2012–2019 reflecting post-conflict recovery, strong public investment, reforms induced-credit
expansion, and sound macroeconomic
policies. The sources of growth have diversified somewhat, with a greater contribution from services and manufacturing,favoring total factor productivity gains.
Employment has gradually shifted awayfrom agriculture, accounting for less thanhalf today as compared of two-thirds in2008. The country, through the new NDP,
aspires to foster structural transformationand inclusiveness by leveraging private
investment. The key reform areas focus on
increasing productivity through capital
deepening and improving human capital,
addressing climate change risks, andstrengthening governance.
Downside risks remain significant and stem
mostly from the pandemic. Domestic cases
have recently increased alongside with thenumber of fatalities, especially among theunvaccinated. Further waves could trigger
trade shocks, global and domestic downturns, depress market sentiment, and exacerbate debt vulnerabilities while slowing therecovery of FDI. Subsequent restrictive
measures could severely impact employment and household welfare. A sharp rise inglobal risk premia could thwart access tointernational markets. The security situationin the north of the country could deteriorate.
Continued weak domestic revenue mobilization may strain the rollout of the NDP.

Recent developments
The economy appeared relatively resilient
throughout the pandemic, posting a real
GDP growth of 2 percent in 2020 (0.6 percent in per capita) thanks to strong
pre-COVID fundamentals, low dependency on remittances and tourism, and a swift
government’s reaction. However, in Q2,
the informal sector cut 20 percent of salaried and 33 percent of non-salaried jobs
while the formal sector cut positions by 22
percent. Higher public investment, fueledby the government’s response package(1.4 percent of GDP), coupled with sustained private consumption and investment more than offset the COVID-related
decline in exports and mitigated job losses. Higher cocoa production and a rebound in manufacturing and services supported a recovery during the second semester. Inflation rose from 0.8 percent in2019 to 2.4 percent in 2020 driven by foodprices due to supply disruptions andhigher global prices. The current accountdeficit widened to 3.8 percent of GDP in2020 from 2.7 percent, mainly reflecting
lower global demand. High-frequency
data show a marked rebound in the firsthalf of 2021 compared to 2020, but withrising inflation. Exports, industry, andbusiness climate index increased by 15.5,

FIGURE 1 Côte d’Ivoire / Real GDP growth and contributions to real GDP growth

FIGURE 2 Côte d’Ivoire / Actual and projected poverty
rates and real GDP per capita

Percent, percentage points
20

Poverty rate (%)

Real GDP per capita (LCU constant)

100

2000000

15

80

1500000

10
5

60

0

40

1000000-5500000

20
-10
2015

2016

2017

Gov. cons.
Inventories
Statistical disc.
Source: World Bank.

2018

2019

2020

Exports
Private cons.
GDP

2021

2022

2023

0

GFCF
Imports0
2008 2010 2012 2014 2016 2018 2020 2022
International poverty rate
Upper middle-income pov. rate

Source: World Bank. Notes: see Table 2.

MPO 226 Oct 21

Lower middle-income pov. rate
Real GDP pc

5.7 and 12.6 percent respectively. Private
consumption increased despite temporary
electricity shortages, supported by higher
employment (+6.8 percent). The substantial increase in imports of capital goods(+43.4 percent) suggests that private investment increased significantly. Cashcrop production including cocoa (+20.9
percent) and cashew (+42.6 percent) featured a stronger-than-expected increase. Inflation increased to 3.4 percent in
H1, fueled by higher local food prices(+5.3 percent).
The COVID response
caused the fiscal deficit to widen from 2.3
percent of GDP in 2019 to 5.6 percent in
2020, driven by higher government spending as revenues remained stable at 15 percent of GDP. The expansion of social programs (cash transfers, universal healthcare, education, water, and electricity)drove the additional spending. Financing
needs were met with significant concessional support and a successful EUR 1
billion Eurobond issuance, resulting in 9.3
percentage points increase in public debt
to 49.8 percent of GDP in 2020.
Côte d’Ivoire’s monetary and exchange
rate policies are managed by the Central
Bank of West African States (BCEAO),
which maintains a peg between the CFA
Franc and the Euro. Its reserves haveremained stable since 2019 and reached

5.8 months of imports in 2020 thanks tosignificant donor support and Eurobond
issuance by Côte d’Ivoire. To support theregional economy and COVID-related
extra spending, the BCEAO implemented
a set of monetary and macroprudential
measures beginning in March 2020, including a policy rate cut and extended
refinancing operations of the 3-month
COVID bonds. These measures were extended into 2021. The incidence of extreme poverty measured with the US$1.9
a day (2011 PPP) international poverty
line declined from 29.8 percent in 2015 to26.3 percent in 2019, which lifted around
159,000 people out of extreme poverty.
The pandemic stalled this progress in
2020, keeping the projected poverty rate
almost at the same level as in 2019, although population growth likely induced
an increase in the number of people inextreme poverty (+200,000).

OutlookReal GDP growth is projected at 6.2 percent
in 2021 and average 6.4 percent over 2021–
23. In 2021, the recovery should be underpinned by public and private investment,
and consumption, partly supported by the

TABLE 2 Côte d’Ivoire / Macro poverty outlook indicators

Real GDP growth, at constant market prices
Private Consumption
Government Consumption
Gross Fixed Capital Investment
Exports, Goods and Services
Imports, Goods and Services
Real GDP growth, at constant factor prices
Agriculture
Industry
Services
Inflation (Consumer Price Index)
Current Account Balance (% of GDP)Net Foreign Direct Investment (% of GDP)
Fiscal Balance (% of GDP)
Debt (% of GDP)
Primary Balance (% of GDP)
International poverty rate ($1.9 in 2011 PPP) a,b
Lower middle-income poverty rate ($3.2 in 2011 PPP) a,b
Upper middle-income poverty rate ($5.5 in 2011 PPP) a,b
GHG emissions growth (mtCO2e)
Energy related GHG emissions (% of total)

Covid recovery package. Continued structural and business climate reforms alongside positive developments in the national
reconciliation process following the peaceful parliamentary elections in Marchshould bolster private investment.
Inflation should gradually decelerate to
2.9 percent in H2 of 2021, close to the
WAEMU target and 2.5 percent over 2022
-23. The current account deficit should
narrow to 3.6 percent of GDP by2023 supported by improved trade balance. The fiscal deficit would remain stable at 5.6 percent in 2021 and graduallyconsolidate towards the WAEMU criterion of 3 percent by 2024, financed throughregional borrowing, Central Bank’s
COVID bonds, and with the support oftherecent
IMF’s
SDR
allocation. Increased digitalization in revenue
administration, tax policy reforms, gradual withdrawal of COVID spending andcontrol over current spending should
enhance fiscal space. The incidence of
extreme poverty is expected to resume adownward trend in 2021 driven by thegovernment's crisis mitigation measuresand the economic recovery. It is projected
to decrease to 25.8 percent by 2021 and to24.3 percent by 2023.

(annual percent change unless indicated otherwise)
2018
6.9
8.0
1.9
18.7
5.6
2.2
6.8
5.3
4.3
8.2
0.6
-3.5
1.2
-2.9
40.1
-1.6
27.0
56.5
79.6
-0.4
21.8

2019
6.2
6.0
4.1
5.5
5.7
4.4
6.3
5.3
11.5
4.7
0.8
-2.7
1.0
-2.3
41.2
-0.8
26.3
55.8
78.7
0.8
21.6

2020
2.0
1.9
0.3
12.2
-1.3
8.8
2.0
2.7
1.6
1.9
2.4
-3.8
0.2
-5.6
51.3
-3.7
26.4
56.0
78.8
0.0
21.5

2021 e
6.2
3.0
27.6
14.7
9.5
17.0
6.2
-1.5
6.0
8.4
2.9
-4.4
1.3
-5.6
49.4
-4.0
25.8
55.3
77.9
4.8
18.3

So urce: Wo rld B ank, P o verty & Equity and M acro eco no mics, Trade & Investment Glo bal P ractices. Emissio ns data so urced fro m CA IT and OECD.
No tes: e = estimate, f = fo recast.
NA(a) Calculatio ns based o n 2008-ENV and 2015-ENV.A ctual data: 2015. No wcast: 2016-2020. Fo recast are fro m 2021to 2023.
(b) P ro jectio n using po int to po int elasticity at regio nal level with pass-thro ugh = 1based o n GDP per capita in co nstant LCU.

MPO 227 Oct 212022 f
6.5
5.1
-9.6
10.7
6.0
1.7
6.5
1.6
11.1
6.0
2.5
-4.3
1.6
-4.8
50.6
-2.0
25.0
54.6
76.9
2.3
18.1

2023 f
6.4
5.2
-1.7
7.2
5.7
1.1
6.4
1.7
7.0
7.3
2.5
-3.6
1.6
-3.8
50.7
-1.5
24.3
53.9
75.9
3.1
18.0

EQUATORIALGUINEA
Table 12020

P o pulatio n, millio n

1.4

GDP , current US$ billio n

9.6

GDP per capita, current US$

6857.1

Scho o l enro llment, primary (% gro ss)aaLife expectancy at birth, years
To tal GHG Emissio ns (mtCO2e)

Recent developments

Key conditions andchallenges

61.8
58.7
22.7

Source: WDI, M acro Poverty Outlook, and official data.
(a) WDI for School enrollment (201 5); Life expectancy (201 9).

After a six-year recession and despite
the COVID-19 crisis, growth is expected to rebound in 2021 and 2022
owing to stronger hydrocarbon production. In the medium term, however, theeconomy is projected to fall back into
recession, as existing oil wells speedilyreach maturity. A protracted COVID19 pandemic is a key downside risk tothis outlook, and there is currently no
reliable data to track poverty.

Weak governance, a poor business environment, and a slow build-up of humancapital have delayed Equatorial Guinea’s
economic diversification from a dominanthydrocarbon sector. While it is classified
as an upper-middle-income country,
Equatorial Guinea ranks consistently
among the worst performers globally on
control of corruption (percentile rank of
0.5 in 2019) and on business climate, andit has a low life expectancy at birth of
only 58.7 years.
In recent years, the economy has contracted, and fiscal and external imbalances
have increased due to both lower hydrocarbon prices and a declining oil sector,
resulting in inadequate resources to address social inequalities and widespreadpoverty. The impact of the COVID-19 pandemic highlighted the need to diversify the
economy and undertake deep structuraland governance-related reforms to securesocial cohesion and put the country on afiscally sustainable development path. In acontext of data paucity to track poverty,
the Living Standard Measurement Survey(LSMS), planned for 2021Q4, will be key tobenchmark poverty incidence. The LSMS
will be used as a basis for a poverty assessment, with the aim to understand challenges faced by low-income households
and inform policies aimed at reorienting
the current National Economic and Social
Development Plan (2021-2035).

FIGURE 1 Equatorial Guinea / Expected versus actual
government expenditures (as of end-June 2021, CFA billions)

After a six-year recession and despite the
COVID-19 crisis and related containment
measures, economic growth is expected
to rebound and reach 3.8 percent in 2021
(up from a contraction of 4.9 percent in2020), mainly due to stronger hydrocarbon production, especially of liquefied
natural gas, which benefited from a backfilling project related to the Alen production field. However, workers in the service sector have been particularly affected by income losses during the pandemic, and the share of the population living
below the poverty line is expected tohave increased because of the country’s
limited social safety nets. Credit growth
remains affected by the continuous decline in public infrastructure projects,
with banks’ balance sheets suffering fromthe government’s domestic arrears withconstruction companies.
Stronger hydrocarbon revenues fromhigher production and prices, coupledwith government expenditure moderation, are expected to narrow the country’s
fiscal deficit from 3.3 percent of GDP in2020 to 0.7 percent of GDP in 2021. As of
end-June, the expenditure execution rate
remained very low (59 percent) compared
to what was planned in the 2021 budget(Figure 1). It is, however, expected to improve in the second half of the year, as adelay in expenditure recording has been
observed in previous budget cycles. The
narrowing of the fiscal deficit underlines
the government’s limited financial support

FIGURE 2 Equatorial Guinea / Non-income poverty indicators

CFA billions

Mortality rate,
under-5 (per 1,000
live births)
300%

600
500

200%

400

100%
300

Prevalence ofanemia amongchildren (% ofchildren ages 6-59
months)200
100

Source: National authorities.

Maternal mortality
ratio (modeled
estimate, per100,000 live births)

EQG relative to Sub-Saharan Africa average
EQG relative to Middle income countries average
Unity benchmark

0Expected in budget law

0%

Actual value

Source: World Development Indicators (WDI).

MPO 228 Oct 21

to households and the private sector
throughout the COVID-19 crisis.
Higher hydrocarbon export receipts andthe exceptional allocation of additional
Special Drawing Rights (estimated to beabout two thirds of the country’s totalinternational reserves) are expected to
improve Equatorial Guinea’s external position in the short term. The current account balance is, however, projected toremain negative in 2021 (-4.7 percent ofGDP), although it is expected to improvecompared to 2020 (-10.9 percent of GDP).

OutlookAfter a short-lived rebound in 2021 and
2022, the economy is projected to fall backinto recession in 2023, as existing oil wells
will reach maturity and reduce production. Also, major projects, such as the Fortuna gas project, would remain in thepipeline. Under this baseline, GDP per
capita will fall to 13 percent below the prepandemic level in 2019 at the end of theforecast horizon. In the absence of meaningful efforts to diversify the economy
away from hydrocarbons, GDP per capita
would take close to two decades to return
to its pre-pandemic level. With growth
expected to slow down in the medium
term, unemployment and poverty arelikely to increase. The forthcoming LSMS
should help to overcome the limited information on social indicators and design aneffective social policy going forward.
This outlook is subject to downside
risks related to the management of the

TABLE 2 Equatorial Guinea / Macro poverty outlook indicators

Real GDP growth, at constant market prices
Private Consumption
Government Consumption
Gross Fixed Capital Investment
Exports, Goods and Services
Imports, Goods and Services
Real GDP growth, at constant factor prices
Agriculture
Industry
Services
Inflation (Consumer Price Index)
Current Account Balance (% of GDP)Net Foreign Direct Investment (% of GDP)
Fiscal Balance (% of GDP)
Debt (% of GDP)
Primary Balance (% of GDP)
GHG emissions growth (mtCO2e)
Energy related GHG emissions (% of total)

pandemic at the national and global level, and to a further degradation of banks’balance sheets due to the accumulation of
the government’s domestic arrears. Increased spending pressures linked to a
prolonged COVID-19 crisis and government difficulties in securing external financing could further negatively affectthe fiscal and current account balances.
In particular, slow implementation ofcritical structural and governance reforms could not only delay budget support disbursements under the current
International Monetary Fund program
but could also affect total factor productivity. On another hand, a stronger-thanprojected performance of the hydrocarbon sector (due to higher-than-expected
capacity and prices) represents a major
upside risk to the outlook.

(annual percent change unless indicated otherwise)
2018
-6.2
3.4
1.6
-10.1
-5.7
6.2
-6.2
-2.4
-11.7
5.8
1.3
-2.8
3.0
0.1
42.1
0.8
2.5
26.0

2019
-6.0
3.4
-4.5
-55.8
-6.2
-9.0
-6.0
-5.8
-8.7
-1.2
1.2
-1.6
5.3
2.0
45.9
2.7
-3.5
25.6

2020
-4.9
3.4
-5.3
-42.1
-9.0
-7.8
-5.0
0.4
-6.8
-2.1
5.8
-10.9
3.9
-3.3
52.3
-2.0
1.7
24.8

2021 e
3.8
2.9
0.8
-16.0
3.5
-0.8
3.8
2.8
5.1
1.8
3.5
-4.7
5.5
-0.7
44.8
0.8
1.6
26.6

So urce: Wo rld B ank, P o verty & Equity and M acro eco no mics, Trade & Investment Glo bal P ractices. Emissio ns data so urced fro m CA IT and OECD.
No tes: e = estimate, f = fo recast.
NA

MPO 229 Oct 212022 f
1.5
2.0
-1.3
-12.0
1.8
0.5
1.5
1.4
1.1
2.2
3.4
-5.2
5.1
-1.9
44.7
-0.4
1.1
28.0

2023 f
-0.9
1.5
0.0
-14.0
-1.8
0.3
-0.9
1.4
-2.0
0.8
3.3
-4.8
5.1
-2.1
45.9
-0.6
0.5
29.0

ERITREA

Key conditions andchallenges

Table 12020

P o pulatio n, millio n

3.5

GDP , current US$ billio n

2.1

GDP per capita, current US$

600.0

Scho o l enro llment, primary (% gro ss)

a

68.4

a

66.3

Life expectancy at birth, years
To tal GHG Emissio ns (mtCO2e)

8.0

Source: WDI, M acro Poverty Outlook, and official data.
(a) WDI for School enrollment (201 8); Life expectancy (201 9).

Real GDP growth is expected to reboundto 2.9 percent in 2021 after plummeting
to -0.6 percent in 2020, supported by external demand uptake and the resumptionof domestic activity. A significant boost to
growth is expected in 2022 supported by
new mining developments, althoughheightened risks still cloud the mediumterm outlook due to the country’s isolation and lack of access to external financing. Poverty data, like national accounts
information, have not been produced overthe last decade.

The lifting of UN sanctions in November
2018 marked Eritrea’s emergence from a
decade of international isolation. Efforts toshift from a centrally planned to a marketled economy have been slow and sporadic, and large SOEs dominate economic
activity. Monetary policy is characterized
by administrative measures, fiscal dominance, and a fixed exchange rate regime
pegged to the US dollar, enabled by severe import restrictions in a context of low
foreign exchange reserves. The banking
system is largely lending to the government and lacks international correspondent banks, while payment and settlement
systems are absent. The country is among
the most vulnerable and least adapted toclimate change in Sub-Saharan Africa, andfrequent weather shocks pose a heavy
burden for the economy and rural livelihoods. The mining sector, which started
operating in 2011, accounts for over
90 percent of total exports, yet contributions to budget revenues are limited.
The Covid-19 crisis hit Eritrea amid a hiatus in its reengagement with development
partners, leaving it without needed external funding. In addition, informal crossborder trade was affected by the conflictin northern Ethiopia. Yet, Eritrea’s isolation moderated the magnitude of the initial external shock.
The emergency conditions prevailing in
the country over the past decade have led

to data production capacity constraints.
National accounts data are limited tounofficial GDP estimates by the Ministryof Finance, inflation estimates cover only
the capital, Asmara, and full balance of
payments accounts are missing. The last
population census in Eritrea took place
more than 25 years ago. Therefore, little
is known about poverty. Data from
1996/97, covering only urban areas, suggests that poverty was widespread witharound 70 percent of the population living in Poverty.

Recent developments
Real Real GDP growth is expected to rebound to 2.9 percent in 2021 after plummeting to -0.6 percent in 2020 amid theCovid-19 crisis. Recovery comes on theback of external demand uptake and theresumption of economic activity following
the phasing out of restrictions imposed at
the onset of the Covid-19 pandemic. Inflationary pressures that build up following
the closure of the border with Ethiopia
after its temporary opening for twomonths in 2019 are expected to ease in
2021, and inflation to hover at 4.3 percent.
The external current account surplus is set
to increase to 12.4 percent of GDP in 2021
from 11 percent the year before as thegrowth in commodity exports exceeds therecovery in imports, allowing for foreignexchange reserves to rise to around threemonths of imports from two months in
2020. Results disclosed in June 2021 after
extensive testing over a period of six

FIGURE 1 Eritrea / Evolution of total public debt

FIGURE 2 Eritrea / Primary and overall fiscal balances

Percent of GDP
300

Percent of GDP
6

250

4

Overall fiscal balance200

Primary fiscal balance

2

150

0

100
-2
50

-4
0

2016

2017

Domestic debt

2018

2019
External debt

2020

2021p

2022p

-6

Total public debt

Source: Ministry of Finance, Planning and Economic Development.

2016

2017

2018

2019

2020

2021p

Source: Ministry of Finance, Planning and Economic Development.

MPO 230 Oct 212022p

months by the Colluli Mining Share Company confirmed that the project’s sulphateof potash production rates align with aprevious front-end engineering and design study. Furthermore, results indicatedthat production can be carried out using
filtered seawater, thus improving the project’s environmental footprint and lowering its opex, capex and maintenance costs.
Following restrictions on potash tradewith Belarus introduced by the EU in June
2021, the US, UK and Canada imposed
sanctions on August 9 on the large Belarusian SOE Belaruskali, one of the largest
world producers of potash fertilizers accounting for 21% global supply in 2019.
UK and Canada sanctions are effective
immediately, while US sanctions will go
into effect on December 8, prospectively
reducing global availability of the crop
nutrient and pushing up its prices.
As economic activity bounces back, the risein government revenues is expected toshrink the fiscal deficit to 4.2 percent in
2021 from 4.8 in 2020. Public spending is
expected to remain roughly unchanged,with the construction work associated to

the Colluli and Asmara mines driving thecontinued capital expenditures. Public debt
is expected to hover at 247.5 in 2021, of
which 80 percent is owed to domestic
banks. Nevertheless, fiscal and domestic
debt outcomes remain uncertain given frequent data revisions due to reporting lags
driven by widespread manual processes.

OutlookReal GDP is expected to grow at 4.8 percent in 2022 as the Colluli mine starts exporting at full capacity. Over the medium
term, growth of real output could continue at about 4 percent, supported by sustained mineral exports and positive spillover effects from the new potash mine tofertilizer production, enhancing agricultural productivity and improving livelihoods and food security. With sanctions
restricting Belarusian exports of potash,
exports of other producers could see aboost in volume and value that could potentially benefit Eritrea.

TABLE 2 Eritrea / Macro poverty outlook indicators

Real GDP growth, at constant market prices
Private Consumption
Government Consumption
Gross Fixed Capital Investment
Exports, Goods and Services
Imports, Goods and Services
Real GDP growth, at constant factor prices
Agriculture
Industry
Services
Inflation (Consumer Price Index)
Current Account Balance (% of GDP)Net Foreign Direct Investment (% of GDP)
Fiscal Balance (% of GDP)
Debt (% of GDP)
Primary Balance (% of GDP)
GHG emissions growth (mtCO2e)
Energy related GHG emissions (% of total)

However, downside risks are significant.
The emergence of new vaccine-resistantCovid-19 variants could hamper global
economic recovery, negatively impacting
exports. Additionally, Eritrea is currently
the only African country that has not yet
started vaccinating its citizens against
Covid-19 within the scope of a national
campaign, which heightens health risks andcould set back economic recovery if a newoutbreak forces the return of restrictions.
Finally, severe climate vulnerabilities continue to burden Eritrea and could worsen in
coming years. The fragile macroeconomic
situation and severe credit constraints leave
the country with little space to boost preparedness facing these risks, and to control
damages should they materialize.
Against this backdrop, the reengagementwith the international community could
result in a pathway to significantly reduce
external arrears and provide muchneeded financing to build essential infrastructure over the medium term, to help
abate the risks associated with climatechange and jump-start the private andfinancial sectors.

(annual percent change unless indicated otherwise)
2018
13.0
13.2
0.8
-62.8
8.9
18.7
12.8
24.0
11.1
4.9
-14.4
15.4
2.9
4.3
267.1
5.7
1.9
26.6

2019
3.8
5.5
39.3
67.5
-5.0
1.4
3.7
27.0
13.0
-26.0
-16.4
12.1
3.9
-1.5
271.8
0.2
4.3
26.1

2020
-0.6
-1.9
16.4
152.2
-5.4
-3.5
-0.7
-0.5
-0.7
-1.0
4.8
11.0
3.8
-4.8
263.4
-3.2
-2.8
26.3

2021 e
2.9
3.4
9.1
17.8
46.4
41.4
2.9
4.5
1.4
1.9
4.3
12.4
3.6
-4.2
247.5
-2.7
3.1
26.6

So urce: Wo rld B ank, P o verty & Equity and M acro eco no mics, Trade & Investment Glo bal P ractices. Emissio ns data so urced fro m CA IT and OECD.
No tes: e = estimate, f = fo recast.
NA

MPO 231 Oct 212022 f
4.8
7.5
7.4
-9.7
11.1
9.2
4.8
3.1
10.2
1.1
4.2
12.7
3.4
-0.4
225.1
0.9
4.9
27.6

2023 f
3.8
5.9
5.0
0.7
3.9
4.7
3.8
2.5
7.6
0.9
2.5
11.6
3.3
-0.2
211.1
1.0
3.8
27.8

ESWATINI

Key conditions andchallenges

Table 12020

P o pulatio n, millio n

1.2

GDP , current US$ billio n

4.0

GDP per capita, current US$

3333.3

Internatio nal po verty rate ($ 1.9)

a

29.2
a

52.1

a

72.0

Lo wer middle-inco me po verty rate ($ 3.2)
Upper middle-inco me po verty rate ($ 5.5)
a

54.6

Gini index

Scho o l enro llment, primary (% gro ss)

b

114.7

b

60.2

Life expectancy at birth, years
To tal GHG Emissio ns (mtCO2e)

2.9

Source: WDI, M acro Poverty Outlook, and official data.
(a) M ost recent value (201 6), 201 1 PPPs.
(b) WDI for School enrollment (201 8); Life expectancy (201 9).

Preliminary estimates for the first quarterof 2021 suggest that growth was on therebound, but this has been reversed due tothe political unrest that happened in June
2021, and the second-round effects of the
COVID-19 pandemic. The fiscal deficit isnarrowing in 2021 as domestic revenues
are recovering while an increase in capital
expenditure is partly offset by declining
recurrent expenditure. Despite signs of
economic recovery in the face of COVID19, poverty levels have stagnated.

Eswatini is trapped in a low investment
and growth path since the end of apartheid in South Africa. Private investment
has been low, constrained by unfavorable
investment climate. As a result, Eswatini,a small state, remains over reliant on the
public sector and the sugar monoculture.
The public sector largely depends on volatile Southern African Customs Union(SACU) revenues, which translate into
significant fluctuations in public spending
and pose a challenge to the managementof fiscal resources. SACU revenues havebeen declining mainly due to the instability in the global economy, trade liberalization, the associated tariff reductions, andlow growth of the South Africa economy.
Domestic revenue mobilization is improving but slowly.
Poverty levels have historically been high,compounded by high inequality, unemployment as well as high prevalence ofHIV. Progress toward reducing poverty
has been slow, with close to a third of the
population living below the US$1.90/day(2011 PPP) international poverty line.
This, together with high inequality levels– with a consumption per capita Gini index of 54.6 in 2017 – increases vulnerability to economic shocks. Unemployment
was high even before COVID-19, affecting
23 percent of the labor force in 2016. At
about 27 percent, Eswatini has the world’s
highest HIV prevalence rate among adults

FIGURE 1 Eswatini / Fiscal deficit and SACU
revenue
Percent of GDP
16

aged 15 to 49. Vulnerability to drought inthe context of heavy reliance on smallholder agriculture, is associated with highincidence of food insecurity.
COVID-19 exposed Eswatini’s structural
weakness further. Overall, economic recovery remains uncertain and hinges on
the evolution of the pandemic, rollout ofthe vaccines and the pace of recovery of
the global and regional economies, particularly that of South Africa. The politicalunrest that happened in June 2021 further
exposed the governance challenges andwithout a comprehensive solution to theunderlying causes of the unrest, the risk of
future unrest will continue to linger andcreate uncertainty for medium term private investment.

Recent developments
Real GDP increased by 9.0 percent (year-on-year) in 2021Q1 driven, by a strong industry performance. Manufacturing recovered
due to a peak in export demand following
the easing of lockdown measures in key
destination markets in the region, and construction has also improved. However,political unrest interrupted economic recovery, with an estimated loss of 3 billion
Emalangeni ($210 million) of business assets (through arson and pillaging), andabout 5,000 people losing their livelihoods.
Sectors that were largely affected by theunrest include retail and wholesale, manufacturing, and transport.
Total government revenue fell (due todeclining SACU revenues) by 8 percent

FIGURE 2 Eswatini / Actual and projected poverty rates andreal private consumption per capita
Percent of GDP
-

14

-1

12

-2

Poverty rate (%)

Real private consumption per capita (constant LCU)

100

28000
27000

80

26000

-3

10

-4

8

-5

6

60

25000

40

24000

-6

4

-7

2

-8

-

-9
2014

2015

2016

2017

SACU revenues (lhs)
Source: Ministry of Finance, Eswatini.

2018

2019

2020

23000
20

22000

0

21000
2009

2021

2011

2013

2015

International poverty rate
Upper middle-income pov. rate

Fiscal deficit (rhs)

Source: World Bank. Notes: see Table 2.

MPO 232 Oct 21

2017

2019

2021

2023

Lower middle-income pov. rate
Real priv. cons. pc

during the first seven months of 2021,
compared to the same period in 2020, although domestic revenue collection recovered. Government expenditures increased
over the period compared to the same
period in 2020, driven by capital spending, while recurrent spending was contained, mainly due to COVID-19 measuresthat limited expenditure on goods andservices. However, the political unrest
has led to unbudgeted spending on publicorder expenditures to contain the protests,
and a US$35 million in funds have beenreleased to compensate businesses thatwere destroyed during the unrest.
The central bank has maintained an accommodative monetary policy stancesince the start of the COVID-19 pandemic.
The discount rate has been kept at 3.75
percent since July 24, 2020. Meanwhile
inflationary pressures remain low, averaging 3.9 percent (year-on-year) for the firstseven months of 2021.Cumulative January-July 2021 trade balance was in deficit asimports grew more than exports.
Despite signs of economic recovery in theface of COVID-19, poverty reduction isestimated to have slowed down. This is

one of the main causes of political unrest
that led to loss of livelihoods and thus
reversed the gains the country had madeas part of recovery from the pandemic.
Food insecurity remains a challenge,
linked to vulnerability to economic shocks
as well as variable and generally low performance of the agriculture sector.

Outlook
The economy is projected to recover modestly in 2021 and inch further in 2022, as the
economy recovers from the shocks inducedby the COVID-19 pandemic and the political unrest. Inflation is expected to increasein 2021, partly due to rising oil and domestic administered prices, but would remain
within the 3-6 percent target band in 2022.
Economic recovery is expected to support amodest reduction in poverty levels, with
the US$1.90/person/day international poverty rate projected to reach 28.4 percent in
2022 and 28.3 percent in 2023.
Though the second-round effects of thepandemic are anticipated to manifest

TABLE 2 Eswatini / Macro poverty outlook indicators

Real GDP growth, at constant market prices
Private Consumption
Government Consumption
Gross Fixed Capital Investment
Exports, Goods and Services
Imports, Goods and Services
Real GDP growth, at constant factor prices
Agriculture
Industry
Services
Inflation (Consumer Price Index)
Current Account Balance (% of GDP)Net Foreign Direct Investment (% of GDP)
Fiscal Balance (% of GDP)
Debt (% of GDP)
Primary Balance (% of GDP)
International poverty rate ($1.9 in 2011 PPP) a,b
Lower middle-income poverty rate ($3.2 in 2011 PPP) a,b
Upper middle-income poverty rate ($5.5 in 2011 PPP) a,b
GHG emissions growth (mtCO2e)
Energy related GHG emissions (% of total)through a further reduction in SACU
revenues in 2022, the fiscal deficit is projected to fall in the medium term, as domestic revenues recover, and authorities
start to implement three-year Fiscal Adjustment Plan. However, uncertainty on
further political unrest and COVID-19
may continue to keep government expenditure high. The expected disbursement by the World Bank and AfDB will
help to cushion the financing gap andkeep domestic expenditure arrears low in
2021 and 2022. Debt levels will remainhigh in the medium term, as the country
continues to borrow, responding to domestic challenges.
The current account surplus is projected
to decline in 2022, partly reflecting declining SACU revenues. However, exports areprojected to increase following the rolloutof vaccines in key export markets while
implementation of fiscal adjustments willcontain the growth of imports. Gross international reserves are projected to remain above the 3-month international
benchmark in 2022, boosted by IMF SDRs
and access to external loans from WorldBank and African Development Bank.

(annual percent change unless indicated otherwise)
2018
2.4
1.3
-4.3
35.7
-3.6
4.7
2.0
5.9
-0.3
2.9
4.8
1.6
-1.0
-7.0
34.3
-5.7
27.5
51.3
71.0
2.5
45.7

2019
2.6
-1.5
-2.0
1.0
16.3
1.5
2.7
0.9
5.5
1.1
2.6
4.7
-2.4
-6.2
40.0
-4.9
28.5
51.9
71.6
0.7
46.4

2020
-1.9
0.5
6.7
-5.9
-2.4
-0.7
-1.7
-5.4
-9.7
4.5
3.9
6.5
-0.2
-6.7
41.7
-4.5
28.6
52.0
71.7
-2.5
46.1

2021 e
1.5
1.4
7.2
2.8
3.0
5.5
1.5
3.7
3.3
0.1
4.0
5.2
-0.7
-6.1
46.1
-4.3
28.6
51.9
71.6
1.2
45.7

So urce: Wo rld B ank, P o verty & Equity and M acro eco no mics, Trade & Investment Glo bal P ractices. Emissio ns data so urced fro m CA IT and OECD.
No tes: e = estimate, f = fo recast.
NA(a) Calculatio ns based o n 2016-HIES.A ctual data: 2016. No wcast: 2017-2020. Fo recast are fro m 2021to 2023.
(b) P ro jectio n using neutral distributio n (2016) with pass-thro ugh = 0.7 based o n private co nsumptio n per capita in co nstant LCU.

MPO 233 Oct 212022 f
1.8
1.8
0.7
3.8
3.2
3.1
1.8
4.1
3.4
0.4
4.2
4.8
-0.8
-5.3
50.5
-2.4
28.4
51.8
71.4
1.5
45.2

2023 f
1.7
2.1
0.6
3.1
3.5
3.6
1.7
3.5
1.9
1.3
4.3
5.1
-0.8
-1.8
51.7
0.9
28.0
51.4
71.1
1.3
44.8

ETHIOPIA

Key conditions andchallenges

Table 12020

P o pulatio n, millio n

115.0

GDP , current US$ billio n

110.2

GDP per capita, current US$

Ethiopia has been among the fastest growing countries in the world, with GDP expanding at an average rate of 10 percent
during 2004-2020. Growth has been driven
by large-scale public investment in infrastructure. While poverty declined byabout 10 percentage points during 20042016, gains are modest when compared toother countries that saw fast growth, andinequality has increased in recent years.
The limitations of the state-led development model in Ethiopia have become apparent. Structural transformation remains
incipient, and the role of the private sector
is constrained by SOE dominance and an
uneven playing field. The financing of thelarge capital investments coupled with aloss in competitiveness, caused by anovervalued exchange rate, have put thecountry at high risk of debt distress. Acknowledging these shortcomings, the authorities launched a Homegrown Economic Reform Agenda in September 2019,
aiming to foster efficiency and introduce
competition in key growth-enabling sectors (energy, logistics, telecom), improvethe business climate, and address macroeconomic imbalances. Among othermeasures, authorities are expected toadopt a market-determined exchange rateand introduce a modern monetary policy
framework by end-2022.
Downside risks loom large over the outlookpresented below. The armed confrontation

958.3

Internatio nal po verty rate ($ 1.9)

a

30.8
a

68.9

a

90.2

Lo wer middle-inco me po verty rate ($ 3.2)
Upper middle-inco me po verty rate ($ 5.5)a

35.0

Gini index

Scho o l enro llment, primary (% gro ss)

b

b

101.0
66.6

Life expectancy at birth, years
To tal GHG Emissio ns (mtCO2e)

211.1

Source: WDI, M acro Poverty Outlook, and official data.
(a) M ost recent value (201 5), 201 1 PPPs.
(b) WDI for School enrollment (201 5); Life expectancy (201 9).

While data confirms the recovery of exports and foreign direct investment, asignificant reduction in agriculture production growth and stagnant electricity
and cement production suggest growth
was sluggish in FY21. According tophone surveys, poverty had increased by
December 2020. Inflation surged in June
and July 2021, and the authorities have
responded by halting money creation andfreezing bank loan disbursements. Prospects for economic rebound in FY22 andbeyond may be jeopardized by escalationin the ongoing armed conflict.

that started in November 2020, initiallyconfined to Tigray, has spread to otherregions, and there are risks that further
escalation would affect agriculture production, food security, and growth. There
are also risks that macroeconomic stability
is harmed and economic reforms are delayed or reversed.

Recent developments
Agriculture is estimated to have slowed
down, with crop production growth easing to below 2 percent during the main
harvest season (fall 2020), compared to 6.2
percent in the same period of the previous
year. Electricity generation and cement
production stagnated in FY21.
After being harshly hit by the pandemic,
most external sector variables reboundedin FY21. Merchandise exports grew at 21.1
percent, boosted by a surge in gold trade.
Growth in coffee exports reached 6.3 percent, supported by international prices,and cut flower exports recovered. However, garment and leather exports contracted. Exports of services grew by 3.1 percent
despite transport growth, which includes
Ethiopian Airlines activities, was negative(-4.4 percent). Net private transfers, including remittances, recovered strongly(22.3 percent). Robust export and remittances performance coupled with contained imports growth resulted in the current account deficit narrowing further in
FY21. Net foreign direct investment inflows reached nearly US$ 4 billion in
FY21, a 64 percent increase, lifted by the

FIGURE 1 Ethiopia / Export recovery, quarter-on quarter growth

FIGURE 2 Ethiopia / Share of respondents who worked in
the preceding seven days

Percent change
40

Percent
100

30

90.7

93.2

87.3

87.4

90
20

80

10

80.3

0

75.6

70
-10

60

-20

Rural

-30
Q1
FY20

Q2

Q3

Q4

Merchandise exports
Source: National Bank of Ethiopia.

Q1
FY21

Q2

Q3

Q4

Service exports
Sources: WB household surveys on Covid-19 impacts.

MPO 234 Oct 21

Urban

National

award of a new commercial license in thetelecom sector to a consortium led by Kenya's Safaricom.
Despite recovery domestic direct and indirect revenue in FY21, revenue collection
remained at about 10.5 percent of GDP(similar to FY20), as there was a significant
drop in foreign trade tax revenue. On the
expenditure side, increases in recurrent
expenses are expected to be compensatedby some decline in capital spending, withthe overall balance estimated to reach 3
percent of GDP in FY21.
Inflation keeps increasing, and reached30.4 percent in August, driven by risingfood prices. Authorities pressed thebreaks on base money growth in June,bringing it to just 7.2 percent in FY21, following double-digit-growth for most of
the year. Broad money growth is estimated to have remained strong, reachingnearly 30 percent in FY21, but the recent
central bank order to freeze bank loan
disbursements is expected to cool thattrend off. The parallel market premium
surged to over 50 percent in early august,driven by uncertainty, prior to declining
back to below 30 percent.

While jobs have been recovering after adrop at the onset of the pandemic, theurban employment rate in January 2021
remained lower relative to pre-COVID-19
time. This, coupled with the slow agricultural growth, is expected to have led to arise in poverty. Indeed, estimates based on
the high-frequency phone survey suggestthat by December 2020 poverty had increased compared to 2019, particularly inurban areas.

Outlook
While strong lending trends are likely tohave supported some growth in industry
and services, the slowdown in agriculture
and the poor performance of electricity
generation and cement production suggest economic activity slowed down overall in FY21; the projected growth rate forthe year remains like that of the spring
release of the Macro-Poverty Outlook.
Meanwhile, the expected recovery ingrowth in FY22 and FY23 has been revised
downwards, as the spread of the armed

TABLE 2 Ethiopia / Macro poverty outlook indicators

Real GDP growth, at constant market prices
Private Consumption
Government Consumption
Gross Fixed Capital Investment
Exports, Goods and Services
Imports, Goods and Services
Real GDP growth, at constant factor prices
Agriculture
Industry
Services
Inflation (Consumer Price Index)
Current Account Balance (% of GDP)
Fiscal Balance (% of GDP)
Debt (% of GDP)
Primary Balance (% of GDP)
International poverty rate ($1.9 in 2011 PPP) a,b
Lower middle-income poverty rate ($3.2 in 2011 PPP) a,b
Upper middle-income poverty rate ($5.5 in 2011 PPP) a,b
GHG emissions growth (mtCO2e)
Energy related GHG emissions (% of total)

conflict since June is likely to affect economic activity in several areas and could
disrupt key trade corridors. This outlook
assumes that the planned macroeconomic
and structural reforms are implemented,
supporting a recovery in foreign direct
investment, exports, and economic growth,
as well as a decline in inflation in FY23 andbeyond. As stated above, however, there
are considerable downside risks.
While employment and income levels havebeen recovering since the huge drop at thebiggening of the pandemic, vulnerability is
expected to increase significantly for thefollowing reasons. First, the impact on employment and income was worse on households who were less advantaged to begin
with; second, despite the increase in employment since early times of the pandemic, recovery in wage employment has beenslow and as a result more people become
dependent on informal jobs such as selfemployment, casual employment and family work; and third, the ongoing armed conflict which started in Tigray and recently
expanded to other parts of the country isalready disrupting the livelihoods of manyand there is also a risk of famine.

(annual percent change unless indicated otherwise)2017/18
7.7
5.3
3.6
6.8
5.0
0.2
7.7
3.5
12.2
8.7
14.5
-6.0
-2.8
60.8
-2.3
27.6
65.6
85.8
0.6
24.9

2018/19
9.0
5.1
7.2
15.1
3.0
5.4
9.0
3.8
11.5
12.0
12.5
-5.1
-2.5
57.3
-2.0
26.5
64.4
84.2
1.7
24.9

2019/20 2020/21 e 2021/22 f 2022/23 f
6.1
2.4
4.3
6.5
5.0
2.5
3.8
5.1
0.6
8.1
13.9
9.9
5.6
-0.1
2.0
6.8
3.4
5.5
6.2
8.4
-1.9
2.0
4.8
5.9
6.1
2.4
4.3
6.5
4.3
1.8
2.5
4.0
9.6
2.7
6.5
11.0
5.2
2.7
4.2
5.3
19.9
20.2
21.9
10.8
-4.1
-2.5
-3.3
-3.8
-2.8
-3.0
-2.6
-2.0
56.5
57.6
55.0
51.2
-2.4
-2.3
-2.0
-1.4
25.9
25.9
25.6
25.0
63.7
63.8
63.4
62.7
83.4
83.4
83.0
82.0
1.5
0.9
1.2
3.4
24.0
22.7
21.5
22.0

So urce: Wo rld B ank, P o verty & Equity and M acro eco no mics, Trade & Investment Glo bal P ractices. Emissio ns data so urced fro m CA IT and OECD.
No tes: e = estimate, f = fo recast.
NA(a) A ctual data: 2015. No wcast: 2016-2020. Fo recast are fro m 2021to 2023.
(b) P ro jectio n using po int to po int elasticity at regio nal level with pass-thro ugh = 0.87 based o n GDP per capita in co nstant LCU.

MPO 235 Oct 21

GABONKey conditions andchallenges

Table 12020

P o pulatio n, millio n

2.2

GDP , current US$ billio n

15.0

GDP per capita, current US$

6818.2

Internatio nal po verty rate ($ 1.9)

a

3.4
a

11.2

a

32.2

Lo wer middle-inco me po verty rate ($ 3.2)
Upper middle-inco me po verty rate ($ 5.5)a

38.0

Gini index

Scho o l enro llment, primary (% gro ss)bLife expectancy at birth, years
To tal GHG Emissio ns (mtCO2e)

b

139.9
66.5
13.8

Source: WDI, M acro Poverty Outlook, and official data.
(a) M ost recent value (201 7), 201 1 PPPs.
(b) WDI for School enrollment (201 1 ); Life expectancy (201 9).

Gabon’s economy contracted by 1.8
percent in 2020 as the COVID-19 crisis
induced a downturn in global demand
and a fall in oil prices. There were,
however, signs of recovery in 2021Q1,
driven by the booming mining andwood sectors. The pandemic has led to asignificant reduction in revenues, leading to record high debt at end-2020.
The medium-term outlook suggests a
gradual economic recovery but limited
poverty reduction before 2023.

As in other countries in the Central African Economic and Monetary Community,
the COVID-19 pandemic and the sharp
fall in oil prices had an adverse impact on
Gabon’s economy in 2020 and highlighted
the vulnerabilities associated with oil dependence. While there were signs of recovery in 2021Q1 and oil prices surged in
the first half of 2021, inadequate governance and a poor business climate remain
major challenges for Gabon to direct its
resource wealth to sustainable development and ensure broad-based improvements in living conditions.
Despite the challenging economic context linked to the pandemic, Gabon
needs to diversify the economy and reduce its vulnerability to terms of trade
shocks. In addition to creating a credible
medium-term fiscal framework that favors enhanced domestic revenue mobilization and more targeted fiscal spending in support of vulnerable groups, itneeds to enhance transparency in natural resource management to reduce fiscal vulnerabilities.
Continuing the vaccination campaign will
help contain COVID-19 and support theeconomic recovery. Gabon’s abundantnatural resources, strategic location, highurbanization, and small population are
major assets to accelerate poverty reduction, achieve shared prosperity, and embrace green growth policies and reduce its

dependence on hydrocarbons. Given its
youthful workforce and fast-growing population, Gabon also needs to prioritize
human capital development.
More than a year into the pandemic, living conditions have not returned to theirpre-crisis level, suggesting a long-lasting
effect of the pandemic on vulnerable
groups. Employment continues to sufferfrom the restrictive measures imposed by
the government to prevent new waves ofinfection, resulting in falling householdincome, especially for self-employed andinformal workers.

Recent developments
GDP contracted by 1.8 percent in 2020,
owing to lower oil production and a decline in the service sector. There weresigns of recovery in 2021Q1, driven by thebooming mining and wood sectors. As of
August 20th, almost 76,000 people havereceived their first vaccine dose (about 3.3
percent of the population) and 55,000 people the second dose (about 2.4 percent).
A fiscal deficit of 2.1 percent of GDP wasrecorded in 2020, reflecting lower oil
prices and additional financing needs
related to the pandemic. Gabon revised
its 2021 budget law to consider measures
to protect lives and livelihoods, including
the cost of vaccines. Preliminary data for
the first two months of 2021 indicate adecline in total revenues and a slightcontraction in current spending while
investment expenditure rose sharply
compared to the same period in 2020.

FIGURE 1 Gabon / Real GDP growth, fiscal balance andgovernment debt

FIGURE 2 Gabon / Actual and projected poverty rates andreal GDP per capita

Percent
4

60

2900000

50

2800000

40

2700000

50

30

2600000

40

202500000

10

2400000

Percent90
80

2

Poverty rate (%)

Real GDP per capita (LCU constant)

70
60

0

-2

30
-4

Real GDP growth, % change
Fiscal balance, % of GDP
Debt, % of GDP (rhs)

-6

2015

2016

2017

20
10

0

0

International poverty rate
Upper middle-income pov. rate

2018 2019e 2020f 2021f 2022f 2023f

Sources: Official data and World Bank calculations.

2300000
2005 2007 2009 2011 2013 2015 2017 2019 2021 2023

Source: World Bank. Notes: see Table 2.

MPO 236 Oct 21

Lower middle-income pov. rate
Real GDP pc

The stock of government debt rose to arecord high of 77.4 percent of GDP at end-2020, up from 59.8 percent of GDP ayear earlier, and Gabon continues to haveoutstanding external arrears.
The current account deficit widened to 6.0
percent of GDP, year-on-year, in 2020,
driven by a smaller trade surplus due to adrop in oil and non-mining exports. Yearon-year exports fell in 2021Q1 due to adrop in oil exports that was not compensated by strong manganese exports.
Meanwhile, imports declined, mostly
driven by lower imports of manufactured
and capital goods.
Despite the government’s response to thecrisis, the pandemic has had a significant
impact on vulnerable groups, and thepoverty rate is expected to reach 34.0 percent in 2021. Household survey data suggest that job losses increased from 16.9
percent (of those who were working before the pandemic) in November 2020 to21.5 percent in April 2021, with workers inretail being the most affected. While wages remain the main income source for 35
percent of households, 20 percent depended on remittances in April 2021. Almost
two-thirds of households have experienced income losses since April 2021, andaccess to essential goods has been deteriorating since November 2020.

OutlookGabon’s economy is projected to grow by
2.8 percent in 2022 and 3.0 percent in 2023.
Assuming the economy grows by 3.5 percent on average per year starting in 2024,
GDP per capita will only return to its preCOVID-19 level by 2027. Medium-term
growth depends on the government’s
commitment to fiscal consolidation, structural reforms, and economic diversification as part of the 2021–2023 Transformation Acceleration Plan. Gabon has received a new allocation of Special Drawing Rights from the International Monetary Fund equivalent to 1.7 percent ofGDP, providing additional liquidity andenhancing prospects for recovery.
In 2021, the fiscal deficit is projected towiden to 3.2 percent of GDP. Measures torationalize tax expenditure will contributeto an increase in revenue, while the rationalization of non-priority expenditure
would allow Gabon to increase investment expenditure. The authorities are
expected to accelerate fiscal consolidation
once the fallout from the pandemic subsides. As a result, the fiscal deficit is expected to narrow gradually over the medium term, and public debt is projected to

TABLE 2 Gabon / Macro poverty outlook indicators

Real GDP growth, at constant market prices
Private Consumption
Government Consumption
Gross Fixed Capital Investment
Exports, Goods and Services
Imports, Goods and Services
Real GDP growth, at constant factor prices
Agriculture
Industry
Services
Inflation (Consumer Price Index)
Current Account Balance (% of GDP)
Fiscal Balance (% of GDP)
Debt (% of GDP)
Primary Balance (% of GDP)
International poverty rate ($1.9 in 2011 PPP) a,b
Lower middle-income poverty rate ($3.2 in 2011 PPP) a,b
Upper middle-income poverty rate ($5.5 in 2011 PPP) a,b
GHG emissions growth (mtCO2e)
Energy related GHG emissions (% of total)

decline, driven by fiscal consolidation andthe economic recovery.
The current account deficit is projected togradually narrow in the medium term,
supported by higher oil prices and a resumption of investments in wood and agri
-businesses in the context of a global economic recovery. For the outer years of theforecast horizon, Gabon should be able tobenefit from the recent OPEC+ agreement
to gradually ease their output cuts.
Projections remain subject to downside
risks such as new COVID-19 infection
waves and a slow vaccine rollout impacting the recovery. Uncertainty surrounding the pandemic, institutional
capacity weaknesses, and the 2023 presidential election could also slow the implementation of structural reforms. Upside risks include a faster global recovery from the pandemic and higher international oil prices.
Due to current economic constraints andthe impact of the pandemic on employment and income, the share of Gabonesehouseholds living on less than US$5.5 per
day is expected to be 1.3 percentage point
higher in 2023 than the pre-pandemic poverty rate, reaching 33.7 percent. Assuming
the economy grows by 3.5 percent in 2024,
the poverty rate could return to its precrisis level by 2024.

(annual percent change unless indicated otherwise)
2018
0.8
-0.4
-21.5
81.7
1.4
51.2
0.7
9.5
-0.8
0.5
6.3
-2.1
-1.3
60.6
1.1
3.4
11.5
32.7
-0.5
19.1

2019
3.9
0.9
6.1
21.5
14.0
25.5
4.2
7.9
6.8
2.3
1.0
-0.9
1.4
59.8
3.6
3.4
11.3
32.3
-0.5
19.3

2020
-1.8
-2.0
5.5
-16.7
10.1
-6.0
-1.9
5.9
-2.2
-2.8
1.6
-6.0
-2.1
77.4
1.0
3.6
12.0
33.8
-0.5
19.6

2021 e
1.5
-0.3
2.8
7.7
6.8
9.5
1.5
3.0
4.3
-0.4
2.0
-4.8
-3.2
74.5
-0.2
3.6
12.1
34.0
1.9
20.1

So urce: Wo rld B ank, P o verty & Equity and M acro eco no mics, Trade & Investment Glo bal P ractices. Emissio ns data so urced fro m CA IT and OECD.
No tes: e = estimate, f = fo recast.
NA(a) Calculatio ns based o n 2017-EGEP .A ctual data: 2017. No wcast: 2018-2020. Fo recast are fro m 2021to 2023.
(b) P ro jectio n using neutral distributio n (2017) with pass-thro ugh = 0.7 based o n GDP per capita in co nstant LCU.

MPO 237 Oct 212022 f
2.8
1.1
-4.2
0.6
3.9
-0.7
2.8
5.0
6.3
0.3
2.0
-3.2
-1.1
71.8
1.6
3.6
12.1
34.0
0.9
19.3

2023 f
3.0
2.7
1.7
2.9
3.3
2.7
3.0
4.0
4.0
2.2
2.0
-2.4
0.3
67.9
3.2
3.6
11.9
33.7
0.8
18.7

THE GAMBIA
Table 1

Key conditions andchallenges
2020

P o pulatio n, millio n

2.4

GDP , current US$ billio n

1.9

GDP per capita, current US$

791.7

Internatio nal po verty rate ($ 1.9)

a

10.3
a

38.4

a

72.7

Lo wer middle-inco me po verty rate ($ 3.2)
Upper middle-inco me po verty rate ($ 5.5)a

35.9

Gini index

Scho o l enro llment, primary (% gro ss)

b

101.7

b

62.0

Life expectancy at birth, years
To tal GHG Emissio ns (mtCO2e)

3.4

Source: WDI, M acro Poverty Outlook, and official data.
(a) M ost recent value (201 5), 201 1 PPPs.
(b) M ost recent WDI value (201 9).

2020 witnessed a slight recession, driven by the pandemic-induced fall in tourism and private consumption. Despite
the crisis, external and fiscal deficits
were kept in check due to increased donor support. Remittances continue to
break records, but new COVID-19 variants dampen the tourism outlook.
Growth and poverty reduction are expected to gradually recover over the medium term. The outlook is subject todownside risks stemming from the speedof global recovery, the vaccine roll-out,and the pace of reforms.

Since the democratic transition of 2017,
the Government has taken important
steps to improve the rule of law, restore
macroeconomic stability, and reignite
growth, which averaged 6 percent between 2017-2019. Following strong economic performance and debt restructuring, The Gambia exited debt distress inearly 2020, paving the way for an IMF
Enhanced Credit Facility.
Despite progress with COVID-19 vaccination both within The Gambia and in
key tourist markets, recovery will be
gradual. The December presidential elections may increase security risks anddiscourage the 2021/22 tourism season
starting in October. Prospects of a tourism rebound are hampered by new variants and stringent entry requirements in
key markets, which also poses a challenge to poverty reduction. Additionally,
recent windstorm and heavy downpours
exposes vulnerable households to therisk of being pushed back or sliding
deeper into poverty.
As the risk of debt distress remains high,
The Gambia has limited fiscal policy
buffers to kickstart the economy. The
outlook is subject to downside risks
stemming from the depth and durationof the pandemic, vaccine-resistant virus
mutations, the deployment of vaccines,
the reform pace ahead of the elections
and climatic shocks.

FIGURE 1 The Gambia / Actual and projected fiscal andprimary balance
Percent of GDP
2

Recent developments
GDP growth fell to -0.2 percent in 2020 (3.1 percent in per capita terms). The services sector was affected most, as containment measures suppressed private consumption and tourism declined. Nevertheless, flight arrivals are increasing in
2021 but are still 70.7 percent lower in
H12021 than during the same period in
pre-pandemic 2019. Agricultural productivity and growth look positive thanks togood rains, although early season proved
dry. Strong private foreign inflows, especially remittances, continue to support
construction and commerce. Private credit
is starting to rebound, reflected in a strong
growth of 34.7 percent at end-July 2021 inloans to construction sector.
The current account deficit narrowed to
3.6 percent of GDP in 2020 (from 2019), as
the tourism drop was offset by remittances and official transfers. FDI financed the
deficit, while exchange rate remained stable. Remittances continue to break records, with 59 percent increase in H12021
compared to previous year, and 144 percent higher than in H12019. This has bolstered reserves that reached 4.7 months ofnext year’s imports in end-June 2021.
The Government registered a primary surplus in 2020, reducing the fiscal deficit to
2.1 percent of GDP, as donor grants supported most pandemic-related spending.
Tax collections reached 99 percent of the
pre-COVID-19 target, supported by therevision of reference prices combined withthe adoption of transactional-value-based

FIGURE 2 The Gambia / Actual and projected poverty rates
and real GDP per capita

Percent of GDP
85

1

Poverty rate (%)

Real GDP per capita (LCU constant)

80

28000

70

0

80

-1

27000

60
26000

50

-2

75

-3

40

25000

30

-4
70

-5

24000

20
23000

10

-6

-7

65
2018

2019

2020

Fiscal balance (% of GDP)
Debt (% of GDP, rhs)2021 e2022 f02023 fPrimary balance (% of GDP)

Sources: The Gambian authorities and World Bank estimates.

22000
2015 2016 2017 2018 2019 2020 2021 2022 2023
International poverty rate
Upper middle-income pov. rate

Source: World Bank Notes: see Table 2.

MPO 238 Oct 21

Lower middle-income pov. rate
Real GDP pc

customs and excise levies. Although expenditure remained stable, recurrent
spending increased to accommodate
COVID-19 needs, while reallocating funds
from lower-priority areas. However, capital expenditure declined due to pandemicrelated implementation challenges. Public
debt-to-GDP increased from 83 percent in2019 to 83.3 percent in 2020. Due to previous debt restructuring, relief under the
Debt Service Suspension Initiative (DSSI)
was modest (0.2 percent of GDP).
Headline inflation increased to 8.2 percent
y/y in July 2021, driven by food price increases. This continues the period of highfood inflation in 2021, averaging 9.9 percent till July 2021, compared to 6.5 percent
in the same period last year. Rising foodprices are undermining food security calling for continued government support.
The central bank continued with cautious
monetary easing, lowering the policy ratefrom 12.5 percent in end-2019 to 10 percent by May 2020 and maintaining thereafter, while reducing the statutory reserve
requirement ratio by 200 basis points to 13
percent in May 2020. Broad money continues to grow, by 23.3 percent at end-July
2021, supported by the build-up of net
foreign assets in the banking system.
The pandemic reversed gains in poverty
reduction. The international poverty rateincreased from 8.4 percent in 2019 to 9.2

percent in 2020, pushing over 25,000 people into poverty. High-frequency phonesurveys indicate that job losses (especiallyin services) peaked with the pandemic, at
26 percent in October 2020 and averaged
21 percent till June 2021, pushing vulnerable households into poverty.

Outlook
The economy is expected to gradually
recover in 2021, as private consumption isless constrained by lockdowns and large
public infrastructure projects are implemented. Over the medium-term, growthwould be spurred by services/tourism,
industrial and agricultural activity, andthe pandemic-induced adoption of digitaltechnologies. This assumes renewed focus
on structural reforms, political stability,and normal weather. Real GDP is projected to grow by 4 percent in 2021 (1.1 percent in per capita terms) and 6 percent in
2022, still below the pre-pandemic rate.
Inflation will temporarily increase before
dropping to the central bank’s 5 percent
target by 2025. The current account deficit
is expected to widen, driven by the highimport content of public investments, as
the recovery begins in 2021, and by declining grants and private inflows over time.

TABLE 2 The Gambia / Macro poverty outlook indicators

Real GDP growth, at constant market prices
Private Consumption
Government Consumption
Gross Fixed Capital Investment
Exports, Goods and Services
Imports, Goods and Services
Real GDP growth, at constant factor prices
Agriculture
Industry
Services
Inflation (Consumer Price Index)
Current Account Balance (% of GDP)
Fiscal Balance (% of GDP)
Debt (% of GDP)
Primary Balance (% of GDP)
International poverty rate ($1.9 in 2011 PPP) a,b
Lower middle-income poverty rate ($3.2 in 2011 PPP) a,b
Upper middle-income poverty rate ($5.5 in 2011 PPP) a,b
GHG emissions growth (mtCO2e)
Energy related GHG emissions (% of total)

Exports would grow, supported by revitalized re-exports. The deficit will be financed by FDI and capital transfers. Foreign exchange reserves would hover
above 5 months of imports.
The fiscal deficit is projected to widen in
2021, due to lower grants, continued
spending on infrastructure, and electionrelated spending. As the economy recovers, tax revenues should increase, supported by improved tax expenditure monitoring and administrative measures. Expenditures should decrease over the mediumterm, as COVID-related spending is withdrawn. Transfers to SOEs are expected tofall, as the Government strengthens corporate governance and balance sheets. The
fiscal deficit would gradually start decreasing after 2021, anchored in the Medium-Term Fiscal Framework 2021-25. Savings under DSSI would extend to 0.1 percent of GDP in 2021. Public debt-to-GDP
should remain on a downward path.
The international poverty rate is expected
to decline to 9 percent in 2021, and 7.1
percent by 2023, driven by the expected
recovery in tourism, construction andcommerce sectors. Additionally, the cashtransfer project in rural Gambia will reduce poverty. Despite an expected favorable cropping season, poor households andthose close to the poverty line remain vulnerable, due to adverse weather events.

(annual percent change unless indicated otherwise)
2018
7.2
9.7
3.7
2.0
44.2
17.6
7.2
3.7
2.0
10.1
6.5
-9.5
-6.1
84.6
-3.0
9.2
35.5
70.7
2.6
30.2

2019
6.2
4.0
14.6
28.3
-10.6
-1.7
6.2
-0.5
14.8
6.1
7.1
-6.2
-2.5
83.0
0.6
8.4
33.2
69.2
1.5
31.6

2020
-0.2
-2.4
10.8
41.1
-51.3
16.2
-0.2
12.0
9.9
-7.3
5.9
-3.6
-2.1
83.3
1.0
9.2
35.5
70.7
0.2
31.5

2021 e
4.0
4.0
7.8
27.5
18.0
27.7
4.0
3.0
4.9
4.1
7.0
-12.7
-4.5
81.6
-1.8
9.0
34.8
70.3
8.6
33.5

So urce: Wo rld B ank, P o verty & Equity and M acro eco no mics, Trade & Investment Glo bal P ractices. Emissio ns data so urced fro m CA IT and OECD.
No tes: e = estimate, f = fo recast.
NA(a) Calculatio ns based o n 2015-IHS.A ctual data: 2015. No wcast: 2016-2020. Fo recast are fro m 2021to 2023.
(b) P ro jectio n using neutral distributio n (2015) with pass-thro ugh = 0.87 based o n GDP per capita in co nstant LCU.

MPO 239 Oct 212022 f
6.0
8.4
-3.3
-1.3
59.5
12.2
6.0
3.3
5.2
7.4
6.3
-13.3
-3.0
77.7
-0.3
8.2
32.8
68.4
3.6
34.6

2023 f
6.5
5.8
6.0
6.4
13.7
7.1
6.5
3.7
7.3
7.2
5.8
-11.2
-1.6
73.0
0.8
7.1
31.1
65.8
4.0
36.0

GHANAKey conditions andchallenges

Table 12020

P o pulatio n, millio n

31.1

GDP , current US$ billio n

67.5

GDP per capita, current US$

2170.4

Internatio nal po verty rate ($ 1.9)

a

12.7

Lo wer middle-inco me po verty rate ($ 3.2)
Upper middle-inco me po verty rate ($ 5.5)

a

29.3

a

55.1

a

43.5

Gini index

Scho o l enro llment, primary (% gro ss)

b

104.8

b

64.1

Life expectancy at birth, years
To tal GHG Emissio ns (mtCO2e)

61.4

Source: WDI, M acro Poverty Outlook, and official data.
(a) M ost recent value (201 6), 201 1 PPPs.
(b) M ost recent WDI value (201 9).

Ghana was severely affected by the
COVID-19 pandemic: growth decelerated
sharply and public finances came undermajor strain in 2020. While the economy
is showing signs of a fragile recovery, theauthorities need to balance the need tosupport the recovery with fiscal prudence.
Given the elevated public debt, Ghana
needs to maintain continued access tocapital markets. The main risk facing
Ghana is debt vulnerability heightened byenergy sector contingent liabilities.

The COVID-19 pandemic has halted Ghana’s rapid growth spell, and the economy
is yet to fully recover. The economy grewat an average of 7 percent in 2017–19, before it experienced a sharp contraction in
Q2 and Q3 of 2020, due to a lockdown inthe spring and a sharp decline in commodity exports. There was a modest rebound in economic growth 2020Q4, resulting in 0.4 percent growth for 2020.
The economic slowdown had a considerable impact on households. At the height ofthe pandemic, nearly 3 out of 4 households reported a decrease in their incomes. Data from August/September 2020
show that, as businesses struggled withsales, they reduced wages and worker
hours but seldom resorted to layoffs. To
cope with the shock, many households
reduced their consumption, while many
had to rely on savings, borrowing, and thesale of assets to make up for the loss of
income. The poverty rate ($3.2) is estimated to have slightly increased in 2020 from
25 percent in 2019 to 25.5 percent in 2020.
The pandemic also had a severe impact on
Ghana’s fiscal position and halted the government’s fiscal consolidation program.
As a result, the overall fiscal deficit(including energy and financial sector
costs) doubled from 7.6 percent of GDP in2019 to 15.2 percent in 2020. Meanwhile,
public debt increased by almost 16 percentage points to 78.9 percent of GDP in

2020, which means that the risk of debt
distress is significant.
The energy sector continues to pose significant fiscal risks for the country. Sector costs
far exceed revenues, costing the budget
about 1-2 percent of GDP annually in recent years. The authorities adopted theEnergy Sector Recovery Program (ESRP) in2019 to restore financial and commercial
viability, curtail arrears accumulation, andpay outstanding arrears. Implementation of
the ESRP is expected to reduce the sector
revenue shortfall which will continue toweigh on the fiscal balances.
Low vaccination rates, coupled with theimpact of the Delta variant, cloud theoutlook. Ghana entered a third wave of
the pandemic in July, with new restrictions that dampened economic activity. As of early September, just over 1 million vaccine doses had been administered, only enough to fully vaccinate 2
percent of the population.

Recent developments
Growth firmed up further in 2021Q1, driven by the strong performance of services(particularly information and communication technologies) and agriculture. Positive growth was recorded despite a sharp
contraction in mining and the concurrent
second wave of the pandemic. 2021Q2
saw mixed developments: there was somepositive demand and trade dynamics, but
private sector credit growth slowed. The
pandemic has so far only had a moderate
impact on the banking sector.

FIGURE 1 Ghana / Real GDP growth and contributions toreal GDP growth

FIGURE 2 Ghana / Actual and projected poverty rates andreal GDP per capita

Percent, percentage points
20

Poverty rate (%)
80

7000

15

70

6000

10

60

5

50

0

40

Real GDP per capita (constant LCU)

5000
4000
3000

30

-5

2000

20

-10

1000

10
-15
2015

2016

2017

Gov. cons.
Inventories
Statistical disc.

2018

2019

2020

Exports
Private cons.
GDP

Sources: Ghana statistical Service and World Bank.

2021

2022

2023

0

0
2005 2007 2009 2011 2013 2015 2017 2019 2021 2023

GFCF
Imports

International poverty rate
Upper middle-income pov. rate
Source: World Bank. Notes: see table 2.

MPO 240 Oct 21

Lower middle-income pov. rate
Real GDP pc

Headline inflation remained relatively low
at 7.8 percent in June 2021 as the pandemic-induced food price shock eased and theexchange rate remained stable. With inflation below its 8 percent target, the Bank of
Ghana reduced the policy rate by 100 basis points to 13.5 percent in May to support the recovery.
Fueled by the domestic recovery, imports
expanded faster than exports in early 2021
while external demand for commodities
remained subdued. As a result, the current account deficit widened from 0.8 percent of GDP in 2020Q2 to 1.3 percent of
GDP in 2021Q2. However, the deficit was
financed by large portfolio inflows andforeign direct investment, which drove
the capital and financial account balance
to a high of US$3.3billion in 2021Q2. With
the proceeds of the March 2021 Eurobonds
emission, gross international reserves
reached US$11 billion in 2021Q2—
equivalent to 5 months’ worth of importsof goods and services, up from 4.0 months
at end-December 2020.
Provisional fiscal data for 2021H1 suggestthat the authorities had to cut spending to
make up for revenue shortfalls. The overall

fiscal deficit as of end-June 2021 was 5.1
percent of GDP, close to the target of 5.2
percent. Revenue and grants were below
target as the pandemic continued to affectbusiness operations and profits, depressing tax revenues. Public expenditure wasalso below target, notably with lowerthan-planned COVID-19-related expenditure (partly because of delays in the vaccination rollout).

Outlook
The economy is projected to recover gradually over the medium term, thanks tocommodity price growth and strong domestic demand. Ghana received theequivalent of US$1 billion in the recent
IMF SDRs allocation, part of which will goto support economic recovery via the
CARES program. Growth is expected toaverage 5.1 percent per year in 2021–23.
After declining by 1.7 percent in 2020, real
per capita GDP is projected to return to its
pre-COVID-19 level in 2021. Conditionalon the recovery benefitting those at theTABLE 2 Ghana / Macro poverty outlook indicators

Real GDP growth, at constant market prices
Private Consumption
Government Consumption
Gross Fixed Capital Investment
Exports, Goods and Services
Imports, Goods and Services
Real GDP growth, at constant factor prices
Agriculture
Industry
Services
Inflation (Consumer Price Index)
Current Account Balance (% of GDP)
Fiscal Balance (% of GDP)
Debt (% of GDP)
Primary Balance (% of GDP)
International poverty rate ($1.9 in 2011 PPP) a,b
Lower middle-income poverty rate ($3.2 in 2011 PPP) a,b
Upper middle-income poverty rate ($5.5 in 2011 PPP) a,b
GHG emissions growth (mtCO2e)
Energy related GHG emissions (% of total)bottom of the distribution, the poverty
rate is expected to continue to fall for theforeseeable future. GHG emissions did not
fall during the pandemic, and are expected to continue to rise until 2023 asgrowth resumes. The main risks to thegrowth outlook are new waves of COVID19 infections in the region or globally.
The fiscal deficit, including financial andenergy sector costs, is expected to remain
elevated as the government implements
its program to support the economy. The
deficit is projected to narrow to approximately 14 percent of GDP in 2021 and to
9.5 percent of GDP by 2023—still well
above Ghana’s fiscal rule ceiling of 5 percent. Moreover, the public debt stock is
expected to rise to 87.4 percent of GDP
by 2024, before coming down graduallyin the medium term. These projections
are dependent on the government meeting its ambitious domestic revenue mobilization targets (starting in 2021), implementing planned spending cuts (startingin 2022), and implementing the ESRP.
Finally, continued access to domestic andexternal financing is critical for Ghana’s
debt sustainability.

(annual percent change unless indicated otherwise)
2018
6.3
3.8
1.8
32.7
6.6
5.0
6.2
4.8
10.6
2.7
9.8
-3.1
-6.9
58.7
-1.4
11.0
26.2
50.8
2.8
38.7

2019
6.5
13.9
5.4
-27.9
6.7
1.7
6.5
4.6
6.4
7.6
7.9
-2.7
-7.6
63.3
-1.9
10.2
25.0
49.1
4.5
39.6

2020
0.4
1.3
6.4
-41.1
-12.8
-8.8
0.4
7.4
-3.6
0.9
10.4
-3.2
-15.2
78.9
-8.8
10.5
25.5
49.8
2.4
40.3

2021 e
4.9
5.8
-18.6
14.7
7.6
4.9
4.9
7.9
4.2
4.1
9.8
-2.4
-13.9
83.5
-5.8
10.0
24.5
48.7
5.5
42.1

So urce: Wo rld B ank, P o verty & Equity and M acro eco no mics, Trade & Investment Glo bal P ractices. Emissio ns data so urced fro m CA IT and OECD.
No tes: e = estimate, f = fo recast.
NA(a) Calculatio ns based o n 2016-GLSS-VII.A ctual data: 2016. No wcast: 2017-2020. Fo recast are fro m 2021to 2023.
(b) P ro jectio n using neutral distributio n (2016) with pass-thro ugh = 0.87 based o n GDP per capita in co nstant LCU.

MPO 241 Oct 212022 f
5.5
6.2
-2.9
9.2
4.5
4.2
5.5
7.3
4.9
5.0
9.6
-4.2
-10.5
84.9
-1.6
9.4
23.6
47.0
5.0
43.5

2023 f
5.0
6.0
-3.5
7.2
4.0
4.1
5.0
3.6
4.5
6.3
6.8
-5.1
-9.5
86.4
-0.4
9.2
22.9
45.9
5.2
45.2

GUINEA

Key conditions andchallenges

Table 12020

P o pulatio n, millio n

13.1

GDP , current US$ billio n

15.2

GDP per capita, current US$

1160.3

Internatio nal po verty rate ($ 1.9)

a

36.1
a

70.9

a

92.5

Lo wer middle-inco me po verty rate ($ 3.2)
Upper middle-inco me po verty rate ($ 5.5)a

33.7

Gini index

Scho o l enro llment, primary (% gro ss)

b

91.5

b

61.6

Life expectancy at birth, years
To tal GHG Emissio ns (mtCO2e)

43.7

Source: WDI, M acro Poverty Outlook, and official data.
(a) M ost recent value (201 2), 201 1 PPPs.
(b) WDI for School enrollment (201 6); Life expectancy (201 9).

Growth was resilient to the pandemic,
accelerating to 7.1 percent in 2020, driven by booming mining production. Capital investment was reduced to contain theincrease in the fiscal deficit following
COVID-19 measures. Higher donor financing and improved terms of trade supported the fiscal and external deficits.
Growth is expected to remain strong, lowering poverty, with down-side risks including prolonged political and social
instability triggered by the 2021 coup,
persisting COVID-19 impacts, and thedeferral of fiscal and structural reforms.

The Guinean economy has sustainedrobust growth since 2016, but the economy remains undiversified. It is dependent on mining (17 percent of GDP and 85
percent of exports) while agriculture
productivity remains low (which represents 23 percent of GDP). Dependence on
bauxite and gold exposes the country tofluctuations in commodity prices. Governance challenges were brought to theforefront by the coup of September 5,
2021. Other constraints to inclusive
growth include an underdeveloped financial sector, low investment levels,
large infrastructure gaps, and a population with low levels of human capital.
Although income inequality is relatively
low, gender gaps are widespread in education, earnings, agricultural productivity, and political representation.
Solid macroeconomic and fiscal management have underpinned growth. The
nominal exchange rate has stabilized,
reducing the gap between the official andparallel exchange rates, although inflation remains high. Fiscal discipline has
been achieved by cuts to capital spending
to compensate for declining tax revenue
since its peak in 2016 (14.2 percent ofGDP). The below potential tax revenues
can be attributed to ineffective tax administration, and tax exemptions for themining sector, which contribute to low
tax compliance.

COVID-19 has affected the non-mining sector and exacerbated existing development
challenges. Enacting structural reforms todiversify the economy and promote inclusive growth are more urgent now. Guinea is
at moderate risk of external debt distresswith limited space to absorb shocks. This
assessment hinges on commitments to maintain a prudent borrowing plan that maximizes concessional borrowing. Risks to theeconomic outlook remain skewed to thedownside, particularly due to the coup’s
impact on mining activities, FDI, and delays
with the distribution of COVID-19 vaccines.

Recent developments
Economic growth accelerated to 7.1 percent in 2020, 4.1 percent in per capita
terms, despite COVID-19. While mining
production boomed, the service sector is
expected to have contracted by 1 percent
due to COVID containment measures.
Mining investments boosted bauxite production while higher gold prices bolsteredartisanal gold exports. Inflation accelerated from 9.5 percent in 2019, to 11.6 percent
in 2020, and 12.4 percent in the first half of2021, with higher food prices partly due tosupply disruptions and an increase incentral bank financing to meet the larger
fiscal deficit in 2020.
The overall fiscal deficit (including grants)
widened to 2.9 percent of GDP in 2020. Tax
revenues amounted to 11.3 percent of GDP
in 2020, their lowest level since 2011, because of weak tax administration, mining
tax exemptions and measures under the

FIGURE 1 Guinea / Government revenue and expenditures

FIGURE 2 Guinea / Actual and projected poverty rates andreal GDP per capita

Percent of GDP

Poverty rate (%)

18

100

15

Real GDP per capita (LCU constant)

7,000,000
6,000,000

80

5,000,000

1260

4,000,000

640

3,000,000

3

20

9

2,000,000
1,000,000

0
2017

2018
2019
Tax revenues
GrantsCapital expenditures

2020

2021
2022
2023
Nontax revenues
Current expenditures

Sources: Guinean authorities; and World Bank staff projections.

0

0
2012

2014

2016

2018

International poverty rate
Upper middle-income pov. rate
Source: World Bank. Notes: See Table 2.

MPO 242 Oct 21

2020

2022

Lower middle-income pov. rate
Real GDP pc

COVID-19 response plan (e.g., tax exemptions for key products and tax deferrals).
Subsidies to the public electricity utility,
which had more than doubled in 2019,
further increased in 2020 because of subsidies offered under the COVID-19 response plan, and reliance on expensive
thermal technology. Under-executed
capital expenditures partially offset
higher current transfers and social
spending to protect vulnerable households. The debt-to GDP ratio increased
from 33.8 percent of GDP in 2019, to 43.3
percent in 2021.
The current account deficit widened to 13.7
percent of GDP in 2020, with higher mining
exports not totally compensating for higher
imports of medicines, sugar, and intermediate and capital goods. Mining-related
FDI continued to be the main source of
external financing and increased from 9.9
percent of GDP in 2019 to 10.6 percent in2020. Estimated international reserves increased slightly from 2.1 months of imports
in 2019 to 2.2 months in 2020.
Projections based on growth in GDP per
capita suggest that the extreme poverty
rate, the percentage of the population living below the international poverty line
(US$1.90 per capita per day, 2011 PPP),
declined from 25 percent in 2019, to 23.6

percent in 2020. This corresponds to over
3.1 million Guineans still living in extreme
poverty in 2020. Non-monetary poverty
such as deprivations in education, health,and access to basic infrastructure, captured using the Multidimensional Poverty
Index, was estimated at nearly 32 percent
in 2018, representing a decrease of 4 percentage points from 2012. However, thepandemic will likely reverse gains in human capital. According to survey results,
about 5 out of 10 households reported that
their children did not engage in any learning activities during school closures,
which is likely to lead to high drop-out
rates and, consequently, increase poverty
among the future generation.

OutlookOver the medium-term, mining-related
investment will continue to drive growth.
Growth is likely to decelerate to 5.2 percent in 2021, before accelerating to 6 percent in 2022-2023 as the service sector recovers. Public and private investment inenergy and transport will support growthin the construction sector. Better provisioning of agriculture inputs could also

TABLE 2 Guinea / Macro poverty outlook indicators

Real GDP growth, at constant market prices
Private Consumption
Government Consumption
Gross Fixed Capital Investment
Exports, Goods and Services
Imports, Goods and Services
Real GDP growth, at constant factor prices
Agriculture
Industry
Services
Inflation (Consumer Price Index)
Current Account Balance (% of GDP)Net Foreign Direct Investment (% of GDP)
Fiscal Balance (% of GDP)
Debt (% of GDP)
Primary Balance (% of GDP)
International poverty rate ($1.9 in 2011 PPP) a,b
Lower middle-income poverty rate ($3.2 in 2011 PPP) a,b
Upper middle-income poverty rate ($5.5 in 2011 PPP) a,b
GHG emissions growth (mtCO2e)
Energy related GHG emissions (% of total)

improve agricultural productivity. The
implementation of structural reforms tostrengthen governance and the businessclimate, as well as more reliable electricity
provision, following completion of theSouapiti hydropower project in 2020,should attract private investments anddevelopment. Inflation is expected to remain high, but to decline gradually to 7.8
percent by 2023.
The external current account deficit isprojected to contract to 9.2 percent of
GDP in 2021, reflecting lower imports forinfrastructure spending (i.e., completionof the Souapiti dam) and other capital
goods. The deficit is projected to increase
thereafter, with exports projected to
grow slower than imports due to renewed infrastructure spending for roadand railways. FDI inflows will meet over
70 percent of financing requirements between 2021 and 2022, with long-termloans meeting the rest.
Extreme poverty is projected to fallsteadily to 20.4 percent by 2023. Prospects for poverty reduction are tilted
downwards because of the pandemic
and any deferral of social reforms andpolitical instability following the coup,
which could jeopardize social gains andinclusive development.

(annual percent change unless indicated otherwise)
2018
6.2
3.8
-7.2
8.7
7.2
3.7
6.7
5.4
6.9
6.9
9.8
-19.5
15.9
-1.1
38.4
-0.3
26.3
61.1
88.5
0.1
14.7

2019
5.6
5.4
-6.3
-8.4
-0.6
-9.5
6.5
7.6
7.2
5.5
9.5
-10.8
9.0
-0.5
33.8
0.0
25.0
59.8
87.7
3.3
14.8

2020
7.1
3.5
42.9
4.9
33.5
39.4
7.1
6.2
18.5
-1.0
11.6
-13.7
9.9
-2.9
39.1
-2.2
23.6
57.9
86.8
2.7
15.1

2021 e
5.2
3.2
5.1
20.7
5.4
7.2
5.2
6.9
6.7
3.2
9.9
-9.2
10.6
-2.2
43.3
-1.3
22.7
56.8
86.4
8.4
15.0

So urce: Wo rld B ank, P o verty & Equity and M acro eco no mics, Trade & Investment Glo bal P ractices. Emissio ns data so urced fro m CA IT and OECD.
No tes: e = estimate, f = fo recast.
NA(a) Calculatio ns based o n 2012-ELEP .A ctual data: 2012. No wcast: 2013-2020. Fo recast are fro m 2021to 2023.
(b) P ro jectio n using neutral distributio n (2012) with pass-thro ugh = 0.7 based o n GDP per capita in co nstant LCU.

MPO 243 Oct 212022 f
6.1
3.1
7.9
31.8
4.8
10.2
6.1
5.8
7.0
5.4
8.0
-11.2
12.9
-2.4
42.4
-1.4
21.4
55.4
85.8
4.5
15.1

2023 f
5.9
3.1
10.1
24.5
4.0
10.1
5.9
6.0
6.7
5.0
7.8
-12.1
12.9
-2.4
41.7
-1.4
20.4
54.2
85.0
4.6
15.2

and high debt servicing costs. However,political stability is expected to enable reforms in public expenditure management
and increase revenue mobilization to gradually reduce the fiscal deficit while supporting growth.

GUINEA-BISSAU Key conditions andchallenges

Table 12020

P o pulatio n, millio n

2.0

GDP , current US$ billio n

1.4

GDP per capita, current US$

700.0

Internatio nal po verty rate ($ 1.9)

a

68.4
a

85.4

a

93.8

Lo wer middle-inco me po verty rate ($ 3.2)
Upper middle-inco me po verty rate ($ 5.5)a

50.7

Gini index

Scho o l enro llment, primary (% gro ss)bbLife expectancy at birth, years
To tal GHG Emissio ns (mtCO2e)

118.7
58.3
4.5

Source: WDI, M acro Poverty Outlook, and official data.
(a) M ost recent value (201 0), 201 1 PPPs.
(b) WDI for School enrollment (201 0); Life expectancy (201 9).

Real GDP contracted by 1.4 percent in
2020, driven by COVID-19 containment
measures, adverse weather, and weak external demand for cashew nuts. The fiscal
deficit widened considerably which led to
an increased debt-to-GDP ratio. Growthis projected to recover in 2021, as the
cashew market recovers. The mediumterm will require fiscal consolidation tomaintain debt sustainability. The 2020
floods highlight the country’s vulnerability to climatic shocks. Poverty has increased and is projected to remain high inthe medium-term.

Exports of raw cashew nuts, which account for 90 percent of merchandise exports, determine economic performance inGuinea-Bissau. Cashew production is dispersed among many smallholder farmers,
whose income supports overall economic
activity. Annual GDP grew 5.4 percent on
average between 2015 and 2017 (3.2 percent in per capita terms) as cashew prices
reached record highs, but Guinea-Bissau
is structurally vulnerable to terms-of-trade
shocks and climatic risks. Raw cashew
prices have been on a downward trajectory since 2018, adversely affecting economic growth, poverty, and government finances. Around 15 percent of tax revenue
is directly related to cashew exports.
Limited diversification and low productivity in the primary sector keep the country highly dependent on food and capital
imports. As COVID-19 has accentuatedthe need for transformation, the government launched a new development plan
aiming to i) modernize public institutions,ii) accelerate job creation iii) boost the
productive sector and infrastructure iv)
improve human capital and living conditions v) promote regional integration andvi) preserve biodiversity. However, progress has been slow given the country’s
limited fiscal space and high debt levels.
The pandemic and high primary deficits
and externally financed infrastructure projects led to considerable debt accumulation

FIGURE 1 Guinea-Bissau / Evolution of main economic
indicators

Recent developments
The economy contracted 1.4 percent in2020 (3.5 percent in per capita terms),
down from 4.5 percent in 2019. This was
driven by a collapse in agriculture, which
contributed 5.8 percent to GDP growth in2019, but negative 0.8 percent in 2020.
Private consumption fell from 1.4 percent
in 2019 to a contraction of 3.8 percent in2020 and government consumption fell
from 16.6 percent to 9 percent. Severe
flooding in September also had a negative impact. High frequency indicatorsshow growth in the first quarter of 2021
of 2.7 percent.
The trade deficit widened to 16.3 percent
in 2020, driven by reduced cashew exports
and prices, which fell 21 and 9.8 percent
respectively between 2019 and 2020. The
current account deficit (CAD) stood at 8.8
percent in 2020. The pandemic relatedtrade disruptions caused capital inflows
and FDI to reduce to 0.9 percent and 0.8
percent of GDP in 2020, respectively. The
CAD in 2020 was financed mostly by
grants and concessional loans.
The fiscal deficit increased from 3.9 percent of GDP in 2019, to 9.5 percent in
2020, owing to pandemic affected tax revenues falling to 8.2 percent of GDP and

FIGURE 2 Guinea-Bissau / Actual and projected poverty
rates and real GDP per capita

Percent, percentage points

Poverty rate (%)

8100270000480

26000006025000040

24000020230000-4-8

GDP growth (%)
Fiscal balance (% of GDP)
Current account balance (% of GDP)

Real GDP per capita (LCU constant)

0-12220000
2010

2012

2014

2016

International poverty rate
Upper middle-income pov. rate
Sources: Ministry of Finance and World Bank.

Source: World Bank. Notes see Table 2.

MPO 244 Oct 21

2018

2020

2022

Lower middle-income pov. rate
Real GDP pc

COVID-related expenditure in health andsocial protection, and sectoral support forthe cashew campaign, in the form of onlending to the banks, reaching 5.4 percent
of GDP, including 2.6 percent on capital
expenditure for equipment, infrastructure
and vaccines. The primary deficit grewfrom 2.8 percent in 2019, to 7.8 percent in
2020, and was filled by international donors and treasury issuances with
WAEMU commercial banks. The country
is at high-risk of overall debt distress andparticipates in the G-20 Debt Service Suspension Initiative. Inflation increased
from 0.3 percent in 2019, to 1.5 percent in2020 due to COVID-related supply disruptions. Guinea-Bissau’s monetary policy is managed by the Central Bank ofWest African States (BCEAO), which
maintains a peg between the CFA franc
and the euro. Reserves have remained
stable since 2019, and reached an estimated 5.8 months of imports in 2020, due todonor support and Eurobond issuance in
Cote d’Ivoire. To support the regional
economy and COVID-19 related extra
spending, the BCEAO implemented a setof monetary and macroprudential
measures beginning in March 2020, including a policy rate cut and extended
refinancing operations of the 3-month

COVID-19 bonds. These measures wereextended into 2021.
The contraction of the economy resulted
in an increase in the incidence of poverty
from 64.6 to 66.6 percent (US$1.9 per day
in PPP 2011) between 2019 and 2020, corresponding to 69,000 additional poor people. High frequency phone surveys for
March 2021 indicate that more than 80
percent of households feel food insecure,and 75 percent are unable to covertransport and energy expenses.

OutlookReal GDP growth is projected to reach 3.3
percent in 2021, as successful vaccine
rollout in other countries supports recovery by increasing demand for cashew.
Growth should reach 5 percent in the medium term, driven by agriculture production, with per capita growth surpassing
2019 levels in 2023.
The CAD is expected to reach 8.6 percent in
2021, declining to 4.7 percent by 2023, as
exports of cashew increase, and imports
reduce to pre-COVID levels. Potential investment in rice production, the main staple food, may further reduce imports. In

TABLE 2 Guinea-Bissau / Macro poverty outlook indicators

Real GDP growth, at constant market prices
Private Consumption
Government Consumption
Gross Fixed Capital Investment
Exports, Goods and Services
Imports, Goods and Services
Real GDP growth, at constant factor prices
Agriculture
Industry
Services
Inflation (Consumer Price Index)
Current Account Balance (% of GDP)
Fiscal Balance (% of GDP)
Debt (% of GDP)
Primary Balance (% of GDP)
International poverty rate ($1.9 in 2011 PPP) a,b
Lower middle-income poverty rate ($3.2 in 2011 PPP) a,b
Upper middle-income poverty rate ($5.5 in 2011 PPP) a,b
GHG emissions growth (mtCO2e)
Energy related GHG emissions (% of total)

August 2021, the BCEAO received 1.4 percent of aggregate GDP in additional SDR
allocations from the IMF that may be onlent to member countries.
Fiscal consolidation is a medium-term
objective of the government. Authorities
aim to contain the wage bill and number ofcivil servants, while weekly Treasury
Committee meetings and the implementation of a Treasury Single Account will help
control expenditure. These reforms, coupled with efforts to broaden the tax baseand improve tax administration, should
support fiscal consolidation with the deficit declining from 5 percent in 2021, tomeet the regional convergence criteria of 3
percent by 2025. Public debt is projected to
decline gradually over the medium term,
and to 75.7 percent by 2023. Inflation is
expected to rise to 1.9 percent in 2021, andremain steady over the medium-term.
Poverty is projected to remain high in
2021, with 66.3 percent living below thepoverty line. Poverty is expected to decline by 0.8 percentage points in 2022, andto reach the pre-pandemic level of 64.6
percent in 2023. The high dependance ofrural households on cashew crops may
limit opportunities for further poverty
reduction in a context of lower prices andclimatic shocks.

(annual percent change unless indicated otherwise)
2018
3.4
-0.5
5.1
7.6
14.4
-8.5
3.4
3.4
5.7
2.7
0.4
-3.6
-4.9
59.2
-4.3
65.3
83.6
92.9
1.3
12.6

2019
4.5
1.4
16.6
33.8
8.7
14.1
4.5
5.8
4.2
3.5
0.3
-8.8
-4.0
65.9
-2.8
64.6
83.0
92.6
1.9
12.9

2020
-1.4
-3.8
9.0
9.6
-10.2
-3.0
-1.4
-0.8
-0.7
-2.1
1.5
-8.3
-9.5
79.3
-7.8
66.6
84.2
93.3
0.4
13.1

2021 e
3.3
2.1
4.6
10.1
4.7
5.0
3.3
4.1
2.9
2.7
1.9
-8.6
-5.0
78.4
-3.4
66.3
84.0
93.1
2.5
13.5

So urce: Wo rld B ank, P o verty & Equity and M acro eco no mics, Trade & Investment Glo bal P ractices. Emissio ns data so urced fro m CA IT and OECD.
No tes: e = estimate, f = fo recast.
NA(a) Calculatio ns based o n 2010-ILA P -II.A ctual data: 2010. No wcast: 2011-2020. Fo recast are fro m 2021to 2023.
(b) P ro jectio n using neutral distributio n (2010) with pass-thro ugh = 0,87 based o n GDP per capita in co nstant LCU.

MPO 245 Oct 212022 f
4.0
2.3
1.7
8.7
10.4
5.1
4.0
4.3
4.8
3.5
2.0
-5.3
-4.7
77.5
-2.7
65.4
83.6
93.0
2.6
13.7

2023 f
5.0
3.5
4.1
6.8
10.2
5.3
5.0
5.1
6.1
4.6
2.0
-4.7
-4.2
75.7
-2.2
64.6
83.0
92.7
3.2
13.9

KENYAKey conditions andchallenges

Table 12020

P o pulatio n, millio n

53.8

GDP , current US$ billio n

101.0

GDP per capita, current US$

1877.3

Internatio nal po verty rate ($ 1.9)

a

37.1
a

66.5

a

86.6

Lo wer middle-inco me po verty rate ($ 3.2)
Upper middle-inco me po verty rate ($ 5.5)a

40.8

Gini index

Scho o l enro llment, primary (% gro ss)

b

b

103.2
66.7

Life expectancy at birth, years
To tal GHG Emissio ns (mtCO2e)

97.1

Source: WDI, M acro Poverty Outlook, and official data.
(a) M ost recent value (201 5), 201 1 PPPs.
(b) WDI for School enrollment (201 6); Life expectancy (201 9).

Kenya’s economy has staged a significant
recovery from the COVID-19 shock,helped by supportive policies, althoughsome sectors remain severely affected.
After the increase in poverty in 2020, thepre-COVID downward trend is expected
to resume as households adapt to changing economic conditions. Near-term
growth prospects hinge on the pace ofvaccination. Resuming fiscal consolidation in the medium term is essential toreduce debt sustainability risks and support a strong private sector-led recovery.

Kenya achieved strong GDP growth in
the decade prior to the pandemic, averaging 5.0 percent per year, supported byincreased public spending reflecting an
ambitious development agenda that included plugging the large infrastructure
gap and implementing devolution. While
this robust growth produced a substantial
reduction in inequality and poverty, thedebt-financed public spending-led expansion has reached its limit as revenue
growth has not kept pace, fiscal space has
narrowed, and debt vulnerabilities havemounted. The fiscal deficit increased from
3.1 percent of GDP in 2010/11 to 8.3 percent in 2020/21 and public debt rose from
38.3 percent of GDP in 2010/11 to 68.3
percent in 2020/21. The pandemic caused
real GDP to contract by 0.3 percent in
2020, forcing a pause in fiscal consolidation and increasing Kenya’s risk of external debt distress to high. The country
now faces an urgent challenge to implement fiscal consolidation, strengthen debt
management capacity, and reorient theeconomy towards sustainable, privatesector-led growth.
Continued policy and institutional reform
progress can support productivity
growth, job creation and laying the foundation for green, resilient and inclusive
development. Priorities include reforms
to address barriers and distortions in key
factor and product markets, address the

FIGURE 1 Kenya / Fiscal deficit and public debt

Percent of GDP
75role and performance of state-owned enterprises, improve access to financing(including by reducing public financing
needs to open more space for credit toflow to the private sector), and invest
efficiently in both human capital andphysical infrastructure.
While Kenya plans to inoculate all 30 million people aged 18 and above against
COVD-19 by end-2022, the vaccination
program still has a long way to go and,like many countries, Kenya has faced considerable challenges in procuring vaccines. As of September 15, only about 8
percent of the target population had received their first free dose. COVID-19 vaccine hesitancy is low, however, with about
82 percent of Kenyans willing to take afree jab, with no difference between poorand non-poor households.

Recent developments
The economy has staged a significant
rebound in 2021 so far. The Purchasing
Managers’ Index shows generally steady
expansion in business activity, supported
by adequate agricultural harvests, therecovery in global demand, a partial resumption of international travel, and abroad-based recovery in manufacturing.
A recent Central Bank of Kenya (CBK)survey shows that most hotels are now
open and average bed occupancy has
tripled from its low in mid-2020(although it remains well below preCOVID-19 levels). GDP growth is projected at 5.0 percent in 2021.

FIGURE 2 Kenya / Actual and projected poverty rates andreal private consumption per capita
Poverty rate (%)

Percent of GDP
9

100

70

7

80

65

5

60

3

55

1

50

-1

Real private consumption per capita (constant LCU)
1400001200001000002019/20

2020/21

Primary deficit (RHS)
Gross public debt (LHS)

2021/222022/232023/24

60

80000

40

60000
40000

20
0

0
2005 2007 2009 2011 2013 2015 2017 2019 2021 2023

Interest payments (RHS)
Fiscal deficit (RHS)

Sources: The National Treasury and Kenya National Bureau of Statistics.

20000

International poverty rate
Upper middle-income pov. rate
Source: World Bank. Notes: see Table 2.

MPO 246 Oct 21

Lower middle-income pov. rate
Real priv. cons. pc

While monetary and fiscal policies continue to support the economic recovery,
many tax and regulatory relief measures
have been normalized on the back of improved economic conditions. Since January
2021, pre-pandemic income tax and VAT
rates were restored, measures to encourage
mobile money use have been withdrawn,
and relief on the extension and restructuring of loans has expired. Nevertheless, thegovernment has remained focused on supporting the healthcare system to cope withthe pandemic, and also maintained income
tax relief for the lowest-earning taxpayers.
Monetary policy has remained accommodative, with the CBK retaining the 125
basis point (bp) reduction in the policy rateand 100bp reduction in the cash reserve
ratio made at the start of the pandemic.
The international poverty rate is expected to decline by nearly a percentage
point from 35.7 percent in 2020 to 34.9
percent in 2021. Kenyan households, particularly those in urban areas, are recovering from a sharp poverty increase during 2020 as also evidenced by rapid response phone surveys. The 2020 poverty
uptick resulted in a new group of poor
who are younger and more educatedthan the pre-COVID-19 poor, and typically working in the services sector. Food

insecurity increased following the renewed containment measures in April
2021, with lack of food being a major
problem for 42 percent of households.

Outlook
The economy is expected to continue torecover in the near term, although uncertainty remains elevated. GDP growth isprojected to be 4.8 percent on average in
2022–23, supported by the ongoing vaccination drive, a pickup in wages andhousehold incomes, resilient remittancesthat will support private consumption,and rising external demand for Kenya’s
merchandise exports. Strengthening external demand is expected to support agriculture, while the reopening of the economy will help recovery in industry andservices, though services are expected torecover more gradually. The baseline assumes that fiscal consolidation efforts resume, reducing debt vulnerabilities andsupporting investor confidence and private sector credit growth. The fiscal deficit
is expected to narrow to 4.4 percent of
GDP in FY2023/24 (Figure 1). General elections are scheduled to be held in August

TABLE 2 Kenya / Macro poverty outlook indicators

Real GDP growth, at constant market prices
Private Consumption
Government Consumption
Gross Fixed Capital Investment
Exports, Goods and Services
Imports, Goods and Services
Real GDP growth, at constant factor prices
Agriculture
Industry
Services
Inflation (Consumer Price Index)
Current Account Balance (% of GDP)Net Foreign Direct Investment (% of GDP)
Fiscal Balance (% of GDP)
Debt (% of GDP)
Primary Balance (% of GDP)
International poverty rate ($1.9 in 2011 PPP) a,b
Lower middle-income poverty rate ($3.2 in 2011 PPP) a,b
Upper middle-income poverty rate ($5.5 in 2011 PPP) a,b
GHG emissions growth (mtCO2e)
Energy related GHG emissions (% of total)

2022, likely creating headwinds for investment next year, in line with the historicalprecedent which suggests that some investment activity is paused ahead of elections. A renewed intensification of thepandemic (including due to significant
delays in the vaccination rollout), moredisruptive election cycle, adverse weather
conditions (including if the severe
drought currently affecting some areas
were to worsen and spread), or a weaker
than expected global economic backdrop,
are the key risks to Kenya’s projected recovery. Realization of these downside
risks could result in lower GDP growth of
below 4 percent in 2022. Corresponding to
the projected economic recovery, poverty
is expected to resume its downward trendwith a decline of 0.8 percentage points
annually in 2022 and just under a percentage point reduction in 2023. However, thiswill require support for the worst affectedhouseholds as well providing universal
access to the COVID-19 vaccine. Furthermore, investments in inclusive policies
that can promote private sector job creation, and the enhancing of safety net programs, are needed to sustainably reducepoverty and inequality in the future.

(annual percent change unless indicated otherwise)
2018
5.6
4.7
7.0
-0.4
6.8
1.4
5.5
5.7
3.8
6.0
4.7
-5.4
1.6
-7.1
57.9
-2.7
35.1
65.5
86.1
1.7
53.6

2019
5.0
4.9
7.0
3.8
-3.2
1.8
5.2
2.6
3.4
6.7
5.2
-5.3
0.9
-7.4
59.5
-3.2
34.4
65.1
85.9
2.7
52.9

2020
-0.3
-2.7
4.3
3.4
-8.2
-8.5
0.3
4.8
4.0
-2.2
5.3
-4.6
0.5
-7.9
65.8
-3.7
35.7
65.8
86.2
2.6
50.8

2021 e
5.0
5.2
3.5
4.0
8.0
5.0
5.0
3.1
4.8
5.7
6.0
-5.3
0.5
-7.9
69.2
-3.8
34.9
65.4
86.0
3.3
49.6

So urce: Wo rld B ank, P o verty & Equity and M acro eco no mics, Trade & Investment Glo bal P ractices. Emissio ns data so urced fro m CA IT and OECD.
No tes: e = estimate, f = fo recast.
NA(a) Calculatio ns based o n 2005-IHB S and 2015-IHB S.A ctual data: 2015. No wcast: 2016-2020. Fo recast are fro m 2021to 2023.
(b) P ro jectio n using annualized elasticity (2005-2015) with pass-thro ugh = 1based o n private co nsumptio n per capita in co nstant LCU.

MPO 247 Oct 212022 f
4.5
4.9
3.0
3.6
5.0
4.0
4.5
2.5
2.6
5.8
5.0
-5.4
0.7
-6.7
70.1
-2.3
34.1
65.0
85.8
3.6
49.2

2023 f
5.0
5.8
2.5
4.9
6.5
7.0
5.0
2.8
3.3
6.2
5.0
-5.5
1.4
-5.1
69.0
-1.1
33.2
64.5
85.5
3.8
49.2

LESOTHO

Key conditions andchallenges

Table 12020

P o pulatio n, millio n

Since 2017, Lesotho has been experiencing
economic contractions, which have been
exacerbated overtime by natural disasters, political instability, and the negative
impact of COVID-19. In recent years thecountry has been led by unstable coalition
governments characterized by frequentchange of cabinet, which has delayed
reform progress. More splits in the current ruling coalition are expected aheadof the national elections, scheduled for
September 2022.
Unsolved structural impediments togrowth in South Africa led recently to
attacks on businesses and looting thatwere predominant in the Kwazulu-Nataland Gauteng provinces. This, together
with the impacts of COVID-19 in theneighboring country, are expected toaffect remittances to Lesotho. With just 0.6
percent of the population inoculated as ofend August, the low pace of vaccination in
the country is likely to hinder growth in
the short run. Progress in reducing debt
levels has been reversed largely due toincreased external borrowing associatedwith the policy responses to mitigate thenegative impact of COVID-19.
The pandemic is unfolding in a context ofhigh poverty, inequality, and unemployment. About a third of the population
still lives on less than US$1.90/person/
day (in 2011 PPP terms). Poverty is concentrated in rural regions, which tend to

2.1

GDP , current US$ billio n

2.2

GDP per capita, current US$

1047.6

Internatio nal po verty rate ($ 1.9)

a

27.2
a

49.9

a

73.2

Lo wer middle-inco me po verty rate ($ 3.2)
Upper middle-inco me po verty rate ($ 5.5)a

44.9

Gini index

Scho o l enro llment, primary (% gro ss)

b

120.9

b

54.3

Life expectancy at birth, years
To tal GHG Emissio ns (mtCO2e)

5.8

Source: WDI, M acro Poverty Outlook, and official data.
(a) M ost recent value (201 7), 201 1 PPPs.
(b) WDI for School enrollment (201 7); Life expectancy (201 9).

Economic growth is expected to recoverin 2021, even though output would
remain below pre-COVID-19 levels.
The economy is expected to reboundand grow by 3.2 percent in 2021 mainly due to the recovery in mining, manufacturing, and construction. Estimates indicate this will be accompanied
by a decrease in poverty from 32.1 percent in 2020 to 30.3 percent in 2021,
using the international poverty line.

have poorer access to basic infrastructureand services. Rural communities are more
vulnerable to climatic shocks, which contributes to erratic and generally low
productivity in agriculture, a sector that isa source of livelihoods for most of therural population. The pandemic has
worsened economic vulnerability andfood insecurity in the country. The World
Food Programme (WFP) projections suggest that about 312,000 people from rural
areas and 158,000 people from urban areas will be food insecure between October
2021 to March 2022.

Recent developments
Following a 9.5 percent decline in 2020,
GDP growth contracted by 13.8 percent(year-on-year) during the first quarter of2021, largely due to the COVID-19-related
restrictions and lockdowns. The largest
declines were recorded in the transport andstorage sector (62.2 percent), followed byhotels and restaurants (which contracted
by 54 percent). The information and communication sector, and the wholesale andretail trade sector were also significantly
affected. The international poverty rate isestimated to have increased from 25.7 percent in 2019 to 32.1 percent in 2020 (atUS$1.90/person/day, in 2011 PPP terms).
Inflation, at 5.5 percent in July 2021, hasremained stable since January, and islargely driven by food and energy prices,amidst supply-demand challenges imposed by closure of borders and domestic
lockdown measures during 2020. The

FIGURE 1 Lesotho / Growth of real GDP at factor cost andcontributions to real GDP growth

FIGURE 2 Lesotho / Actual and projected poverty rates andreal private consumption per capita

Percent, percentage points
30

Poverty rate (%)

Real private consumption per capita (constant LCU)

100

20

11000
10500

80

10000

10
60

9500

0
40

9000

-10
20

8500

-20

0

-30
2019
Agriculture

2020

2021
Industry

Sources: WDI and World Bank staff estimates.

2022
Services

8000
2017

2023

2018

2019

2020

International poverty rate
Upper middle-income pov. rate

GDP growth

Source: World Bank. Notes: see Table 2.

MPO 248 Oct 21

2021

2022

2023

Lower middle-income pov. rate
Real priv. cons. pc

Central Bank of Lesotho (CBL) has maintained the policy rate unchanged at 3.5
percent per annum since July 2020 to facilitate the recovery from the COVID-19
shock and to ensure that the domestic
cost of funds remain aligned with the restof the region.
On the external side, the current accountdeficit narrowed from a revised 3.4 percent of GDP in 2019 to a revised 2.1 percent in 2020, reflecting a decline in tradeflows and low demand, as well as higher
Southern African Customs Union (SACU)
revenue inflows. Meanwhile, the fiscal
deficit has increased, driven by higher
public expenditure largely due to temporary COVID-19 response measures and a
growing public wage bill.

Outlook
Economic growth is forecasted to reboundto 3.2 percent in 2021, and average 2.9
percent in the medium-term. Agricultural
subsidies on fertilizers, seeds and other
inputs, are expected to contribute to crop
production. Medicinal cannabis farming
as well as horticulture farming projects

are also expected to contribute to the sector’s grow. In addition to agriculture, projected recovery in the medium-term is set
to be led by a rebound in the mining,
manufacturing (including textiles) andconstruction activities on the back of supportive external demand conditions andimproved business and consumer confidence. The advanced stages of construction activities associated with the commencement of the transfer tunnel and thedam under the second phase of Lesotho
Highlands Water Project (LHWP-II) are
expected to have a positive impact on
growth in the medium term. Services arealso expected to recover to near prepandemic levels in the medium-term as
less restrictions are imposed and moretravel is permitted, adding impetus to thegrowth momentum.
Inflation is expected to follow developments in the regional food and energy
prices and could be affected by further
restrictions of movement and the closureof borders. Key inflationary pressures are
expected to emanate from food prices andadministered prices which are likely to berevised upwards in the medium-term.
Monetary policy stance is to remain accommodative in the mid run.

TABLE 2 Lesotho / Macro poverty outlook indicators

Real GDP growth, at constant market prices
Private Consumption
Government Consumption
Gross Fixed Capital Investment
Exports, Goods and Services
Imports, Goods and Services
Real GDP growth, at constant factor prices
Agriculture
Industry
Services
Inflation (Consumer Price Index)
Current Account Balance (% of GDP)Net Foreign Direct Investment (% of GDP)
Fiscal Balance (% of GDP)
Debt (% of GDP)
Primary Balance (% of GDP)
International poverty rate ($1.9 in 2011 PPP) a,b
Lower middle-income poverty rate ($3.2 in 2011 PPP) a,b
Upper middle-income poverty rate ($5.5 in 2011 PPP) a,b
GHG emissions growth (mtCO2e)
Energy related GHG emissions (% of total)

The precarious fiscal situation and policy
uncertainly are also weighing down theeconomic outlook. Tax revenues and
SACU receipts have been adversely hit,leading to a widening fiscal gap in 2021
and 2022. It remains unclear as how thisgap will be financed given the limited
government buffers and limited domestic
borrowing capacity. Public debt stock is
projected to increase steadily from anestimated 51.7 percent of GDP in 2020 to55.9 percent in 2021, prior to moderating
again as growth resumes. The government is in discussion with the IMF for a
new program.
With the recovery from COVID-19, poverty is expected to trend downwards but
will remain higher than in 2019. The
US$1.90/person/day (in 2011 PPP terms)
poverty rate is project to fall slightly to
30.3 percent in 2021 and to 28.4 percent in
2022. The poverty levels are projected toremain higher than pre-COVID-19 levels,a reflection of slow labor market recovery
from
COVID-19-related
lockdown
measures which led to job and income
losses. Accelerating poverty reduction will
require support for the worst affectedhouseholds and providing universal access to the vaccine.

(annual percent change unless indicated otherwise)
2018
-1.2
0.8
-1.9
-49.7
6.5
-4.7
-1.2
-13.2
3.6
-1.8
4.0
-1.7
1.6
-4.6
45.1
-3.8
27.2
49.9
73.2
1.2
70.1

2019
-0.4
5.2
7.8
78.1
-7.2
-1.2
-0.4
6.1
-1.3
-0.7
5.2
-3.4
1.5
-5.6
42.9
-4.6
25.7
47.7
71.7
0.8
71.4

2020
-9.5
-14.9
19.7
-9.2
-7.7
-2.1
-9.5
25.5
-10.1
-13.1
5.0
-2.1
1.7
-1.0
51.7
-0.1
32.1
54.2
77.2
-1.5
71.6

2021 e
3.2
7.8
-7.1
129.8
-0.2
15.6
3.2
2.3
7.5
1.4
5.4
-7.9
1.4
-6.6
55.9
-6.3
30.3
52.1
75.8
-0.2
71.7

So urce: Wo rld B ank, P o verty & Equity and M acro eco no mics, Trade & Investment Glo bal P ractices. Emissio ns data so urced fro m CA IT and OECD.
No tes: e = estimate, f = fo recast.
NA(a) Calculatio ns based o n 2017-CM SHB S.A ctual data: 2017. No wcast: 2018-2020. Fo recast are fro m 2021to 2023.
(b) P ro jectio n using neutral distributio n (2017) with pass-thro ugh = 0.87 based o n private co nsumptio n per capita in co nstant LCU.

MPO 249 Oct 212022 f
3.0
3.6
-0.5
24.0
1.6
6.8
3.0
2.4
4.8
2.2
5.3
-12.6
1.4
-11.8
53.8
-11.6
28.4
50.8
74.0
2.2
71.8

2023 f
2.8
3.6
-3.7
37.0
2.2
10.3
2.8
2.4
5.0
1.8
5.3
-11.2
1.5
-8.0
56.3
-7.8
27.2
49.9
73.2
2.3
71.7

LIBERIA

Key conditions andchallenges

Table 12020

P o pulatio n, millio n

5.1

GDP , current US$ billio n

3.2

GDP per capita, current US$

627.5

Internatio nal po verty rate ($ 1.9)

a

44.4

a

35.3

Gini index

Scho o l enro llment, primary (% gro ss)

b

b

85.1
64.1

Life expectancy at birth, years
To tal GHG Emissio ns (mtCO2e)

22.4

Source: WDI, M acro Poverty Outlook, and official data.
(a) M ost recent value (201 6), 201 1 PPPs.
(b) WDI for School enrollment (201 7); Life expectancy (201 9).

Liberia’s economy is rebounding after
contracting for two consecutive years.
Real GDP growth is projected at 3.6 percent in 2021 and an average of 4.9 percent in 2022-23, allowing per capita GDP
to increase for the first time since 2016.
Nevertheless, poverty is expected toslightly increase as per capita consumption continues to contract, with growth
being driven by export of commodities.

The COVID-19 pandemic unfolded at atime when Liberia’s economy was alreadyweak. In 2020, the economy contracted forthe second year in a row, and extreme
poverty is estimated to have increased.
Moreover, Liberia experienced a third
wave of COVID-19 infections in June 2021,
and data from the latest High-Frequency
Survey, conducted in July 2021, suggestthat pandemic-related challenges persist.
In the context of large pre-existing imbalances, the authorities have sought to restore macroeconomic stability while responding to the pandemic. Notably, theCentral Bank of Liberia (CBL) has maintained a tight monetary policy stance tohelp contain inflation, and the government has continued fiscal consolidation,with strong revenue efforts that paid off
even at the height of the pandemic.

Recent developments
Liberia’s economy is recovering, with output expanding in key sectors over the first
five months of 2021. In agriculture, rubberand crude palm oil production increasedby 29.3 percent and 3.3 percent, year-onyear, respectively, due to a recovery in international prices. In industry, the production of gold, cement, and beverages increased, reflecting favorable international

prices as well as an uptick in export, construction, and consumption. While ironore production increased by 14.6 percent
compared to the first five months after
the lockdown (from April to August2020), it fell by 8.3 percent, year-on-year,
as production remained below preCOVID-19 levels.
Notwithstanding the rebound in economic
activity, inflationary pressures have moderated. The rate of inflation slowed steadily to 7.1 percent by July 2021 due to a decline in food prices and the CBL’s cautious
monetary stance. Modest inflationarypressures allowed the CBL to cut its policy
rate by 500 basis point to 20 percent inAugust 2021 to improve liquidity conditions and support growth.
Despite the recovery, poverty is expected
to increase to 52.1 percent, as growth inprivate consumption remains modest
because of the COVID-19 pandemic. The
last COVID-19 High-Frequency Survey
shows the that about 35 percent of thebusinesses reported a decline in revenue
and more than 80 percent of the households were worried about not having
enough food to eat.
Liberia’s fiscal position improved in thefirst five months of 2021 due to increased
revenues and spending consolidation. Total
revenues and grants increased to US$249.3
million, while total expenditure reached
US$286.4 million, yielding a fiscal deficit of
US$37.1 million (1.1 percent of GDP). With
the amended PFM act requiring Liberia toalign its fiscal year to the calendar year by
2022, the legislature has approved a special
budget to fund fiscal operations from July 1
to December 31, 2021. Total revenues and

FIGURE 1 Liberia / Real GDP growth and sectoral
contributions to real GDP growth

FIGURE 2 Liberia / Actual and projected poverty rate andreal private consumption per capita

Percent, percentage points

Poverty rate (%)
80

16Real private consumption per capita (LCU constant)
250

70

12

200

60

8

50

4

40

0

30

150
100

20

-4

Agriculture
Industry
Services
Real GDP growth

-8
-12
2018

2019e

2020f

2021f

2022f

Source: World Bank staff calculations based on IMF and CBL data.

50

10
0

0
2007

2009

2011

2013

2015

International poverty rate

2023f

Source: World Bank. Notes: see Table 2.

MPO 250 Oct 21

2017

2019

2021

2023

Real priv. cons. pc

grants are projected at US$429 million(12.7 percent of GDP) during the period(from July 1 to December 31, 2021), withdomestic revenue representing an expected 70 percent of public resources as
the government increases the Goods andService Tax rate to 11 percent and imposes
an airport departure tax at US$25 per passenger. Total expenditure is projected at
US$458.2 million (13.6 percent of GDP,
including donor-financed projects), withcurrent expenditure representing 60 percent of the special budget. The fiscal deficit of the special budget is projected at 0.9
percent of GDP and is expected to be fully
financed by external loans.
The recovery in the price of Libera’s main
export commodities, on the back of renewed international demand, has boosted
the value of exports and improved thetrade balance. Between January and May
2021, iron ore, gold, and rubber exports
increased considerably, resulting in an

increase in the value of exports by 71.2
percent, higher than the 40.0 increase in
the value of imports.

Outlook
Liberia’s economy is projected to expandby 3.6 percent in 2021 and an average of
4.9 percent in 2022-23. Growth will be
driven mainly by the mining sector andexternal demand. Structural reforms are
expected to increase activity in mining,
agriculture, and construction. Per capita
GDP is expected to return to pre-COVID19 levels by 2023.
Headline inflation is projected to average
9.8 percent in 2021 and remain in single
digits in 2022-23. With continued tightmonetary policy and sustained fiscal consolidation, it is expected to fall further to
8.5 percent by 2023. The poverty rate is

TABLE 2 Liberia / Macro poverty outlook indicators

Real GDP growth, at constant market prices
Private Consumption
Government Consumption
Gross Fixed Capital Investment
Exports, Goods and Services
Imports, Goods and Services
Real GDP growth, at constant factor prices
Agriculture
Industry
Services
Inflation (Consumer Price Index)
Current Account Balance (% of GDP)
Fiscal Balance (% of GDP)
Debt (% of GDP)
Primary Balance (% of GDP)
International poverty rate ($1.9 in 2011 PPP) a,b
GHG emissions growth (mtCO2e)
Energy related GHG emissions (% of total)

projected to decline to 48.1 percent in
2022, the first time in five years.
Liberia’s fiscal and external balances are
expected to improve due to continued
fiscal consolidation, a strong global economy, and favorable price dynamics for Liberia’s main exports. The overall fiscal
deficit is projected to fall from 2.9 percent
in 2021 to an average of 2.4 percent of
GDP in 2022-23, while the current accountdeficit is projected to narrow from an estimated 16.4 percent of GDP in 2020 to an
average of 15.3 percent of GDP in 2021-23.
The outlook is, however, subject to highlevels of uncertainty and significant
downside risks. External risks include: (i)a resurgence of COVID-19 infections,
given low vaccination rates; and (ii) adverse commodity price dynamics. Internal risks are linked to the government’s
commitment to reform, which needs tobe maintained for growth and poverty
reduction to materialize.

(annual percent change unless indicated otherwise)
2018
1.2
6.0
-4.3
-13.6
-0.3
-13.8
0.8
1.2
4.9
-0.8
20.4
-22.3
-4.6
38.2
-4.0
44.9
0.6
36.1

2019
-2.5
-2.8
4.0
-4.3
1.6
0.4
-2.9
0.2
1.0
-6.6
27.0
-20.5
-5.6
48.5
-5.0
48.2
-0.3
35.9

2020
-3.0
-1.9
-11.6
0.2
-10.2
-7.4
-2.9
2.4
0.2
-8.6
17.4
-19.4
-3.4
52.2
-2.2
51.2
-0.7
35.4

2021 e
3.6
1.1
2.6
-0.3
15.4
1.3
3.4
3.3
3.9
3.4
9.8
-16.5
-2.9
56.0
-1.9
52.1
3.0
35.5

So urce: Wo rld B ank, P o verty & Equity and M acro eco no mics, Trade & Investment Glo bal P ractices. Emissio ns data so urced fro m CA IT and OECD.
No tes: e = estimate, f = fo recast.
NA(a) Calculatio ns based o n 2016-HIES.A ctual data: 2016. No wcast: 2017-2020. Fo recast are fro m 2021to 2023.
(b) P ro jectio n using neutral distributio n (2016) with pass-thro ugh = 1 based o n private co nsumptio n per capita in co nstant LCU.

MPO 251 Oct 212022 f
4.7
8.6
-9.8
3.4
2.0
3.1
4.7
4.5
5.3
4.6
11.0
-15.5
-2.5
55.2
-0.6
48.1
3.4
35.7

2023 f
5.0
8.6
-17.1
6.2
2.0
3.1
5.0
5.2
5.6
4.6
8.5
-15.1
-1.7
53.6
0.1
44.4
3.5
35.9

MADAGASCAR
Table 1

Key conditions andchallenges

2020

P o pulatio n, millio n

Prior to the COVID-19 crisis, Madagascar
was on a modest upward growth trajectory,
supported by renewed political stability,
which contributed to restore investor confidence, reopen access to key export markets,
reinstate flows of concessional financing,and encourage structural reforms. Despite
positive momentum, growth peaked at astill modest 4.4 percent in 2019 and averaged only 3.5 percent over the period 201319, which barely surpassed population
growth and was insufficient to ensure rapid
poverty reduction. Despite unique natural
resources, a relatively high degree of tradeintegration and strong comparative advantages, Madagascar has been unable toaccumulate productive assets, reflecting an
unpredictable business environment, inadequate investments in infrastructure andhuman capital, weak governance and exposure to frequent climate shocks.
The COVID-19 crisis has plunged the country into its deepest recession in two decades and led to a significant uptick in extreme poverty. The longer lasting effects ofthe crisis are uncertain but previous recessions contributed to depress potential output through the persistent loss of formal
employment and private capital. Whileemergency measures continue to be critical,
including efforts to ramp up vaccination,safely reopen the country, and mitigate theimpact of the pandemic on companies andhouseholds, a pre-condition to deliver a

27.7

GDP , current US$ billio n

13.4

GDP per capita, current US$

483.8

Internatio nal po verty rate ($ 1.9)

a

78.8
a

91.5

a

97.5

Lo wer middle-inco me po verty rate ($ 3.2)
Upper middle-inco me po verty rate ($ 5.5)a

42.6

Gini index

Scho o l enro llment, primary (% gro ss)

b

134.1

b

67.0

Life expectancy at birth, years
To tal GHG Emissio ns (mtCO2e)

42.5

Source: WDI, M acro Poverty Outlook, and official data.
(a) M ost recent value (201 2), 201 1 PPPs.
(b) M ost recent WDI value (201 9).

The COVID-induced recession in 2020
was more severe than anticipated andthe second wave of the pandemic hitting
Madagascar in 2021 has further delayed
prospects of recovery. Historic droughts
in the South have led to widespread foodinsecurity for already vulnerable populations. Following these converging
crises, extreme poverty is expected toincrease by 5 percentage points between
2019 and 2021 and remain 2 percentage
points above pre-COVID levels in 2023.
Without a robust policy response, potential growth could be persistently
scarred by recent shocks.

sustainable recovery is for the government to re-commit to reforms aimed at
improving the business climate, basic
public services and infrastructure, andpublic sector governance.

Recent developments
The initial impact of the COVID-19 crisis in
has been more severe than previously anticipated, with the collapse of export
revenues and private investment resulting
in a GDP contraction of 6.2 percent in 2020
(2 percentage points lower than estimatedin April 2021). Following a short-lived rebound at the end of 2020, volumes of sales,order books, profits, investment, and employment were again trending down in thefirst half of 2021, as a second wave of thepandemic hit the country in March andApril of 2021 and international borders remained closed. The drought-driven foodcrisis in the South led nearly 1 in 2 people(more than 1.3 million) living in the region’s
10 hardest-hit districts in a situation of acutefood insecurity, while nearly 30,000 are
expected to experience famine by the end of
the year. Against this backdrop, the poverty
rate is estimated to have risen from 76.5
percent in 2019 to 80.7 percent in 2020, andfurther to 81.1 percent in 2021, sending another 2.4 million people under theinternational poverty line of $1.90/capita/
day (in 2011 PPP) over this two-year period.
The sudden loss of fiscal revenues contributed to widen budget deficits to 4.2 percent
of GDP in 2020 and led to the accumulationof domestic arrears. In this context, public

FIGURE 1 Madagascar / GDP per capita around crisis episodes

FIGURE 2 Madagascar / Actual and projected poverty rates
and real GDP per capita

Index, t-1 = 100
105

Poverty rate (%)
120

100

100

95

80

90

60

85

40

Real GDP per capita (LCU constant)
900000850000800000750000

80

1981
2002
2020

75

0

t-3

t-2

6500002005 2007 2009 2011 2013 2015 2017 2019 2021 2023

70
t-4

700000

20

1991
2009

t-1

t

t+1

t+2

t+3

t+4

Source: World Bank, Poverty & Equity and Macroeconomics, Trade &Investment Global Practices.

t+5

International poverty rate
Upper middle-income pov. rate

t+6

Source: World Bank. Notes: see Table 2.

MPO 252 Oct 21

Lower middle-income pov. rate
Real GDP pc

debt reached 45 percent of GDP in 2020, a
7.5 percentage point uptick from 2019. The
current account deficit increased in 2020 toreach 5.2 percent of GDP, driven by a 26
percent drop in export revenues. Risingenergy and capital goods imports in thefirst half of 2021 further widened the external deficit. Unexpected fiscal and externalfinancing needs were mostly covered byemergency support operations from multilateral donors, which has helped limit currency pressures and maintain foreign reserves at comfortable levels.

Outlook
Reflecting continued headwinds during
the first half of the year, growth is now

predicted to reach 1.8 percent in 2021, 0.2
percentage points below April 2021 projections. Overall, income per capita
dropped by a cumulative 9.4 percent in2020 and 2021, representing the largest
shock since the political crises of 1991 and2002. Barring a third wave of the pandemic, further escalation of food insecurity in
the South or other natural disasters, a
gradual lifting of COVID-related restrictions is expected to result in growth
picking up to 5.4 percent in 2022 and 5.1
percent in 2023. This should allow a return to positive GDP per capita gains, but
at a slower-than-previously-expected
pace. Against this backdrop, the poverty
rate is expected to decrease moderately
over the next two years but to remain two
percentage points higher than the preCOVID level, at 78.5 percent, in 2023.

TABLE 2 Madagascar / Macro poverty outlook indicators

Real GDP growth, at constant market prices
Private Consumption
Government Consumption
Gross Fixed Capital Investment
Exports, Goods and Services
Imports, Goods and Services
Real GDP growth, at constant factor prices
Agriculture
Industry
Services
Inflation (Consumer Price Index)
Current Account Balance (% of GDP)
Fiscal Balance (% of GDP)
Debt (% of GDP)
Primary Balance (% of GDP)
International poverty rate ($1.9 in 2011 PPP) a,b
Lower middle-income poverty rate ($3.2 in 2011 PPP) a,b
Upper middle-income poverty rate ($5.5 in 2011 PPP) a,b
GHG emissions growth (mtCO2e)
Energy related GHG emissions (% of total)

The budget deficit is predicted to increase further to 6.2 percent of GDP in
2021, as public investments are scaled
up and domestic arrears accumulated in2020 are being repaid, before stabilizingin 2022-23 around 4 percent. External
debt distress risks are assessed to bemoderate, assuming ambitious efforts
to boost revenue mobilization and prudent management of public debt andcontingent liabilities. Food supply disruptions and a rebound in energy prices
are expected to bring inflation up to 6.1
percent in 2021, from 4.3 percent in
2020, but this remains consistent with
Central Bank’s objectives and will allow
it to maintain a broadly accommodative
policy stance.

(annual percent change unless indicated otherwise)
2018
3.2
1.6
-7.9
11.0
2.4
11.1
2.3
0.4
2.0
3.3
7.3
0.7
-1.3
39.5
-0.5
77.3
90.7
96.6
1.8
14.4

2019
4.4
1.2
1.9
12.9
10.9
4.6
4.3
5.5
6.6
3.1
5.6
-2.3
-1.4
37.4
-0.7
76.5
90.3
96.1
4.0
14.3

2020
-6.2
-3.0
2.2
-6.3
-24.5
-14.8
-6.2
2.2
-19.5
-5.9
4.2
-5.2
-4.2
45.0
-3.5
80.7
92.5
98.5
-1.1
14.1

2021 e
1.8
1.4
7.5
2.6
3.9
4.4
1.8
2.2
1.4
1.7
6.1
-5.9
-6.2
49.8
-5.3
81.1
92.7
98.8
0.7
14.6

So urce: Wo rld B ank, P o verty & Equity and M acro eco no mics, Trade & Investment Glo bal P ractices. Emissio ns data so urced fro m CA IT and OECD.
No tes: e = estimate, f = fo recast.
NA(a) Calculatio ns based o n 2005-EP M and 2012-ENSOM D.A ctual data: 2012. No wcast: 2013-2020. Fo recast are fro m 2021to 2023.
(b) P ro jectio n using po int to po int elasticity at regio nal level with pass-thro ugh = 0.87 based o n GDP per capita in co nstant LCU.

MPO 253 Oct 212022 f
5.4
3.5
2.0
9.7
8.8
6.5
5.4
3.0
6.7
6.2
6.3
-5.4
-5.2
51.8
-4.2
79.7
92.0
98.0
1.5
15.1

2023 f
5.1
3.7
4.2
8.7
7.1
6.3
5.1
3.0
6.3
5.8
6.1
-5.3
-4.1
52.7
-3.1
78.5
91.4
97.3
1.8
15.6

MALAWI

Key conditions andchallenges

Table 12020

P o pulatio n, millio n

19.3

GDP , current US$ billio n

11.7

GDP per capita, current US$

606.2

Internatio nal po verty rate ($ 1.9)

a

69.2

a

44.7

Gini index

Scho o l enro llment, primary (% gro ss)bbLife expectancy at birth, years
To tal GHG Emissio ns (mtCO2e)

144.8
64.3
28.9

Source: WDI, M acro Poverty Outlook, and official data.
(a) M ost recent value (201 6), 201 1 PPPs.
(b) M ost recent WDI value (201 9).

Malawi’s economy continues to be heavily
affected by the COVID-19 pandemic, withsevere second and third waves striking in
2021. Economic growth is expected at 2.4
percent in 2021, with only a weak rebound in the services and industry sectors. Malawi is benefitting from a onetime
boost to maize production in 2021 due tofavorable weather and extensive input
subsidies. However, it will need to address high levels of debt while investingin diversification in order to sustainably
increase growth and reduce persistently
high poverty levels.

The COVID-19 pandemic has continued toheavily impact the economy in 2021, withsecond and third waves continuing toweigh on activity, particularly in the services and industry sectors. Despite vaccination efforts, only 2.2 percent of the
population has been fully vaccinated as ofAugust 2021. The pandemic is reducing
revenues and increasing expenditure for
COVID-response, which together withexpansionary policies by the new administration, further weaken an alreadystrained fiscal position. Malawi’s economy
continues to rely on subsistence, rainfed
agriculture, which limits its growth potential, increases its susceptibility to weather
shocks, and creates food insecurity. In
addition, the main export of tobacco is
projected to decline in the medium term.
This has been compounded by trade policies and a business environment which
impede investment and commercialization, as well as erratic electricity supply
that limits value addition and slows economic diversification. Public investment
has been low, offset by large and increasing subsidies to maize production. Weakfiscal management and economic policies
have contributed to recurring and increasing fiscal deficits, which have been largely
funded by high-cost domestic borrowing.
Rising domestic debt has already pushed
Malawi into high overall risk of debt distress and it is budgeted to continue rising

sharply. This is being compounded byrecent external non-concessional borrowing. This increasingly reduces fiscal spacefor development spending and also risks
crowding out private sector investment.
After several years of ‘super-stability,’
while the depreciating exchange rateshould gradually help to reduce a significant trade imbalance, it will also increaseimported inflation and external borrowing
levels. These factors have contributed topersistently high poverty levels and limited structural transformation. The shareof the population below the international
poverty line of $1.90 per day has decreased only marginally in the last decade,reducing from 72 percent in 2010 to 67
percent in 2019. However, this increased
to 68 percent in 2020 due to the COVID-19
pandemic.

Recent developments
Economic activity has continued to bestrongly affected by the COVID-19 pandemic in 2021, although its impact on theservices and industry sectors was partially
offset by a strong agricultural harvest.
Favorable weather and agricultural input
subsidies have contributed to a one-time
jump in the maize harvest, and tobacco
production also increased. This has contributed to stronger employment in rural
areas, while urban employment has only
shown a slower recovery from the pandemic. Moderate and severe food insecurity has also reduced by June 2021, although poorest households continue to be

FIGURE 1 Malawi / Fiscal deficit and public debt

FIGURE 2 Malawi / Actual and projected poverty rates andreal GDP per capita

Percent of GDP
8

Poverty rate (%)

Percent of GDP
60

Real GDP per capita (constant LCU)

73

45000072

40000071

35000070

30000069

25000068

2000006715000066

100000

1

65

50000

0

64

7
50

6

5

40

4
30

3
2

20
10
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

Fiscal Deficit (lhs)02004 2006 2008 2010 2012 2014 2016 2018 2020 2022
International poverty rate

Public Debt (rhs)

Sources: Ministry of Finance, Economic Planning and Development, World Bank.

Source: World Bank. Notes: See Table 2.

MPO 254 Oct 21

Real GDP pc

the most insecure. Malawi’s severe second
wave of the COVID-19 pandemic largely
subsided by March 2021, but a third wave
led to a jump in case numbers from June
to August. As a result, the Government
increased social distancing policies which
impacted the services and industry sectors, although these policies were thenlifted in August as conditions improved.
Headline inflation picked up to 8.7 percent in July 2021. Robust food supplies
following the strong agriculture season
led food inflation to decelerate to 10.3
percent. However, non-food inflation has
increased to 7.2 percent partially due todepreciation of the kwacha. The Malawi
Kwacha has gradually depreciated byabout 10 percent against the US dollar
since July 2020. After gradually declining
over the past year, Reserve Bank of Malawi (RBM) gross reserves increased to 2.4
months import cover in August 2021, due
to the IMF’s Special Drawing Rights(SDR) allocation.
Fiscal pressures from the pandemic andgovernment expansionary policies, including the introduction of Affordable
Input Program (AIP), contributed to thefiscal deficit widening to 7.1 percent of
GDP in FY2021. Expenditure reached thehighest levels in recent years due to highlevels of expenditure on wages, interest
payments, and fertilizer subsidies. Development spending has also been strong,

driven by COVID-19 response programs,
and irrigation and water projects.

Outlook
The economy is projected to grow by 2.4
percent in 2021, largely due to strong agriculture production. Economic activity is
expected to pick up slightly in the services
and industry sectors over the last monthsof 2021 as case numbers from the third
wave continue to decline and social distancing policies have been lifted. However, sluggish vaccine availability, vaccine
hesitancy, and slow uptake will continue
to perpetuate risks of new waves of infection and associated social distancing policies. With GDP per capita growth remaining low, the share of the population below
the international $1.90 poverty line is projected to continue to stagnate around 68
percent between 2021 and 2023.
The FY2022 fiscal deficit is expected towiden to 9.1 percent of GDP and there arerisks that it could go even higher. Tax
revenues are optimistically budgeted to
pickup significantly, which, if unrealized,
could lead to a larger deficit or the further
accumulation of arrears. Expenditure,
already at high levels, is increasing further, driven by a surge in domesticallyfinanced development spending and a

TABLE 2 Malawi / Macro poverty outlook indicators

Real GDP growth, at constant market prices
Real GDP growth, at constant factor prices
Agriculture
Industry
Services
Inflation (Consumer Price Index)
Current Account Balance (% of GDP)Net Foreign Direct Investment (% of GDP)
Fiscal Balance (% of GDP)
Debt (% of GDP)
Primary Balance (% of GDP)
International poverty rate ($1.9 in 2011 PPP) a,b
GHG emissions growth (mtCO2e)
Energy related GHG emissions (% of total)

modest increase in an already high levelof recurrent expenditure. The second yearof the universal inputs subsidy program,the AIP, will weigh heavily on the budget.
The Government continues to finance fiscal deficits through domestic borrowing,
thereby increasing domestic debt levels.
The external debt-to-GDP ratio may also
increase due to financing needs for
COVID-19 response, as well as depreciation of the exchange rate. Additional offbudget domestic borrowing of 13 percent
of GDP for development projects isplanned for the medium term. However,this will call for rigorous cost-benefit analysis of projects to assess if they justify
high borrowing costs. In addition, theGovernment is expected to clear arrears
amounting to 3 percent of GDP.
The current account deficit is projected toremain elevated in the medium term. A
modest uptick in tobacco production anda projected increase in global tea prices
should support exports in 2021 but increasing international oil and fertilizer
prices may increase the import bill. Exchange rate depreciation should help improve the trade balance in the medium
term, but export growth may be weak due
to limited diversification beyond rainfed
subsistence agriculture and declining
global demand for tobacco.

(annual percent change unless indicated otherwise)
2018
4.4
4.0
0.3
7.2
4.5
9.2
-17.0
1.8
-4.4
43.9
-1.6
68.1
5.6
34.0

2019
5.4
6.0
5.9
7.7
5.5
9.4
-13.8
0.7
-4.5
45.3
-1.6
67.3
4.5
33.4

2020
0.8
0.8
3.4
1.2
-0.5
8.6
-11.7
0.5
-6.3
52.8
-3.3
67.9
3.0
32.8

2021 e
2.4
2.4
4.9
1.6
1.7
8.8
-11.5
0.8
-7.1
57.3
-3.5
68.1
-0.5
33.8

So urce: Wo rld B ank, P o verty & Equity and M acro eco no mics, Trade & Investment Glo bal P ractices. Emissio ns data so urced fro m CA IT and OECD.
No tes: e = estimate, f = fo recast.
NA(a) Calculatio ns based o n 2016-IHS-IV.A ctual data: 2016. No wcast: 2017-2020. Fo recast are fro m 2021to 2023.
(b) P ro jectio n using neutral distributio n (2016) with pass-thro ugh = 0.7 based o n GDP per capita in co nstant LCU.

MPO 255 Oct 212022 f
3.0
3.0
1.8
2.4
3.7
8.1
-10.7
1.2
-9.1
61.9
-5.3
68.1
2.2
33.8

2023 f
4.4
4.4
3.2
4.3
5.0
7.9
-9.7
1.4
-8.6
64.2
-4.4
67.6
2.8
33.7

MALI

Key conditions andchallenges

Table 12020

P o pulatio n, millio n

20.3

GDP , current US$ billio n

17.5

GDP per capita, current US$

862.1

Internatio nal po verty rate ($ 1.9)

a

50.3
a

79.8

a

95.0

Lo wer middle-inco me po verty rate ($ 3.2)
Upper middle-inco me po verty rate ($ 5.5)a

33.0

Gini index

Scho o l enro llment, primary (% gro ss)bbLife expectancy at birth, years
To tal GHG Emissio ns (mtCO2e)

75.6
59.3
45.1

Source: WDI, M acro Poverty Outlook, and official data.
(a) M ost recent value (2009), 201 1 PPPs.
(b) WDI for School enrollment (201 8); Life expectancy (201 9).

The COVID-19 and political crises led toa recession in 2020 and erased the progress in poverty reduction since 2015. A
modest recovery is projected in 2021, stabilizing the fiscal balance, while debt pressures will keep building as external imbalances widen. Growth is expected to recover over the medium term, although theoutlook is tilted to the downside with risks
from the political transition, rising insecurity, the emergence of new COVID-19
variants, and climatic hazards.

Structural change is limited and theeconomy remains vulnerable to external shocks. Agriculture is dominatedby subsistence crops and livestockwith low productivity. Manufacturingconcentrates in textiles and agrifoods,
while cotton and gold dominate export. Agricultural technologies andinfrastructure are vital conditions forstructural transformation. There havebeen mixed results in nonmonetary
poverty indicators. Children’s schooling improved as the share of households with a child not attending schoolfell from 62 to 41 percent. However,the percentage of households with sickmembers unable to consult with ahealth specialist has increased from 22
to 37 percent.
The recent coups (August 2020 and May2021) compounded longstanding governance challenges and may further delay the recovery. Newly created regions
are not adequately staffed for effective
service delivery, hampering implementation of the 2015 Algiers peace agreement. In addition to restoring the presence of the state and strengthening therule of law, fiscal consolidation and improving public financial management
constitute the most pressing tasks.
Downside risks also include the emergence of new variants and the slow vaccination rollout.

Recent developments
Real GDP contracted by 1.6 percent in2020 (4.5 percent in per capita terms), due
to the pandemic, the coup, and dampened
agricultural production (resulting fromlower cotton farmgate prices, localized
floods and insecurity). On the demandside, private consumption and investment
were main factors behind the contraction.
The first quarter of 2021 showed signs ofrecovery in agriculture and services. Industrial activity slowed down particularly
in textile and agrifood. Headline inflation(y/y) turned positive in mid-2020, andcontinued to increase in 2021, reaching 4
percent y/y in June 2021, driven by surging food prices (5.3 percent y/y), which islikely to add to social tensions.
The current account deficit (CAD) narrowed to 0.2 percent of GDP in 2020, withstronger terms of trade and lower domestic demand. External financial inflows
dropped in 2020, due to the pandemic anddelays in donor support. In 2021Q1, goods
exports continued to increase supported
by non-gold exports, while goods imports
also rose despite declining energy imports.
The fiscal deficit reached 5.4 percent of
GDP in 2020, due to lower revenues frompandemic-induced spending and tax expenditures, reduced grants, and wage billincreases. Financing needs were coveredby concessional credits, grants, increased
domestic borrowing and resources freed
by the Debt Service Suspension Initiative(DSSI). Public debt reached 47.4 percent of
GDP (partly reflecting a data reconciliation

FIGURE 1 Mali / GDP growth, fiscal and current accountbalance

FIGURE 2 Mali / Actual and projected poverty rates and real
GDP per capita

Percent
7

Poverty rate (%)

Percent of GDP
1

Real GDP per capita (LCU constant)

120

290000

6

5

-2

4

280000100

270000

80

3

-5

2

1
-8

0

26000060

25000024000040

230000
20

-1

-2

-11
2016

2017

2018 2019 2020e 2021p 2022p 2023p
GDP growth (%)
Fiscal balance (% of GDP, rhs)
Current Account Balance (% of GDP, rhs)

Sources: Malian government and the World Bank.

22000002100002006 2008 2010 2012 2014 2016 2018 2020 2022
International poverty rate
Upper middle-income pov. rate

Source: World Bank. Notes: See Table 2.

MPO 256 Oct 21

Lower middle-income pov. rate
Real GDP pc

that included previously under-recordedloans), while the country remains at amoderate risk of debt distress. In the firsthalf of 2021, both customs and domestic
tax collections showed signs of recovery.
Spending in 2021 remains high, driven
by fiscal measures to contain food andfuel price, and increases in subsidies andwage bill.
Mali’s monetary and exchange rate policies are managed by the Central Bank ofWest African States (BCEAO), which
maintains a peg between the CFA Francand the Euro. Its reserves have remained
stable since 2019 and reached an estimated
5.8 months of imports in 2020 due to large
donor support and a large Eurobond issuance in Cote d’Ivoire. To support the regional economy and COVID-19 related
extra spending, the BCEAO implemented
monetary and macroprudential measuresbeginning in March 2020 (including a policy rate cut and extended refinancing operations of the 3-month COVID-19 bonds)
which were extended into 2021.
Between 2015 and 2019, Mali experienced significant poverty reduction.
Poverty incidence fell from 47.6 percent
to 42.1 percent, driven by higher agricultural production and the expansion of

the tertiary sector which encouraged
rural households’ consumption. This
positive trend was reversed in 2020 due
to growth contraction which increased
poverty to 44.9 percent. In high frequency surveys, 12.7 percent of respondents
employed before the pandemic reportbeing unemployed in May 2020 due tothe crisis. However, the share of respondents reporting unemployed fell to
6.3 percent in September, and to 5.8 percent in October 2020.

OutlookReal GDP growth is expected to reboundto 4 percent in 2021 and to average 5.1
percent over 2022-2023. Private consumption is expected to continue to recoveralongside remittance inflows as the pandemic wanes down. The programmedtransition to democratic rule by early2022 would ease political uncertainty andencourage private investment over the
medium-term. Poverty is projected toremain at 44 percent in 2021, before decreasing gradually to the pre-pandemic
level of about 42 percent by 2023. Main

TABLE 2 Mali / Macro poverty outlook indicators

Real GDP growth, at constant market prices
Private Consumption
Government Consumption
Gross Fixed Capital Investment
Exports, Goods and Services
Imports, Goods and Services
Real GDP growth, at constant factor prices
Agriculture
Industry
Services
Inflation (Consumer Price Index)
Current Account Balance (% of GDP)Net Foreign Direct Investment (% of GDP)
Fiscal Balance (% of GDP)
Debt (% of GDP)
Primary Balance (% of GDP)
International poverty rate ($1.9 in 2011 PPP) a,b
Lower middle-income poverty rate ($3.2 in 2011 PPP) a,b
Upper middle-income poverty rate ($5.5 in 2011 PPP) a,b
GHG emissions growth (mtCO2e)
Energy related GHG emissions (% of total)risks to further poverty reduction remain
weather variability, price inflation, andconflict deterioration.
The external position is expected to deteriorate with less favorable terms of tradeover 2021-2023. Import demand will risewith the recovery in private consumption.
The CAD is projected to increase to 5 percent of GDP in the medium term, financed
by official inflows and FDI. In August
2021, the BCEAO received 1.4 percent of
aggregate GDP in additional SDR allocations from the IMF which have been onlent to member countries.
The budget deficit is projected to stay at
5.5 percent of GDP in 2021. Spending in
2021 may further increase with electionrelated activities, the harmonization ofallowance and bonus, and extra security
spending. In the medium-term, revenue
is expected to improve with ongoingreforms and donor reengagement.
Spending will stabilize, creating roomfor fiscal consolidation. The deficit will
gradually return to the WAEMU criterion of 3 percent by 2024. The DSSI extension is expected to free resources of over
0.2 percent of GDP in 2021. The debt
stock will reach 50.8 percent of GDP in
2022 before declining.

(annual percent change unless indicated otherwise)
2018
4.7
3.0
2.0
-0.9
-0.1
-12.1
5.3
5.9
5.5
4.8
1.7
-4.9
2.7
-4.7
36.1
-3.9
43.2
75.3
93.5
3.8
18.1

2019
4.8
3.8
4.0
6.3
2.3
5.9
4.5
4.1
3.7
5.2
-2.9
-7.5
5.0
-1.7
40.6
-0.7
42.1
74.6
93.2
4.6
18.2

2020
-1.6
-11.0
20.9
-16.7
-8.4
0.1
-1.6
-6.5
0.1
1.7
0.5
-0.2
3.1
-5.4
47.4
-4.2
44.9
76.6
93.8
-1.5
18.1

2021 e
4.0
8.0
-5.2
8.7
-6.1
4.0
4.0
8.0
1.5
2.1
3.0
-5.2
2.4
-5.5
50.8
-4.0
44.2
76.0
93.7
5.8
18.0

So urce: Wo rld B ank, P o verty & Equity and M acro eco no mics, Trade & Investment Glo bal P ractices. Emissio ns data so urced fro m CA IT and OECD.
No tes: e = estimate, f = fo recast.
NA(a) Calculatio ns based o n 2009-ELIM .A ctual data: 2009. No wcast: 2010-2020. Fo recast are fro m 2021to 2023.
(b) P ro jectio n using neutral distributio n (2009) with pass-thro ugh = 0.87 based o n GDP per capita in co nstant LCU.

MPO 257 Oct 212022 f
5.2
4.0
-2.0
16.7
8.0
5.3
5.2
5.2
5.2
5.2
2.1
-4.8
2.4
-4.5
50.4
-2.6
43.1
75.2
93.4
4.4
18.5

2023 f
5.0
3.5
5.6
11.5
6.0
5.0
5.0
5.0
5.0
5.0
2.0
-5.6
2.4
-3.5
50.0
-1.7
41.9
74.3
93.1
4.4
19.0

MAURITANIA
Table 1

Key conditions andchallenges

2020

P o pulatio n, millio n

4.7

GDP , current US$ billio n

7.7

GDP per capita, current US$

1638.3

Internatio nal po verty rate ($ 1.9)

a

6.0
a

24.1

a

58.8

Lo wer middle-inco me po verty rate ($ 3.2)
Upper middle-inco me po verty rate ($ 5.5)a

32.6

Gini index

Scho o l enro llment, primary (% gro ss)bbLife expectancy at birth, years
To tal GHG Emissio ns (mtCO2e)

100.4
64.9
13.3

Source: WDI, M acro Poverty Outlook, and official data.
(a) M ost recent value (201 4), 201 1 PPPs.
(b) M ost recent WDI value (201 9).

In 2020, Mauritania’s economy experienced its first contraction in a decade.
However, external and fiscal balances
remained resilient and contained into
2021, supported by increased donor financing, debt service suspension, andbetter terms of trade. Growth and poverty
reduction are expected to gradually recover in the medium term. Downside risks
include sustained pandemic, climatic hazards, slower structural reforms, and regional insecurity. Extreme poverty increased from 5.4 percent to 6.1 percent
between 2019 and 2020.

Macroeconomic stability had improved before the Covid-19 pandemic on the back ofimproved terms of trade, and reforms to
reduce fiscal deficits after the 2014-2015
commodity price shock. Growth increased
to 5.8 percent in 2019, with accompanying
extractive GDP growth of 14.9 percent, as
the country prepared to implement social
reforms. However, with the pandemic, thereforms were delayed, the economy remains
undiversified and overly reliant on the extractive sector, and subject to global uncertainties. There were no changes in the low
future productivity (37 percent) of a childborn in Mauritania between 2015 and 2019.
This may be partially explained by insufficient investment in human capital and basic
infrastructure, and the inability to channel
economic gains from trade and fiscal buffers
to address development constraints.
The Covid-19 pandemic continues to impose severe human, economic, and social
hardships, despite mitigating measures
implemented to contain the impact on thepoor. The contraction of the economy in2020 led to employment and income losses,
pushing an estimated 38,000 people into
extreme poverty. Addressing high poverty
rates and social deprivations requires macroeconomic stability and a focus on poverty
reducing programs. In response, the government launched programs to support an
economic recovery and sustain growth in
2021 and 2022. The government needs tofocus on supporting economic recovery,
creating inclusive jobs, preparing the fiscal
framework for 2023 gas revenues, and mitigating the impact of climate related shocks
on the agricultural sector.

Recent developments
The economy contracted by 1.8 percent in2020 induced by a global recession andlockdown measures to mitigate the impactof the Covid-19 pandemic. Contractions
were observed mainly in the fishing,transport, and ICT sectors. The extractive
and manufacturing sectors were resilient,benefiting from rising international prices
for extractive exports. Though the exchange rate remained stable in 2020 andthe first half of 2021, headline inflation rosefrom 1.5 percent (y-o-y) in August 2020,
reaching 4.4 percent (y-oy) in August 2021.
Supply constraints imposed due to theimplementation of Covid-19 measures in
2021 continues to fuel higher food prices
and offset the removal of import taxes onfood consumed by the poor.
The current account deficit (CAD) widened slightly to 11 percent of GDP in 2020,
from 10.4 percent in 2019, mainly on account of stronger imports of food and capital goods for the extractive sector. Despite
the pandemic, increased exports of ironore and gold compensated for a sharp
drop in fish exports in 2020. The CAD was
financed by strong extractive related FDI,
increased donor financing, and lower debt
amortization. Gross international reserves(excluding extractive industries) increased

FIGURE 1 Mauritania / Evolution of main macroeconomic
indicators

FIGURE 2 Mauritania / Actual and projected poverty rates
and real GDP per capita

Percent, percentage points
8

Poverty rate (%)

Percent of GDP
0

Real GDP per capita (LCU constant)

100

60000

-2

6
-4

4

-6

50000

80

40000
60
30000

-8

2
-10

0

-12

40

20000
20

10000

-14

-2

GDP growth (%)
Primary fiscal balance (% of GDP)
Current account balance (% of GDP, rhs)

-4

-16

0

-18

International poverty rate
Upper middle-income pov. rate

2015 2016 2017 2018 2019e 2020e 2021p 2022p 2023p
Source: World Bank.

02004 2006 2008 2010 2012 2014 2016 2018 2020 2022

Source: World Bank. Notes: See Table 2.

MPO 258 Oct 21

Lower middle-income pov. rate
Real GDP pc

from 4.5 months of imports in 2019, to 5.9
months in 2020.
Fiscal policy was impacted by the economic slowdown in 2020 as the lockdown affected both revenue collection
and budget execution. The fiscal surplus
remained mostly unchanged between
2019 and 2020 at 2 percent of GDP. A
surge in SOE dividends in 2020 partly
compensated for the fall in tax revenues,
which fell from 12.3 percent of GDP in
2019, to 11.7 percent. On the spending
side, increases in current transfers wereoffset by a reduction in public investments. Public debt increased slightly, toreach 73.2 percent in 2020, but is expected to decline sharply in 2021 aided
by some debt forgiveness.
Monetary policy was responsive to impactof the crisis in 2020. The central bankeased its reserve requirement and policy
rate and conducted liquidity management
operations to absorb excess liquidity. This
did not result in lower lending rates, lower domestic prices, nor increased lending
to the private sector, reflecting the limited
effectiveness of the monetary policy. Nonperforming loans remain high and rose to
25.8 in September 2020 relative to end
period level of 21.5 percent in 2019.
The decline in per capita GDP of 4.2 percent between 2019 and 2020, reversed

years of poverty reduction. Extreme poverty, measured by US$ 1.9/day (2011 PPP),
increased from 5.4 percent in 2019 to 6.1 in
2020, corresponding to nearly 38,000 people falling into extreme poverty. According to a phone survey in March 2021, twothirds of households reported difficulties
in accessing healthy and nutritious food,
while 94 percent of households reported
being affected by higher food prices.
Three out of four households experienced
a fall in income due to the pandemic.

Outlook
The economy is expected to recover in
2021, and over the medium term, on theback of the extractive sector. In the shortterm, successful implementation of
measures to curb the spread of the virus
and vaccinations is expected to support
the recovery of the non-extractive sectors
to result in GDP growth of 2.7 percent in
2021. With a favorable outlook over the
medium term and the onset of gas production in 2023, GDP growth is expected
to reach about 6.4 percent in 2023.
The current account deficit is expected toincrease and remain elevated at 11.9 percent of GDP in 2021 as a result of higher

TABLE 2 Mauritania / Macro poverty outlook indicators

Real GDP growth, at constant market prices
Private Consumption
Government Consumption
Gross Fixed Capital Investment
Exports, Goods and Services
Imports, Goods and Services
Real GDP growth, at constant factor prices
Agriculture
Industry
Services
Inflation (Consumer Price Index)
Current Account Balance (% of GDP)Net Foreign Direct Investment (% of GDP)
Fiscal Balance (% of GDP)
Debt (% of GDP)
Primary Balance (% of GDP)
International poverty rate ($1.9 in 2011 PPP) a,b
Lower middle-income poverty rate ($3.2 in 2011 PPP) a,b
Upper middle-income poverty rate ($5.5 in 2011 PPP) a,b
GHG emissions growth (mtCO2e)
Energy related GHG emissions (% of total)

imports of food, and capital equipment tosupport the extractive and hydrocarbon
activities. External financing will continue
to be met by extractive related FDI andconcessional financing, resulting in grossinternational reserves of more than 5months of non-extractive imports.
The 2021 budget included most of themeasures to fight the ongoing pandemic
that were not implemented in 2020, resulting in a projected fiscal deficit of 1.7 percent of GDP in 2021. In the medium term,
the budget is expected to be balanced, as
Covid related social spending is curtailed,
and tax collection improves along with thestronger economic growth.
The economic recovery is expected tosupport the reversal of poverty trends andbring back the poverty rate to its prepandemic level of 5.4 percent by 2023.
Nevertheless, the pandemic will continue
to represent a significant risk to growth in
the medium term if the virus is not contained and further waves trigger stricter
containment measures. Rising inflation
since August 2020 poses a threat to poverty reduction efforts if maintained overthe medium term.

(annual percent change unless indicated otherwise)
2018
4.5
2.7
-3.4
38.0
0.0
13.1
3.8
2.5
3.1
4.7
3.0
-13.3
10.5
2.4
73.8
3.6
5.9
23.8
58.3
1.2
32.6

2019
5.8
2.7
1.0
24.4
19.1
11.7
6.6
9.4
6.5
5.4
2.2
-10.4
11.2
2.0
70.7
2.9
5.4
22.5
56.6
2.8
33.6

2020
-1.8
2.7
9.2
-17.8
-1.9
2.0
-1.0
-3.6
2.6
-1.7
2.4
-11.0
11.5
2.1
73.2
3.4
6.1
24.3
59.1
-0.2
33.1

2021 e
2.7
1.9
13.1
6.8
2.1
6.5
1.4
0.7
4.9
-0.1
2.6
-10.9
12.5
-1.7
65.1
-0.7
6.1
24.3
59.1
3.6
31.8

So urce: Wo rld B ank, P o verty & Equity and M acro eco no mics, Trade & Investment Glo bal P ractices. Emissio ns data so urced fro m CA IT and OECD.
No tes: e = estimate, f = fo recast.
NA(a) Calculatio ns based o n 2014-EP CV.A ctual data: 2014. No wcast: 2015-2020. Fo recast are fro m 2021to 2023.
(b) P ro jectio n using neutral distributio n (2014) with pass-thro ugh = 0,87 based o n GDP per capita in co nstant LCU.

MPO 259 Oct 212022 f
4.1
2.4
-1.6
7.2
6.2
4.3
4.2
1.2
5.7
4.7
3.0
-9.8
12.1
-0.6
62.9
0.4
5.9
23.8
58.5
2.4
32.2

2023 f
6.4
2.7
5.1
6.3
11.2
5.1
6.4
2.3
10.5
5.9
3.5
-5.2
9.1
0.0
60.5
0.9
5.4
22.4
56.6
3.6
32.8

MAURITIUS
Table 1

Key conditions andchallenges
2020

P o pulatio n, millio n

1.3

GDP , current US$ billio n

10.9

GDP per capita, current US$

8384.6
a

2.2

a

12.7

Lo wer middle-inco me po verty rate ($ 3.2)
Upper middle-inco me po verty rate ($ 5.5)a

36.8

Gini index

Scho o l enro llment, primary (% gro ss)bbLife expectancy at birth, years
To tal GHG Emissio ns (mtCO2e)

99.5
74.2
6.0

Source: WDI, M acro Poverty Outlook, and official data.
(a) M ost recent value (201 7), 201 1 PPPs.
(b) M ost recent WDI value (201 9).

After a deep pandemic-driven recession in
2020, a second wave of Covid-19 has delayed recovery in 2021 despite the successful rollout of vaccines. Pensions’ reform and phased unwinding of Covid-19
support will be key to maintain debt sustainability. Authorities need to strike abalance to avoid a premature withdrawalof support that could compromise recovery, while creating fiscal space to address
longstanding structural challenges. The
effects of Covid-19 have reversed recent
gains in poverty reduction and female
labor force participation.

Mauritius became a High-Income Countryin July 2020 based on 2019 data. However,even before the pandemic struck, its development trajectory had become more fragile
due to four interrelated challenges thatemerged over the past decade: (i) a growthtrajectory increasingly driven by consumption, with a declining share of investment
and stagnating capital productivity; (ii) asustained loss in overall export competitiveness; (iii) an ageing population andincreasing frictions in the labor market,
resulting in high structural unemployment, rising skill shortages and growing
inequality; and (iv) persistent fiscal deficits
and rising levels of public debt to GDP.
Despite the successful handling of the public health emergency, the economic impact
of Covid-19 was severe due to the centrality of tourism in the Mauritian economy.
Real GDP plummeted by 14.9 percentage
points in 2020, causing Mauritius to slip
back into Upper-Middle-Income status in
2021. Government support to households
and firms was extensive, totaling over Rs
121 billion, or 28 percent of 2020 GDP. As
public debt spiked, following an initialtransfer of Rs 18bln (3.5 percent of GDP)
from the special reserves fund under the
2019/20 budget, the Bank of Mauritius
law was modified to allow for direct nonrefundable transfers to government andanother Rs 60bln (14 percent of GDP)
were transferred.

FIGURE 1 Mauritius / General government balance and debt

Percent of GDP
2

Percent of GDP
120

0

110

-2

100

-4

90

-6

80

-8

70

-10

60

-12

50

-14

40

-16
-18
-20
-22

Achieving inclusive growth in the future
will require overcoming constraints to amore inclusive labor market. This includes
increasing the participation of youth andwomen with low educational attainments.
Over 50,000 youth aged 16 to 29 are neither in education nor in employment, andabout 1 out of 3 has obtained at most acertificate of primary education. Similarly,
only 1 in 2 women participates in the labor market, and only 1 in 3 among womenwith low education. The impact of Covid19 reversed recent gains in labor force
participation of women. Women weresignificantly more likely to be displaced
during this time, while men and womenwith a better education were significantly
less likely to be laid off overall.

Recent developments
After remaining covid free since April
2020 and partially open to travel since
October 2020, albeit with a two-weekquarantine requirement for visitors, a second wave of Covid-19 led to new borderclosings on March 10, 2021, accompanied
by a new lockdown. Vaccines’ rollout
started in February 2021, and 63 percent of
the population was fully vaccinated by
end-August. Borders began reopening on
July 15, although with strict quarantining
and testing requirements. Inbound travel
remained subdued with arrivals dropping
to 12,027 over the first half of 2021, compared to 424,127 in the first semester of
2020, pulling down backward and forward industries. Merchandise exports

FIGURE 2 Mauritius / Actual and projected poverty rates
and real GDP per capita
Poverty rate (%)

Real GDP per capita (constant LCU)

25

350000300000202500001520000010150000100000

5

50000

30

General government balance (lhs)
Primary balance (lhs)
General government debt (rhs)

20

0

10
0

Lower middle-income pov. rate
Real GDP pc

2012/13 2014/15 2016/17 2018/19 2020/21 2022/23f
Sources: Statistics Mauritius and World Bank staff estimates.

0
2006 2008 2010 2012 2014 2016 2018 2020 2022

Source: World Bank. Notes: see Table 2.

MPO 260 Oct 21

Upper middle-income pov. rate

increased 17.9 percent in S1 of 2021 compared to S1 of 2020, driven by manufactures. As merchandise imports increased
in a similar percentage, trade and current
account deficits widened.
Fiscal deficit escalated to 20.5 percent in FY
20/21, and despite being partially financed
through a 14 percent of GDP nonrefundable Central Bank transfer, stillcaused public debt to spike to 99.9 percent
of GDP. Moody’s downgraded Mauritius’credit rating in March 2021 from Baa1 to
Baa2 due to its weakened fiscal and economic stance while maintaining a negative
outlook based on risks to the recovery of
tourism and the weakening of the BOM
balance sheet. The inclusion of Mauritius
on the FATF and EU AML/CFT watchlists
in 2020 has so far not resulted in GBCs
financial flow reversals. In its June 2021
Plenary, the FATF made the initial determination that Mauritius has substantiallycompleted its reform plan and warrants an
on-site assessment. Meanwhile, the government suffered a pitfall with the July 14
arbitrage ruling in favor of Betamax in its
appeal to the Supreme Court of Mauritius’decision against it. The ruling entitles Betamax to a payment of around Rs 5.68 Billion
effective on or before June 22, 2021.
Poverty (Upper-MIC threshold of $5.5 a
day 2011 PPP) fell from 18 to 10 percent
between 2012 and 2019. However, given
the dramatic contraction of GDP in 2020,
poverty is estimated to have increased byover 5 percentage points.

Outlook
GDP is expected to rebound by 5.1 percent
in 2021 and accelerate to 6.6 percent in
2022, against a backdrop of a gradual resumption of tourism in the second semester of 2021 as travel restrictions are eased,accompanied by a continued recovery of
manufacturing exports in line with global
demand, and uptakes in construction,
wholesale trade, and financial and insurance services.
The current account deficit is expected toreach 18.4 percent of GDP in 2021 before
gradually narrowing over the medium

TABLE 2 Mauritius / Macro poverty outlook indicators

Real GDP growth, at constant market prices a
Private Consumption
Government Consumption
Gross Fixed Capital Investment
Exports, Goods and Services
Imports, Goods and Services
Real GDP growth, at constant factor prices
Agriculture
Industry
Services
Inflation (Consumer Price Index)
Current Account Balance (% of GDP)Net Foreign Direct Investment (% of GDP)
Fiscal Balance (% of GDP)b
Debt (% of GDP)b
Primary Balance (% of GDP) b
Lower middle-income poverty rate ($3.2 in 2011 PPP) c,dUpper middle-income poverty rate ($5.5 in 2011 PPP) c,d
GHG emissions growth (mtCO2e)
Energy related GHG emissions (% of total)

term, assuming recovery in tourism andadditional efforts to strengthen export
competitiveness. The fiscal deficit is expected to moderate to 12.5 percent in FY
21/22 as the economic recovery accelerates
and Covid-19 support measures are lifted,
aiding a progressive fiscal consolidation.
Public debt would peak at 107.5 percent of
GDP in FY 21/22, although the expected
phase-in of CSG in 2023/24 would put the
debt trajectory back on the rise. Projections indicate that poverty will fall to 11
percent, half a point above the pre-COVID-19 level, well into 2023.
Significant downside risks cloud the horizon. The emergence of new Covid-19 variants threatens the rebound of tourism,
while failure to address competitivenesschallenges and skills mismatches could
result in less dynamic exports and lingering unemployment. Pensions’ reform andthe phased unwinding of Covid-19 support will be key to maintain debt sustainability, while recapitalizing the BOM andstrengthening its independence will be
critical to sustain effective monetary policy and price stability.

(annual percent change unless indicated otherwise)
2018
3.8
3.2
4.2
10.9
2.7
-0.2
3.6
-1.3
2.6
4.1
3.2
-3.9
10.3
-3.3
67.6
-0.6
2.0
11.4
0.2
62.4

2019
3.0
3.2
2.0
6.1
-4.2
2.1
3.2
4.1
2.4
3.3
0.5
-5.4
14.3
-10.8
77.7
-8.1
1.8
10.5
1.4
62.2

2020
-14.9
-18.7
-1.2
-26.4
-38.0
-28.9
-14.8
-3.1
-19.1
-14.3
2.5
-12.6
26.0
-20.5
99.9
-17.6
2.7
15.8
-12.5
61.1

2021 e
5.1
3.9
1.8
15.3
7.5
4.8
5.0
5.5
12.2
3.3
5.1
-18.4
24.2
-12.5
107.5
-8.9
2.4
14.2
5.7
62.2

So urce: Wo rld B ank, P o verty & Equity and M acro eco no mics, Trade & Investment Glo bal P ractices. Emissio ns data so urced fro m CA IT and OECD.
No tes: e = estimate, f = fo recast.
NA(a) Histo rical demand-side data is being revised due to a co nsistency pro blem.
(b) Fiscal balances are repo rted in fiscal years (July 1st - June30th).
(c) Calculatio ns based o n 2017-HB S.A ctual data: 2017. No wcast: 2018-2020. Fo recast are fro m 2021to 2023.
(d) P ro jectio n using neutral distributio n (2017) with pass-thro ugh = 0.87 based o n GDP per capita in co nstant LCU.

MPO 261 Oct 212022 f
6.6
4.6
2.2
12.5
11.4
4.8
6.6
2.9
5.1
7.2
6.6
-12.2
25.1
-7.9
103.1
-4.6
2.2
12.3
6.6
63.8

2023 f
4.2
4.3
1.1
7.2
4.3
2.5
4.2
2.4
5.0
4.1
3.0
-10.5
24.5
-8.3
104.1
-4.9
2.0
11.0
4.4
64.5

MOZAMBIQUE
Table 12020

P o pulatio n, millio n

31.3

GDP , current US$ billio n

14.0

GDP per capita, current US$

447.3

Internatio nal po verty rate ($ 1.9)

a

63.7

Lo wer middle-inco me po verty rate ($ 3.2)

a

82.4

a

54.0

Gini index

Scho o l enro llment, primary (% gro ss)

b

116.4

b

60.9

Life expectancy at birth, years
To tal GHG Emissio ns (mtCO2e)

109.8

Source: WDI, M acro Poverty Outlook, and official data.
(a) M ost recent value (201 4), 201 1 PPPs.
(b) M ost recent WDI value (201 9).

Following the first contraction in three
decades in 2020, the economy is expected
to grow at 2.3 percent in 2021, supported by increased agricultural production
and recovery in demand. However, thepoverty rate is projected to change marginally from 63.3 to 63.5 percent between 2020 and 2021, as per capita income growth stays flat. Growth is anticipated to reach 9.6 percent in 2023, mainly driven by prospects in natural gas,
but considerable uncertainties remain
due to COVID-19 and the military insurgency in Northern Mozambique.

Key conditions andchallenges
Mozambique’s development model, reliant
on non-renewable resources, has exposed
the country to vulnerabilities in the global
market and has limited the pace of poverty
reduction. Growth has been dependent on
capital-intensive mega-investments andexports of primary commodities, with limited local linkages. Low human and physical capital, and a weak investment climate
limit private sector growth and activity inthe non-resource sectors. In rural areas,
where most of the poor reside, low agriculture performance traps the poor in poverty. Climate shocks have intensified infrequency and magnitude, severely impacting the low growth economy.
The Liquified Natural Gas (LNG) industry, under development since the discovery of massive gas fields in 2010, is the
key driver of growth prospects, but isthreatened by a military conflict near major gas projects. Addressing the conflict ina sustainable manner requires tacklingthe underlying causes of fragility, besides
a military intervention. These include
regional socio-economic disparities, lackof employment and opportunities for the
youth, low access to public infrastructures and services. However, Mozambique needs to deal with these challenges
while still recovering from COVID-19,
and in a context of considerable fiscal
constraints, partly reflecting rising wage
bill and high debt burden.

Mozambique’s immediate priorities include speeding up the vaccination program to accelerate the reopening of its
economy. The delays in LNG development can be used as an opportunity toestablish the regulatory and institutionalframework for sound management of resource revenues. This implies, among
others, improving economic management
to prevent adverse effects from the upcoming revenue windfalls, and strengthening linkages between the LNG industry
and the local economy. Concurrently, diversifying away from the resources sector
is essential, while building resilience toclimatic shocks through prevention andmitigation actions. While waiting for thegas revenues, fiscal space should be created, including through acceleration of
wage bill and SOE reforms.

Recent developments
The year started with major challenges.
Terrorist attacks near the LNG projects
operation site led to the suspension of the
Total- led project, and the postponementof the Final Investment Decision of another major LNG project. A surge in COVID19 cases and the following social distancing measures delayed economic recovery.
Despite this, the economy is bouncing
back, albeit slowly. GDP grew by 2 percent in the second quarter of 2021, putting
half year growth at 1.1 percent comparedto the percent contraction in the same period of 2020. The recovery was driven by
agriculture and public services, the latter

FIGURE 1 Mozambique / Real GDP growth and sectoral
contributions to real GDP growth

FIGURE 2 Mozambique / Actual and projected poverty
rates and real GDP per capita

Percent, percentage points

Poverty rate (%)
100

10%
8%

Real GDP per capita (LCU constant)
25000

80

20000

60

15000

40

10000

20

5000

6%
4%
2%
0%
-2%

-4%

0

2013 2014 2015 2016 2017 2018 2019 2020e 2021f 2022f 2023f
Agriculture
Services
Source: World Bank staff estimates.

Extractives
Tax

0
2008

Manufacturing
GDP

2010

2012

2014

2016

International poverty rate
Real GDP pc
Source: World Bank. Notes: see Table 2.

MPO 262 Oct 21

2018

2020

2022

Lower middle-income pov. rate

mostly reflecting increased public investment spending. Private services, manufacturing and extractives still struggled as thethird wave of the virus led to tightening ofsocial distancing measures and global
trade recovers gradually.
In the first 7 months of the year, annual
average inflation surged to 5.2 percent,compared to 3 percent during the same
period in 2020. This trend, mainly induced
by increased food prices due to currency
depreciation, combined with job losses due
to COVID-19, is projected to push 6 hundred thousand people into poverty in 2021.
Fiscal revenue increased by 16 percent in
the first half of 2021 (y-o-y) owing to higher
income, and goods and services tax collection. Expenditure grew by 7 percent, due tosalaries, and defense, anticipated to continue to add spending pressures. As a result,the primary and overall deficits are expected to widen to 3 and 6 percent of GDP
in 2021, up from 1.2 and 4.6 percent in 2020,
respectively. Domestic debt, which increased by a percentage point to 21 percent
of GDP in the first semester of 2021, is likely to remain the main financing source.
At US$ 2.2 billion in the first half of 2021,
the current account deficit (CAD) droppedby 3 percent (y-o-y). Recovering manufacturing and extractives exports—specifically,
coal, and aluminum—offset a relative
growth in imports, mainly driven by consumption goods and construction materials.
The CAD also reflects delays in the LNG
projects, which had been projected to push
CAD levels to around 60 percent in the 3
years starting in 2021. As a result, external
reserves stood at around US$3.7 billion(equivalent to 8 months of imports, excluding megaprojects).

Outlook
The economy is projected to rebound modestly in the short-term. Growth is anticipated at 2.3 percent in 2021 mainly due tohigher agriculture production underpinned
by ongoing investments in infrastructure
and improved inputs. Despite the third
COVID-19 wave, services and manufacturing are expected to recover as mobility is
restored. In addition, trade and commodities prices recovery will support extractives
production. However, the poverty rate is
expected to increase marginally from 63.3

TABLE 2 Mozambique / Macro poverty outlook indicators

Real GDP growth, at constant market prices
Private Consumption
Government Consumption
Gross Fixed Capital Investment
Exports, Goods and Services
Imports, Goods and Services
Real GDP growth, at constant factor prices
Agriculture
Industry
Services
Inflation (Consumer Price Index)
Current Account Balance (% of GDP)Net Foreign Direct Investment (% of GDP)
Fiscal Balance (% of GDP)a
Debt (% of GDP)
Primary Balance (% of GDP) a
International poverty rate ($1.9 in 2011 PPP) b,c
Lower middle-income poverty rate ($3.2 in 2011 PPP) b,c
GHG emissions growth (mtCO2e)
Energy related GHG emissions (% of total)

to 63.5 between 2020 and 2021, reflecting alimited growth in per capita income due tofast population growth. GDP growth isanticipated to accelerate from 2022, reaching 9.6 percent in 2023 as gas production
kicks-off from 2022, and more LNG projects advance in 2022 and 2023, boosting thebusiness environment and allowing thepoverty rate to fall to 60.3 percent by 2023.
As LNG projects resume, the CAD may
jump from 32 percent in 2021 to around 40
percent of GDP in 2023, due to higher
imports of services and equipment. The
financing needs are projected to be covered by foreign direct investment andprivate debt.
The authorities face significant mediumterm financing challenges. Budgetary pressures from military spending, COVID-19,
and recurrent natural disasters are likely tokeep public expenditure hovering above
30 percent of GDP in 2022 and 2023. Nevertheless, the authorities are expected toresume fiscal consolidation, improving theoverall fiscal deficit from 6.2 percent to 3.8
percent of GDP between 2021 and 2023.
However, debt challenges will remain highwith debt ratios projected to remain above
100 percent in the medium-term.

(annual percent change unless indicated otherwise)
2018
3.4
4.9
-5.8
4.2
47.9
43.4
3.3
3.4
4.2
2.9
3.9
-30.3
18.2
-4.1
108.9
0.3
61.6
81.0
3.5
7.8

2019
2.3
3.1
3.6
-0.6
-9.5
-1.5
1.8
1.3
-0.4
2.9
2.8
-19.6
14.4
-0.4
107.5
2.8
61.9
81.1
0.4
7.9

2020
-1.2
-2.1
-19.3
60.1
-15.0
-0.4
-1.9
3.1
-5.8
-2.7
3.1
-27.2
16.7
-4.6
125.3
-1.3
63.3
82.2
-0.6
7.9

2021 e
2.3
9.8
16.0
16.4
20.4
27.9
2.3
3.4
1.3
2.2
6.2
-32.1
16.6
-6.2
121.4
-3.4
63.5
82.3
-4.6
4.7

So urce: Wo rld B ank, P o verty & Equity and M acro eco no mics, Trade & Investment Glo bal P ractices. Emissio ns data so urced fro m CA IT and OECD.
No tes: e = estimate, f = fo recast.
NA(a) Figure includes o nce-o ff capital gains revenues in 2017, estimated at 2.7 percent o f GDP .
(b) Calculatio ns based o n 2014-IOF.A ctual data: 2014. No wcast: 2015-2020. Fo recast are fro m 2021to 2023.
(c) P ro jectio n using neutral distributio n (2014) with pass-thro ugh = 0.87 based o n GDP per capita in co nstant LCU.

MPO 263 Oct 212022 f
5.1
9.5
-1.1
32.0
14.5
23.4
5.1
3.4
10.2
4.0
6.4
-43.5
21.9
-4.5
119.9
-1.4
62.8
81.7
-0.9
4.0

2023 f
9.6
3.7
-71.3
26.7
27.0
1.4
9.6
5.0
27.7
4.5
5.5
-44.3
17.7
-3.8
110.2
-1.0
60.3
80.1
-0.7
3.4

NAMIBIA

Key conditions andchallenges

Table 12020

P o pulatio n, millio n

2.5

GDP , current US$ billio n

10.6

GDP per capita, current US$

4240.0Internatio nal po verty rate ($ 1.9)

a

13.8
a

30.3

a

51.0

Lo wer middle-inco me po verty rate ($ 3.2)
Upper middle-inco me po verty rate ($ 5.5)
a59.1

Gini index

Scho o l enro llment, primary (% gro ss)

b

124.2

b

63.7

Life expectancy at birth, years
To tal GHG Emissio ns (mtCO2e)

22.2

Source: WDI, M acro Poverty Outlook, and official data.
(a) M ost recent value (201 5), 201 1 PPPs.
(b) WDI for School enrollment (201 8); Life expectancy (201 9).

Namibia’s rebound is hampered by the
protracted effects of the pandemic. The
economy has exited from a devastating
third wave of infections that had widespread health and economic impacts. Recession persisted in early-2021 and the
projected upper middle-income poverty
rate remained high at 65 percent. The
trajectory of the pandemic poses significant risk to the outlook and pre-COVID19 structural constraints will limit thescale of the medium-term recovery andpoverty reduction.

Namibia’s growth challenge predates the
COVID-19 crisis. Real GDP peaked in 2018
and is not expected to return to that level
over the forecast horizon. In the decade to2015, economic growth averaged nearly 5
percent annually while the years thereafter have been mostly marked by recession.
Until the mid-2010s, investments in mineral extraction, a boom in exports andgovernment
spending
underpinned
growth. Namibia subsequently sufferedfrom falling commodity prices, weakgrowth in key trade partners (notably
South Africa) and tight fiscal policy on theback of government’s effort to rebalance
public finances. In real terms, GDP per
capita growth has been negative since2016, with corresponding projected poverty increases. Weak demand and skills
mismatches have constrained job creation
with the unemployment rate averaging
above 20 percent since 2016.
The government’s response to the pandemic was timely but led to a marked
deterioration in fiscal balances. The room
for additional fiscal stimulus is reduced.
Global and regional developments willremain an important driver of Namibia’s
fiscal and external positions as the country
is highly reliant on commodity exports
and SACU transfers. Volatility in prices of
Namibia’s exports, particularly diamonds
and uranium, present risks as well as
growth prospects in key trade partners.

FIGURE 1 Namibia / Budget balance and debt

Recent developments
The country experienced a devastating
third wave of COVID-19 infections over
May-July, which impelled tighter restrictions. As the economy exited the third
wave in August, restrictions have begun
to be eased, allowing for increased activity. Vaccinations began in March. As of
end-August, over 329,000 vaccine doses
had been administered, although only
about 5 percent of the population has been
fully vaccinated. With procurement of
more doses and donations, vaccine supply
has improved in Q3.

FIGURE 2 Namibia / Actual and projected poverty rates andreal GDP per capita
Percent of GDP
0

Percent of GDP
70

Namibia is amongst the driest countries in
the world and severe drought remains apersistent threat for economic performance and for the welfare of poor subsistence farmers.
Uncertainty regarding the outlook combined with an uncompetitive business environment will continue to constrain private investment, leading to weak growthand job creation. COVID-19 vaccinations
are proceeding but coverage remains relatively low. The possibility of recurrent
restrictive measures domestically remains
a significant downside risk to the recovery.
The pandemic has further exacerbated
Namibia’s disparities in economic opportunities and access to services. Globally,
Namibia is one of the most unequal countries, with a Gini coefficient of 59.1 in 2015.
In addition, in 2020 around 64.5 percent of
the population is projected to live on lessthan US$5.5 daily (2011 PPP).

65

-2

60

Real GDP per capita (LCU constant)
70000

Poverty rate (%)
80
70

60000

60

55
50
45

-4

50

-6

40

50000
40000
30000

30

40

-8

35

-10

30
25

-12
2013

2014 2015 2016
Public Debt (left axis)

2017

10000

10
0

0

2009

2018 2019 2020
Fiscal Balance (right axis)

Sources: Ministry of Finance, Central Bank and World Bank staff estimates.

20000

20

2011

2013

2015

International poverty rate
Upper middle-income pov. rate
Source: World Bank. Notes: see table 2.

MPO 264 Oct 21

2017

2019

2021

2023

Lower middle-income pov. rate
Real GDP pc

Macroeconomic variables confirm that the
impact of the COVID-19 shock has extended into 2021. Real GDP declined by 6.5
percent year-on-year in Q1, exceeding thecontraction in Q4 2020. This was driven bysteep drops in several sectors including
mining, manufacturing, finance and tradeservices. Health as well as informationand communication maintained strong
growth rates. Aside weak domestic demand, the labor market has deteriorated
markedly, restraining disposable income.
The fiscal situation remains fragile, andthe government is undertaking reforms to
manage risks and support the recovery.
The budget deficit is estimated to havewidened to 10.5 percent of GDP in FY
2020/21 as the government responded tothe multifold challenges of the pandemic.
Public debt (including guarantees) roseclose to 70 percent of GDP. The government is implementing its Economic Recovery Plan through which it aims to
attract private investment. Authorities
also launched the Harambee Prosperity
Plan II (2021-2025) which prioritizes theimplementation of targeted programmes.
The current account widened to 8.7 percent of GDP in Q1 mainly driven by alarge contraction in exports. Despite thisdeterioration, financing from multilaterals
and SACU inflows have ensured that foreign exchange reserves remain adequate.
Reserves stood at N$42.7 billion in Julyand are expected to be boosted by the
recent IMF SDRs allocation.

Outlook
Economic output is expected to remain
below potential in 2021. The improved
global demand for commodities is favorable, although the performance is being
limited by idiosyncratic factors. This includes lost production from plants whichwere placed under care and maintenance.
Growth and employment creation in sectors which are highly exposed to the impact of COVID-19, such as tourism, willremain muted. Monetary policy remains
accommodative and driven by the peg
with the South African rand. The scale ofthe medium-term recovery will depend on
the trajectory of the pandemic and thegovernment’s ability to address longlasting challenges to higher growth. The

TABLE 2 Namibia / Macro poverty outlook indicators

Real GDP growth, at constant market prices
Private Consumption
Government Consumption
Gross Fixed Capital Investment
Exports, Goods and Services
Imports, Goods and Services
Real GDP growth, at constant factor prices
Agriculture
Industry
Services
Inflation (Consumer Price Index)
Current Account Balance (% of GDP)Net Foreign Direct Investment (% of GDP)
Fiscal Balance (% of GDP)a
Debt (% of GDP)b
Primary Balance (% of GDP) a
International poverty rate ($1.9 in 2011 PPP) c,dLower middle-income poverty rate ($3.2 in 2011 PPP) c,dUpper middle-income poverty rate ($5.5 in 2011 PPP) c,d
GHG emissions growth (mtCO2e)
Energy related GHG emissions (% of total)

rebound is expected to be slower thaninitially expected, with growth reaching
1.2 percent in 2021 and 2.4 percent in 2022.
Corresponding negative per capita GDP
growth and slow job creation are projected to maintain poverty near 65 percent(US$5.50 line).
The authorities are committed to restoring
fiscal sustainability, but public finances
will remain under pressure. Prospects forweaker SACU revenues, which is acknowledged in the budget, and possible spending pressures as the pandemic extends aremain risks to the fiscal outlook. Borrowing
requirements will remain elevated – onexternal debt, Namibia’s inaugural US$500
million Eurobond falls due in November
2021. The budget deficit is expected at 9.8
percent of GDP in FY2021/22 while thedebt ratio is projected to keep rising in the
short term. Financing is expected to besourced from both domestic (debt and thepartial listing of MTC) and externalsources. The government has thus far received external funding from the IMF and
AfDB. Ensuring fiscal sustainability while
preserving social spending will be important to limit the risks of further worsening of poverty and inequality.

(annual percent change unless indicated otherwise)
2018
1.1
-0.2
-0.2
-6.0
16.1
1.2
1.1
4.0
5.3
-1.0
4.3
-3.4
0.8
-5.6
54.4
-2.3
15.7
33.9
54.8
-4.1
19.2

2019
-0.9
0.4
1.5
-8.9
-9.0
-3.4
-0.2
-3.2
-2.3
1.1
3.7
-1.8
-1.5
-5.5
62.3
-1.7
16.7
35.8
56.8
-2.0
19.1

2020
-8.5
-10.3
-1.5
-11.2
-17.7
-14.7
-7.1
6.1
-13.7
-5.7
2.2
2.6
-1.3
-10.5
69.5
-6.0
20.8
43.5
64.5
0.7
17.7

2021 e
1.2
4.9
-2.6
-3.5
1.5
2.9
1.2
1.6
-3.1
2.9
3.8
-6.4
0.9
-9.8
81.0
-5.1
21.1
44.1
65.0
-0.1
16.1

So urce: Wo rld B ank, P o verty & Equity and M acro eco no mics, Trade & Investment Glo bal P ractices. Emissio ns data so urced fro m CA IT and OECD.
No tes: e = estimate, f = fo recast.
NA(a) Fiscal balances are repo rted in fiscal years (A pril 1st -M arch 31st).
(b) Refers to P ublic and P ublicly Guaranteed debt.
(c) Calculatio ns based o n 2009-NHIES and 2015-NHIES.A ctual data: 2015. No wcast: 2016-2020. Fo recast are fro m 2021to 2023.
(d) P ro jectio n using annualized elasticity (2009-2015) with pass-thro ugh = 1based o n GDP per capita in co nstant LCU.

MPO 265 Oct 212022 f
2.4
3.5
-1.5
5.8
7.4
6.1
2.4
1.4
5.4
1.4
4.5
-4.6
1.4
-8.6
84.9
-3.8
20.9
43.6
64.6
3.0
18.0

2023 f
1.5
3.0
-0.5
3.5
4.5
5.0
1.5
1.4
2.5
1.1
4.5
-2.9
1.5
-7.2
88.5
-2.3
21.0
43.8
64.8
0.7
18.0

NIGERKey conditions andchallenges

Table 12020

P o pulatio n, millio n

24.2

GDP , current US$ billio n

13.5

GDP per capita, current US$

557.9

Internatio nal po verty rate ($ 1.9)

a

45.4
a

77.2

a

93.6

Lo wer middle-inco me po verty rate ($ 3.2)
Upper middle-inco me po verty rate ($ 5.5)a

34.3

Gini index

Scho o l enro llment, primary (% gro ss)

b

b

66.4
62.4

Life expectancy at birth, years
To tal GHG Emissio ns (mtCO2e)

50.3

Source: WDI, M acro Poverty Outlook, and official data.
(a) M ost recent value (201 4), 201 1 PPPs.
(b) M ost recent WDI value (201 9).

Niger's economy has weathered relatively
well the combination of health, security,and environmental crises in 2020. However, a decline in real per capita GDP islinked to an increase in the poverty rate of
0.4 percentage points, to 41.2 percent.
With the global recovery and the start ofoil exports, growth should accelerate to
5.5 percent in 2021 and could reach double digits in the medium term. However,
future trends remain dependent on political stability, improving governance andclimatic risks.

The Nigerien economy faces adverse
structural factors that constrain sustainable inclusive growth. These include unfavorable geographic and climatic conditions, high demographic pressures, weakhuman capital, widespread informality,
low agricultural productivity and insufficient structural transformation, as well as
poor governance, weak institutions andother internal factors of fragility. Morethan four in ten Nigeriens live on less than
US$1.9 per day (2011 PPP). A sustained
pace of economic growth is required in
the next decades to reduce large development gaps.
Beyond these structural factors, persistent insecurity and terrorist attacks are amajor risk factor impacting Niger’s
overall economic performance, publicfinances, including through the requirement for military expenditures, andmore broadly the security and wellbeing of the population. Another major
hazard is the growing exposure to climatic shocks, which has led to large
agricultural production fluctuations andheightened food insecurity among thepoor. Finally, while official data suggestthat the health toll of COVID-19 pandemic has not been severe, low levels of
deployment of vaccines (with only 0.4%of the total population vaccinated at theend of August 2021) create additional
uncertainty in the short term.

At the same time, the relatively peacefultransfer of power during the recent presidential election and the coming on streamof larger oil export capacities (oil exports
are projected to increase by some 385 percent to 97,000 barrels/day by 2023 with thecompletion of a pipeline) represents a
potential opportunity, in terms of attracting investors and mobilizing significant
resources for development. Yet, the economic and social benefits of future oilwindfalls will hinge on the transparent
and efficient governance of theses resource, to the benefit the entire populationand future generations.

Recent developments
Economic growth slowed to 3.6 percent in2020 (real per capita GDP growth of -0.2
percent) from 5.9 percent in 2019. Activity
has been supported by the resilience of
the agricultural sector, whereas manufacturing sector growth fell because of the
global recession and COVID-19 restrictions. Growth was particularly affected by the slowdown in investment (from13.6 percent in 2019, to 4.9 percent in2020). From a deflationary situation in
2019, inflation rose to 2.9 percent in 2020,
due to supply disruptions.
The fiscal deficit widened from 3.6 percent
of GDP in 2019 to 4.9 percent in 2020, andpublic debt increased by more than 3 percentage points of GDP to 45 percent. This
deterioration was mainly due to an increase in expenditures (2.4 percent ofGDP), especially transfers to protect poor

FIGURE 1 Niger / Real GDP growth and sectoral contributions
to real GDP growth

FIGURE 2 Niger / Actual and projected poverty rates andreal GDP per capita

Percent, percentage points
10

Poverty rate (%)

120

8

100

Real GDP per capita (LCU constant)

400000350000300000680

425000060

220000015000040

100000

0

20

50000

-2
2018

2019

2020

Agriculture
Services
Actual GDP growth
Sources: INSN and World Bank staff estimates.

2021

2022

2023

0

0
2005 2007 2009 2011 2013 2015 2017 2019 2021 2023

Industry
Net Taxes

International poverty rate
Upper middle-income pov. rate
Source: World Bank. Notes: See Table 2.

MPO 266 Oct 21

Lower middle-income pov. rate
Real GDP pc

households and businesses from theeffects of the pandemic.
The external current account deficit deteriorated by 0.8 percent of GDP in 2020 because of the deteriorated trade balance dueto the closure of the border with Nigeria.
External reserves - managed by the Central Bank of West African States (BCEAO)have remained stable since 2019 andreached an estimated 5.8 months of imports in 2020 due to large donor support
and a large Eurobond issuance in Coted’Ivoire. To support the regional economy
and COVID-19 related extra spending, theBCEAO implemented a set of monetaryand macroprudential measures beginningin March 2020 and extended into 2021,
including a policy rate cut and extended
refinancing operations of the 3-month
COVID-19 bonds.
The poverty rate, measured by the international poverty line of US$1.9 (2011
PPP), was estimated at 40.8 percent in2019. Due to the decline in real per capita
GDP growth the poverty rate rose by 0.4
percentage points in 2020, which, combined with one of the highest population
growth rates in the world, is expected toincrease in the number of poor to almost
10 million. Data from high frequency

phone surveys estimate that in 2020 about
40 percent, 27.5 percent and 9 percent of
Nigerien households reported having
experienced a decline in their income
from agriculture, family enterprises andprivate transfers respectively during thelast 12 months.

OutlookNotwithstanding the high levels of uncertainty, the economic outlook is favorable
and economic growth is projected at 5.5
percent. Agriculture, benefiting from thereopening of the border with Nigeria, andindustry, from the recovery in global demand and boom in oil production, areexpected to contribute most to the recovery. Domestic demand will remain themain driver of growth. In the medium
term, real GDP growth rate is expected toaccelerate with the coming on stream ofoil exports. With prudent management of
the oil windfall, inflation should remainaround 2 percent.
The fiscal deficit is expected to remain
high, at 6.8 percent of GDP in 2021, due tolower than expected revenue as well as an

TABLE 2 Niger / Macro poverty outlook indicators

Real GDP growth, at constant market prices
Private Consumption
Government Consumption
Gross Fixed Capital Investment
Exports, Goods and Services
Imports, Goods and Services
Real GDP growth, at constant factor prices
Agriculture
Industry
Services
Inflation (Consumer Price Index)
Current Account Balance (% of GDP)Net Foreign Direct Investment (% of GDP)
Fiscal Balance (% of GDP)
Debt (% of GDP)
Primary Balance (% of GDP)
International poverty rate ($1.9 in 2011 PPP) a,b
Lower middle-income poverty rate ($3.2 in 2011 PPP) a,b
Upper middle-income poverty rate ($5.5 in 2011 PPP) a,b
GHG emissions growth (mtCO2e)
Energy related GHG emissions (% of total)increase in spending to accommodate
growing security needs and larger fiscal
transfers. Public debt is projected to reach
48.5 percent of GDP in 2021. The external
deficit is expected to widen in 2021 with
the import of capital goods for major infrastructure projects. In the medium term,
the increase in oil exports should strengthen Niger’s public finances, with a gradual
return to the WAEMU deficit target by2024, and its external position. In August
2021, the BCEAO received 1.4 percent of
aggregate GDP in additional SDR allocations from the IMF that could be temporarily on-lent to member countries.
Such a positive economic outlook may
support a reversal of the extreme poverty
rate, which is projected to fall from 41.2
percent in 2020, to 36.9 percent in 2023.
However, downside risks from politicalinstability and insecurity, exposure toclimatic shocks, combined with one of thehighest demographic growth rates in theworld (3.8 percent per year) pose a serious
risk to this projected poverty reduction
path. The number of poor is projected toremain high and almost unchanged overthe medium term.

(annual percent change unless indicated otherwise)
2018
7.2
6.6
4.8
17.6
-4.3
9.4
6.3
7.9
6.0
5.0
2.8
-12.6
3.3
-3.0
37.0
-2.1
42.2
74.5
92.5
4.5
14.5

2019
5.9
3.7
8.1
13.6
1.1
6.2
6.1
3.4
9.0
7.0
-2.5
-12.7
5.3
-3.6
39.8
-2.5
40.8
73.8
92.3
4.9
14.4

2020
3.6
4.4
3.7
4.9
-6.3
2.7
4.2
7.7
1.7
2.3
2.8
-13.5
2.6
-4.9
45.0
-3.8
41.2
73.9
92.4
3.5
14.3

2021 e
5.5
4.4
10.8
9.5
-7.8
4.4
5.4
4.8
4.1
6.8
2.9
-15.3
4.6
-6.8
48.5
-5.7
40.2
73.4
92.1
6.6
14.3

So urce: Wo rld B ank, P o verty & Equity and M acro eco no mics, Trade & Investment Glo bal P ractices. Emissio ns data so urced fro m CA IT and OECD.
No tes: e = estimate, f = fo recast.
NA(a) Calculatio ns based o n 2014-ECVM A .A ctual data: 2014. No wcast: 2015-2020. Fo recast are fro m 2021to 2023.
(b) P ro jectio n using neutral distributio n (2014) with pass-thro ugh = 0.7 based o n GDP per capita in co nstant LCU.

MPO 267 Oct 212022 f
6.2
9.0
-0.2
10.3
8.8
15.4
6.2
5.0
6.4
7.3
2.5
-16.0
5.1
-5.3
49.4
-4.0
39.1
73.0
91.8
5.8
15.2

2023 f
9.4
5.0
12.2
0.2
58.4
4.9
9.3
5.0
30.9
1.3
2.0
-11.4
3.2
-3.4
47.5
-2.1
36.9
71.2
91.1
8.3
17.7

NIGERIA

Key conditions andchallenges

Table 12020

P o pulatio n, millio n

206.1

GDP , current US$ billio n

440.9

GDP per capita, current US$

2139.3

Internatio nal po verty rate ($ 1.9)

a

39.1
a

71.0

a

92.0

Lo wer middle-inco me po verty rate ($ 3.2)
Upper middle-inco me po verty rate ($ 5.5)a

35.1

Gini index

Scho o l enro llment, primary (% gro ss)bbLife expectancy at birth, years
To tal GHG Emissio ns (mtCO2e)

84.7
54.7
360.6

Source: WDI, M acro Poverty Outlook, and official data.
(a) M ost recent value (201 8), 201 1 PPPs.
(b) WDI for School enrollment (201 6); Life expectancy (201 9).

In 2020, Nigeria plunged into a recession
due to the combined effects of COVID-19
and oil price shocks. The number of Nigerians living below the international poverty line is expected to rise by 12 million
in 2019–23. In 2021, real GDP is expected to grow by 2.4 percent, supportedby the rise in oil prices, and fiscal andmonetary stimulus. Nigeria’s growth
outlook remains highly uncertain, however, fiscal, exchange rate, and businessclimate reforms will be necessary to ensure a robust recovery.

The Nigerian economy exited the COVID19-induced recession in 2020Q4, due to theloosening of containment measures, a rebound in oil prices, and the quick responseof the authorities to the pandemic. As partof its COVID-19 response, the government
carried out several long-delayed policy
reforms in 2020, often against vocal opposition. Notably, it: (i) began to harmonize
exchange rates; (ii) initiated reforms toeliminate gasoline subsidies; (iii) adjusted
electricity tariffs to more cost-reflective
levels; (iv) cut non-essential spending; and(v) enhanced debt management and increased transparency in the public sector,
especially for oil and gas operations.
In the short term, the biggest challenge
remains the loss of welfare arising fromthe COVID-19 economic shock and the pre-pandemic macroeconomic imbalances.
Three immediate policy priorities could
help support Nigeria’s poor. First, rollingout vaccinations quickly and equitably
could help curb the direct health threat
and lift restrictions, reinvigorating livelihoods. Second, adopting low-tech remotelearning solutions that work for the poor
to reduce the long-term adverse impact onhuman capital from any future school closures due to an increase in COVID cases orother similar factors. Finally, expandingsocial protection could offset income losses
and prevent households from falling into—or further into—poverty.

In the medium term, the government
needs to sustain its efforts to address the
pandemic and ensure a sustainable economic recovery. This includes merging its
multiple exchange rates, lowering trade
restrictions, improving the business climate, and reducing the monetization of
the fiscal deficit. In addition, diversifying
the economy, especially decreasing thedependence of revenues on oil, is essential
to build resilience against future shocks
and subsequently create productive jobs,
improve socio-economic indicators, andreduce poverty.

Recent developments
In 2021H1, GDP grew by 2.8 percent, primarily due to the recovery of trade, agricultural production, IT services, and somemanufacturing industries. Oil production,
however, continued to decline up until
2021Q2 due to a lower OPEC quota andinefficiencies in production and distribution. Inflation remained elevated at 17.0
percent, year-on-year, in August 2021, driven by an increase in domestic food prices.
Core inflation for the same period was 13.4
percent, year-on-year, due to higher pricesof air and road transportation, medical
services, pharmaceuticals, and cars.
The COVID-19 crisis continues to disrupt
Nigeria’s labor market. The share of Nigerians working fell dramatically at the start ofthe pandemic, but it has since recovered
and now exceeds pre-pandemic levels.
However, labor market improvements havebeen primarily due to workers turning to

FIGURE 1 Nigeria / Real GDP growth, contributions to real
GDP growth, and oil price

FIGURE 2 Nigeria / Actual and projected poverty rates andreal GDP per capita.

Percent GDP, percent growth20

Poverty rate (%)

US$/bbl110

Real GDP per capita (constant LCU)

100

365000Oil price (US$/bbl)
90
15

G&S Exports (% GDP)

36000080355000

70
10

5

60

3500004034500050

Revenues (% GDP)

30

340000GDP growth (%)
10

20

-10

0

3350000330000
2018

-5

-30

2020

International poverty rate
Upper middle-income pov. rate

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Sources: Nigeria Authorities, WDI, and World Bank.

2019

Source: World Bank. Notes: see table 2.

MPO 268 Oct 21

2021

2022

2023

Lower middle-income pov. rate
Real GDP pc

small-scale, non-farm enterprise activities
in retail and trade, the revenues of which
remain precarious.
Narrowing the fiscal deficit continues tobe a challenge. In 2020, the fiscal deficitof the consolidated government widened
to 5.8 percent of GDP, but the timely passage of the amended budgets at both thefederal and state government level
helped minimize the need for central
bank financing (which, nevertheless, remained significant at 2.8 percent ofGDP). In 2021H1, the federation revenues(FAAC) declined by 16.7 percent year-onyear, as oil revenues transferred to thefederation account declined by over 50
percent year-on-year, despite an increasein global oil prices. Expenditure growth
remained strong as federal expendituregrew by 26 percent, boosted by an increase of more than 25 percent in debt
servicing costs and a 193.3 percent increase in capital expenditure. For the firsthalf of 2021, the federal government
posted a fiscal deficit of 4.0 percent ofhalf-year GDP.
In 2021Q1, the current account balance
worsened as exports declined by 42 percent
due to lower oil production, and imports

declined by only 16 percent due to tradedisruptions, foreign exchange scarcity,and lower domestic demand. While theCentral Bank took steps to harmonize its
multiple exchange rates by adopting theInvestors’ and Exporters’ Foreign Exchange (IEFX) window rate as its official
rate in May 2021, it was insufficient toequilibrate the market. An increase in capital controls led to foreign exchange scarcity, evidenced by the increasing parallelexchange rate premium, which averaged
20 percent in 2021H1.

Outlook
Nigeria’s GDP is expected to recover andgrow by 2.4 percent in 2021, driven by theservices, trade, agriculture, and construction sectors. Yet, with GDP growth lower
than population growth, GDP per capita
at end-2021 is expected to be similar tothat of 2010 and is not expected to returnto pre-COVID-19 levels before 2025.
This baseline scenario assumes that theauthorities maintain their current macroeconomic reform efforts, including measures

TABLE 2 Nigeria / Macro poverty outlook indicators

Real GDP growth, at constant market prices
Private Consumption
Government Consumption
Gross Fixed Capital Investment
Exports, Goods and Services
Imports, Goods and Services
Real GDP growth, at constant factor prices
Agriculture
Industry
Services
Inflation (Consumer Price Index)
Current Account Balance (% of GDP)Net Foreign Direct Investment (% of GDP)
Fiscal Balance (% of GDP)
Debt (% of GDP)
Primary Balance (% of GDP)
International poverty rate ($1.9 in 2011 PPP) a,b
Lower middle-income poverty rate ($3.2 in 2011 PPP) a,b
Upper middle-income poverty rate ($5.5 in 2011 PPP) a,b
GHG emissions growth (mtCO2e)
Energy related GHG emissions (% of total)

aimed at: (i) revenue-based fiscal consolidation; (ii) strengthening of expenditure anddebt management; (iii) stabilizing the financial sector; and (iv) adopting a more
flexible and transparent foreign exchange
management regime.
Nevertheless, the impact of the pandemic
on poverty could linger. Given the combined effects of the COVID-19 crisis andpopulation growth, the number of Nigerians living in poverty could rise by 12 million in 2019–23, and the absolute numberof poor Nigerians could reach around
91 million by 2023.
Nigeria’s economic outlook remains
highly uncertain. Uncertainty aroundthe pace of vaccinations and the duration of the COVID-19 pandemic persists
and will continue to impact household
consumption and private investment.
Moreover, the modest projected recovery can be threatened by volatility inthe oil sector, including an unexpected
shock to oil prices, and weaknesses in
the financial sector. Even in the mostfavorable global context, the policy response of Nigeria’s authorities will be
crucial to lay the foundation for a robust recovery.

(annual percent change unless indicated otherwise)
2018
1.9
5.2
33.2
9.7
-1.4
49.2
1.9
2.1
1.9
1.8
12.1
1.0
0.2
-4.1
19.3
-2.2
39.1
71.0
92.0
6.0
39.0

2019
2.2
-2.4
15.0
11.8
15.0
27.3
2.3
2.4
2.3
2.2
11.4
-3.8
0.4
-4.6
21.7
-2.6
39.3
71.1
92.1
3.4
39.9

2020
-1.8
1.3
13.6
19.0
-32.2
-23.5
-1.9
2.2
-5.9
-2.2
13.2
-2.4
0.2
-5.8
25.2
-4.1
41.1
72.6
92.8
-2.4
40.1

2021 e
2.4
-1.0
-7.4
6.6
16.0
12.4
2.4
2.2
2.8
2.4
16.5
1.2
0.2
-5.6
29.9
-4.2
41.2
72.7
92.8
2.9
41.1

So urce: Wo rld B ank, P o verty & Equity and M acro eco no mics, Trade & Investment Glo bal P ractices. Emissio ns data so urced fro m CA IT and OECD.
No tes: e = estimate, f = fo recast.
NA(a) Calculatio ns based o n 2018-LSS.A ctual data: 2018. No wcast: 2019-2020. Fo recast are fro m 2021to 2023.
(b) P ro jectio n using neutral distributio n (2018) with pass-thro ugh = 0.7 based o n GDP per capita in co nstant LCU.

MPO 269 Oct 212022 f
2.6
0.5
-1.0
5.1
6.1
1.8
2.6
2.2
2.3
2.9
13.5
1.1
0.3
-5.5
31.7
-3.5
41.2
72.7
92.8
3.0
42.4

2023 f
2.8
0.7
3.3
8.5
4.6
7.3
2.8
2.5
2.3
3.1
11.0
-3.8
0.3
-5.9
33.4
-3.7
41.1
72.6
92.7
3.0
43.7

RWANDAKey conditions andchallenges

Table 12020

P o pulatio n, millio n

13.0

GDP , current US$ billio n

10.2

GDP per capita, current US$

784.6

Internatio nal po verty rate ($ 1.9)

a

56.5
a

80.2

a

91.9

Lo wer middle-inco me po verty rate ($ 3.2)
Upper middle-inco me po verty rate ($ 5.5)a

43.7

Gini index

Scho o l enro llment, primary (% gro ss)

b

131.3

b

69.0

Life expectancy at birth, years
To tal GHG Emissio ns (mtCO2e)

8.0

Source: WDI, M acro Poverty Outlook, and official data.
(a) M ost recent value (201 6), 201 1 PPPs.
(b) M ost recent WDI value (201 9).

Rwanda’s economy has started recovering in 2021, expected to growth atabout 5 percent after being hit hard in2020 as the COVID-19-induced crisis.
The twin deficits deteriorated—
requiring more external financing—andare expected to remain at above theirpre-crisis levels in 2021–2023. Despite
the government’s unprecedented assistance program, the adverse effect of thecrisis on output and employment meansthat poverty is likely to have increased
and is expected to remain above the precrisis levels in 2022-2023.

Rwanda’s economy was growing rapidly
prior to the COVID-19 pandemic. GDP
growth averaged 7.5 percent yearly between 2010 and 2019, raising average GDP
per person by nearly 48 percent duringthat time. Despite this exceptional performance, the country faces major development challenges.
Growth must be more inclusive. Rwanda’s
poverty to growth elasticity has been declining since 2010/11. In terms of the international poverty line of US$1.90 (2011
PPP), poverty rate declined from 69 percent to 55.4 percent over 2005–2019, but
due to COVID, poverty is projected tohave increased in 2020 by more than 3
percentage points with respect to its 2019
value, to then decrease by 0.7 percentage
points in 2021. These changes imply adding more than 600,000 new poor in 2 years
as a result of widespread decreases inhousehold income and employment losses.
This uptick in poverty increases the urgency to design a medium-term public investment strategy for broad-based and inclusive economic recovery following the pandemic (e.g., increasing productivity in agriculture and improving rural livelihoods).
Rwanda needs to flatten its debt curve.
Rapid GDP growth has relied heavily on
public investment spending that increasedby 14 percent annually over 2010–2019.
However, public debt grew rapidly as
well—more than tripling relative to GDP

FIGURE 1 Rwanda / Primary deficit, interest payments, andpublic debt
Percent of GDP

Percent of GDP
10
9
8
7
6
5
4
3
2
1
0

90

since 2010—raising concerns about its
long-term sustainability with limited
space to absorb shocks. This calls for acrediblefiscalconsolidation
path,strengthening debt management capacity,and shift from public investment growthled model to the private sector.
Strengthening the role of the private sector is key to future developments. With analmost depleted fiscal space, Rwanda’s
public investment growth-led model is nolonger sustainable. Key reforms should
aim to enable the emergence of competitive domestic enterprises, supporting
young, innovative firms and micro, small
and medium enterprises; foster innovation and improve access to credit by deepening financial intermediation and developing long-term finance.

Recent developments
Economic activity recovered in 2021. After contracting by 3.4 percent in 2020,
GDP grew by 3.5 percent in the firstquarter and 20.6 percent in the second
quarter (Q2), making 9.7 percent growthin the first half of 2021—despite a second
wave of infections that prompted a threeweek lockdown in Kigali in early 2021.
The recovery was boosted by investment
as well as the rebound in both private
and public consumption, especially in
Q2. Food production, construction, trade,transport and education services drove
the recovery of output. Growth in tourism services—accommodation and catering services—turned positive in Q2, after

FIGURE 2 Rwanda / Actual and projected poverty rates andreal private consumption per capita
Poverty rate (%)

Real private consumption per capita (LCU constant)

100

600000807050000080605040000060
300000403040200000201020100000

0

2018

2019

2020e

Primary deficit (left)

2021f

2022f

2023f

0

Interest spending (left)

International poverty rate
Upper middle-income pov. rate

Government debt (right)
Sources: World Bank staff estimates.

02005 2007 2009 2011 2013 2015 2017 2019 2021 2023

Source: World Bank. Notes: see Table 2.

MPO 270 Oct 21

Lower middle-income pov. rate
Real priv. cons. pc

dropping for four consecutive quarters.
The economy is projected to grow by 4.9
percent for the year.
Both monetary and fiscal policy support
continued in H1-2021. The National Bankof Rwanda (BNR) maintained accommodative policy stance to support the economic recovery and provide liquidity to
the financial sector, taking advantage ofthe absence of inflationary pressures. The
banking
sectorremained
wellcapitalized, but credit risk has heightened through rising non-performing
loans. The government also continued an
expansionary fiscal stance in 2021
through higher spending on public investment in infrastructure. The government continued also to implement its
US$900 million Economic Recovery Plan
(ERP), with policies focusing on increased spending to contain the epidemic
and to strengthen the health system, social protection, education, as well as support for the private sector through therecovery fund. The government has added a new window, the “Manufacture andBuild to Recover Programme,” to form asecond ERF in August. With about
US$250 million, this aims to fast-track
private sector investments in manufacturing and construction.

Outlook
The recovery is expected to gather momentum in the near term, powered by
vaccine rollout, but the economy is projected to grow along a lower trajectory
than it did before the pandemic. Confidence, consumption, and trade are expected to gradually improve, raising GDP
growth to about 6.5 percent over 2022–
2023. With a target of vaccinating 30 and
60 percent of the population by end-2021
and 2022 respectively, COVID-19 cases are
expected to gradual decline, which would
support growth in contact-intensive services sectors. A stronger recovery in advanced countries and some emerging market economies would support growth inmining and export-oriented sectors. Despite the government’s unprecedented
assistance program, the adverse effect of
the crisis on output and employment
means that poverty is expected to remain
above the pre-crisis levels in 2022-2023,
with government facing challenges to
identify and reach households that become poor due to the pandemic. However, economic recovery could lose momentum if the progress on vaccination slows,

TABLE 2 Rwanda / Macro poverty outlook indicators

Real GDP growth, at constant market prices
Private Consumption
Government Consumption
Gross Fixed Capital Investment
Exports, Goods and Services
Imports, Goods and Services
Real GDP growth, at constant factor prices
Agriculture
Industry
Services
Inflation (Consumer Price Index)
Current Account Balance (% of GDP)Net Foreign Direct Investment (% of GDP)
Fiscal Balance (% of GDP)
Debt (% of GDP)
Primary Balance (% of GDP)
International poverty rate ($1.9 in 2011 PPP) a,b
Lower middle-income poverty rate ($3.2 in 2011 PPP) a,b
Upper middle-income poverty rate ($5.5 in 2011 PPP) a,b
GHG emissions growth (mtCO2e)
Energy related GHG emissions (% of total)

mobility restrictions are reinstalled andlast longer, public investments delayed,and external demand is weaker than expected. Business insolvencies and layoffs
could hit incomes, increase poverty, andundermine banking sector stability.
Fiscal sustainability will remain a challenge in the medium term. Increased
spending plans include an expansion of
the COVID vaccination campaign, hiringof new teachers following the massive
construction of classrooms last year, andthe Economic Recovery Fund to support
the private sector and state-owned enterprises. Public debt is forecast to reach 79.4
percent of GDP in 2021 and 81.6 percent in
2022. It would require a cumulative reduction in the overall headline deficit of 6 percentage points of GDP between 2021 and2029 to reach the nominal debt anchor of
65 percent. The July 2021 World Bank/IMF
DSA warns that Rwanda’s limited fiscal
space and this would continue to put pressure on the debt sustainability in the caseof major shocks. Rwanda needs to identify
credible revenue and spending measures
for a growth-friendly fiscal consolidation
with a view to reaching our debt anchor
within a reasonable timeframe, and stepping up efforts to quantify, contain, andremediate emerging fiscal risks.

(annual percent change unless indicated otherwise)
2018
8.6
11.3
5.1
6.0
10.3
8.1
8.5
6.1
8.7
9.7
1.4
-9.2
3.6
-4.8
55.9
-3.6
54.3
79.0
91.4
0.8
26.4

2019
9.5
5.5
17.5
32.0
19.9
18.0
8.9
5.0
16.6
8.3
2.4
-11.6
2.5
-7.0
62.3
-5.5
53.1
78.3
91.1
3.4
26.0

2020
-3.4
-5.0
-2.5
-2.0
-9.2
-3.4
-3.5
0.9
-4.2
-5.5
7.4
-12.4
1.0
-9.5
71.4
-7.8
56.2
80.2
91.9
-1.3
25.0

2021 e
4.9
4.1
14.2
2.4
14.1
12.1
4.9
5.8
10.6
2.3
2.5
-13.5
2.4
-9.2
79.1
-7.1
55.5
79.8
91.7
0.4
24.0

So urce: Wo rld B ank, P o verty & Equity and M acro eco no mics, Trade & Investment Glo bal P ractices. Emissio ns data so urced fro m CA IT and OECD.
No tes: e = estimate, f = fo recast.
NA(a) Calculatio ns based o n 2010-EICV-III and 2016-EICV-V.A ctual data: 2016. No wcast: 2017-2020. Fo recast are fro m 2021to 2023.
(b) P ro jectio n using average elasticity (2010-2016) with pass-thro ugh = 0.7 based o n private co nsumptio n per capita in co nstant LCU.

MPO 271 Oct 212022 f
6.4
4.9
2.1
13.0
19.2
14.1
6.4
5.5
10.7
5.2
4.1
-12.2
3.0
-8.6
81.3
-6.0
54.4
79.1
91.5
1.0
23.2

2023 f
6.8
6.1
3.5
11.0
10.2
9.4
6.8
5.5
10.0
6.1
5.0
-11.2
3.6
-7.3
81.1
-4.7
52.9
78.2
91.1
1.5
22.5

SÃO TOMÉAND PRÍNCIPE
Table 12020

P o pulatio n, millio n

0.2

GDP , current US$ billio n

0.5

GDP per capita, current US$

2500.0Internatio nal po verty rate ($ 1.9)

a

35.6
a

65.4

a

86.4

Lo wer middle-inco me po verty rate ($ 3.2)
Upper middle-inco me po verty rate ($ 5.5)
a

56.3

Gini index

Scho o l enro llment, primary (% gro ss)bLife expectancy at birth, years
To tal GHG Emissio ns (mtCO2e)

b

106.8
70.4
0.4

Source: WDI, M acro Poverty Outlook, and official data.
(a) M ost recent value (201 7), 201 1 PPPs.
(b) WDI for School enrollment (201 7); Life expectancy (201 9).

São Tomé and Príncipe (STP) is recovering from the COVID-19 pandemic
through vaccination and resumption ofinternational travel, supporting the recovery of commercial agriculture and tourism. But growth is expected to slow in
2021 with lower exceptional international
financing compounded by an energy crisis. Support measures to vulnerable families contributed to maintaining poverty
stable at around a third of the population.
Delays in the implementation of structural reforms and pandemic-related uncertainty pose risks to the outlook.

Key conditions andchallenges
STP is a small island country constrainedby remoteness, a small private sector, limited institutional capacity, and low humancapital. Growth has been driven by public
expenditure, but its high reliance on external financing (grants and loans) and low
domestic revenue mobilization have madeit unsustainable. Growth opportunities arefurther limited by underdeveloped infrastructure, especially unreliable electricity
that results in periodic crises with rolling
blackouts, including one that has been
underway for much of 2021. Energy reforms are crucial to support the country´senergy transition and to promote a private
sector led growth model.
The country’s fast-growing population is
young and mostly low-skilled: about 60
percent of the working-age population
have up to six years of schooling, relying
heavily on informal family-enterprises andsubsistence activities due to a lack of job
opportunities in the private sector. Low
access to finance further limits incomegenerating opportunities. Extreme poverty
remains high, with about 35.6 percent of
the population living on less than $1.90 per
day (in 2011 PPP terms) in 2017.
The COVID-19 pandemic affected theeconomy of STP mainly through the nearhalt of the incipient tourism sector andpandemic related mobility restrictions. By
August 2020, employment had fallen by
24 percent among household heads and

FIGURE 1 São Tomé and Príncipe / Twin deficits and grants

Percent of GDP
0

Percent of GDP
0

most family enterprises reported lower
earnings. However, progress on vaccination is supporting recovery. The government has vaccinated around 5.5 percent of
the population as of end-June 2021, andaims to vaccinate about 70 percent of the
population by mid-2022.

Recent developments
After unexpectedly growing by 3.1 percent in 2020 despite the pandemic, economic activity is estimated to decelerate
to 2.1 percent in 2021 as the large, externally financed, fiscal impulse eases.
Growth is being supported by the upturnof the agricultural sector due to the global economic recovery, as the demand forcocoa pushed the export of goods by 175
percent Year-on-Year in May 2021. Also,
the resumption of international travel issupporting the recovery of tourism. STP
received 2,530 tourists in the second
quarter, higher than the 55 tourists thatcame in the second quarter of 2020 but
still 73 percent below the 2019 level. Finally, the implementation of externallyfinanced projects is expected to drive
industrial growth.
The current account deficit (including
official transfers) is estimated to improveto 11.3 percent of GDP in 2021 led mostly
by higher exports of goods and services,which will offset increases in imports
driven by higher oil prices. Assuming
most of the IMF’s recent SDR allocation is
kept in reserves, gross international reserves are estimated to increase to US$

FIGURE 2 São Tomé and Príncipe / Actual and projected
poverty rates and real GDP per capita
Poverty rate (%)

Real GDP per capita (LCU constant)

100

20800

2
-5

4
6

-10

20600
80

20400
20200

60

8
-15

10
12

-20

20000
40

19800

19600

20

19400

14
-25

16

0

Fiscal balance

Current account balance

Sources: Government authorities, IMF and World Bank projection.

19200
2017

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

2018

2019

2020

International poverty rate
Upper middle-income pov. rate

Grants, rhs

Source: World Bank. Notes: See Table 2.

MPO 272 Oct 21

2021

2022

2023

Lower middle-income pov. rate
Real GDP pc

73.4 million, equivalent to 4.6 months ofnext year imports.
Inflation has decelerated to 6.9 percent inJuly 2021 from 9.4 percent in end-2020 as
the demand pressures fueled by the fiscal
and monetary response to the pandemic
lessen, and the disruptions in international trade ease. Also, to help reduce excess
liquidity, the central bank increased theminimum reserve requirements in the end-2020, which has led to reduction of 8.6
percent in the monetary aggregate (M1)by May 2021.
As the government is committed to phaseout pandemic-related spending only
gradually, fiscal expenditures are estimated to increase to 27.2 percent of GDP in
2021, while revenues are estimated toincrease slightly to 25.7 percent of GDP.
Accordingly, domestic primary deficit isexpected to widen slightly to 3.5 percent
of GDP, with the additional deficit financed largely domestically. Public debt
is estimated to reach 87.9 percent of GDP,but given its concessional nature, debt
service will remain low.
Pandemic relief programs, including the
distribution of food baskets and a temporary expansion of cash transfer programs
to vulnerable families and displaced
workers, alleviated the impact of thepandemic on poorer households. Thiswas reflected in surveys showing thatfood insecurity did not increase during2020. Though data are limited, poverty is
expected to have remained stable during
this period.

Outlook
Growth is projected to increase to around
3.1 percent in 2022-2023 driven by a dynamic agricultural sector, continued implementation of externally financed infrastructure projects, recovery of tourism,and structural reforms to promote a morecompetitive private sector. The current
account deficit is projected to improve toaround 7.1 percent of GDP, as the demand of the country´s high-value commodities and tourism services increases,
while imports moderate, particularly oil
products, as the efficiency of the energy
sector improves.
The gradual resumption of fiscal consolidation, improvement in domestic
revenue mobilization (e.g. introduction of VAT), and the implementationof the energy reforms are expected to
improve the country´s fiscal situation,

TABLE 2 São Tomé and Príncipe / Macro poverty outlook indicators

Real GDP growth, at constant market prices
Real GDP growth, at constant factor prices
Agriculture
Industry
Services
Inflation (Consumer Price Index)
Current Account Balance (% of GDP)
Fiscal Balance (% of GDP)
Debt (% of GDP)
Primary Balance (% of GDP)
International poverty rate ($1.9 in 2011 PPP) a,b
Lower middle-income poverty rate ($3.2 in 2011 PPP) a,b
Upper middle-income poverty rate ($5.5 in 2011 PPP) a,b
GHG emissions growth (mtCO2e)
Energy related GHG emissions (% of total)

2018
2.9
2.1
-3.3
0.8
3.1
7.9
-15.9
-2.9
93.2
-2.5
35.5
65.2
86.2
1.7
38.8

contributing to narrow the domestic
primary deficit to around 1.1 percent
of GDP. Similarly, the central bank’s
commitment to defend the peg andthe fiscal consolidation efforts are
expected to reduce inflation toaround 5.0 percent.
Poverty dynamics in 2022-23 will dependon the pace of the recovery, scale of social
protection efforts, and impact of policy
measures such as VAT introduction. Continued reliance on low productivity selfemployment along with high youth unemployment means that generating morejobs is key to reducing poverty.
Given the pervasive impact on the economy, delays in implementation of muchneed reforms (e.g. energy) pose risks togrowth in medium-term, and exacerbate
fiscal vulnerabilities. Additional risks
stem from pandemic uncertainty (e.g. newvariants), slower vaccine deployment,
political uncertainty, and the ongoingenergy crisis. Climate change threatens
long-term growth through impact on key
crops and fisheries stocks, which affect themost vulnerable. On the upside, implementation of the reform agenda and theexternally-financed projects could boost
growth in long-term.

(annual percent change unless indicated otherwise)

2019
2.2
2.5
1.0
0.7
3.2
7.8
-17.5
-1.3
99.9
-0.6
35.4
65.2
86.1
1.0
39.2

2020
3.1
2.3
-1.1
4.4
2.2
9.9
-12.4
-3.7
87.4
-3.3
35.2
65.0
85.8
0.9
39.6

2021 e
2.1
2.1
1.5
2.0
2.2
6.8
-11.3
-1.5
87.9
-1.1
35.1
64.9
85.8
0.7
39.6

So urce: Wo rld B ank, P o verty & Equity and M acro eco no mics, Trade & Investment Glo bal P ractices. Emissio ns data so urced fro m CA IT and OECD.
No tes: e = estimate, f = fo recast.
NA(a) P ro jectio n using po int to po int elasticity at regio nal level with pass-thro ugh = 0.7 based o n GDP per capita in co nstant LCU. A ctual data: 2017.
No wcast: 2018-2020. Fo recast are fro m 2021to 2023.
(b) A ctual data: 2017. No wcast: 2018-2020. Fo recast are fro m 2021to 2023.A ctual data: 2017. No wcast: 2018-2020. Fo recast are fro m 2021to 2023.

MPO 273 Oct 212022 f
2.9
2.9
1.8
2.5
3.1
5.7
-7.5
-0.5
86.5
-0.1
35.0
64.8
85.7
1.2
40.0

2023 f
3.3
3.3
2.2
3.0
3.5
5.8
-6.7
-1.1
84.3
-0.7
34.7
64.6
85.4
1.4
40.4

SENEGAL

Key conditions andchallenges

Table 12020

P o pulatio n, millio n

16.7

GDP , current US$ billio n

24.2

GDP per capita, current US$

1449.1

Internatio nal po verty rate ($ 1.9)

a

38.5
a

68.4

a

88.4

Lo wer middle-inco me po verty rate ($ 3.2)
Upper middle-inco me po verty rate ($ 5.5)a

40.3

Gini index

Scho o l enro llment, primary (% gro ss)bbLife expectancy at birth, years
To tal GHG Emissio ns (mtCO2e)

82.1
67.9
36.8

Source: WDI, M acro Poverty Outlook, and official data.
(a) M ost recent value (201 1 ), 201 1 PPPs.
(b) M ost recent WDI value (201 9).

Growth reached 2.5 percent (y-o-y) during the first quarter of 2021, despite aresurgence of COVID-19. Growth will
gradually recover before increasing substantially once hydrocarbon production
begins in 2023. After a spike in 2020, thefiscal deficit is expected to gradually decline over the medium term. Downside
risks include a sustained pandemic, climatic hazards, terms of trade shocks, anddelayed structural reforms. Following
general growth trends, the poverty rate
will increase slightly in 2021, before resuming a gradual declining trend.

Over the past decade, Senegal benefited
from greater international competitiveness, lower fertility rates, and modest
structural transformation. Pre-COVID,
growth averaged around 6 percent between 2014-19, boosted by investment,
private consumption, and a favorable external environment. Growth supported aprocess of poverty reduction by only 5
percent, from 43 percent in 2011 to 37.8
percent in 2018/9 – falling short of top
performing sub-Saharan African countries. In addition, inequality stagnatedover the period, with the Gini coefficientremaining at 0.35 and persistent spatialand socio-demographic disparities, including gender gaps. COVID-19 worsened
the situation markedly, with poverty estimated to have increased by 2.1 percentage
points in 2020, according to the 2020 HighFrequency Survey, equivalent to 357,000
additional poor.
Risks are tilted to the downside. The
resurgence of COVID-19 in the summer
triggered new containment measures,
which slowed activity in the formal andinformal sectors. The fragility of economic recovery is exacerbated by structural vulnerabilities hampering Senegal’s potential growth. On the one hand,insufficient and unevenly distributed
human capital and structural inequalities constrain labor supply. On the other
hand, the private sector has been unable

FIGURE 1 Senegal/ Fiscal, deficit, Real GDP growth, andcontributions to real GDP growth
Percent
20

Recent developments
Growth decelerated to 1.5 percent in 2020(-1.2 percent in per capita terms), as thenegative impact of containment measures
was partially offset by an 8.2 percent surge
in agriculture production. On the demandside, public investment and public consumption increased by 13.5 and 12.6 percent, respectively. Despite a resurgence of
COVID-19, growth reached 2.5 percent in
Q1 2021, driven mostly by industrial production and the service sector (+20.7 and+14.4 percent y-o-y in the first 5 months of2021, respectively), as households andbusinesses adapted to the pandemic. Formal employment also expanded: +7.7 percent y-o-y in Q1 2021. Inflation increased
to 2.5 percent in 2020, and was at 2.9 percent in July 2021, due to higher food prices.
The current account deficit (CAD) widened
from 8.1 percent of GDP in 2019 to 10.2

FIGURE 2 Senegal / Actual and projected poverty rates andreal private consumption per capita

Percent of GDP
0

15

-1

10

-2

5

-3

0

-4

-5

-5

-10

-6

-15

to generate enough productive jobs to
keep up with population growth, stifled
by insufficient competition and inadequate financing.
The economy remains vulnerable to external shocks. Weaker-than-projected global
growth or lower hydrocarbon prices witha global shift towards low-carbon initiatives would dampen domestic prospects.
Senegal is also exposed to coastal erosion
and climatic shocks (floods, droughts, andhealth hazards), which could slow recovery in tourism, reduce agricultural
productivity, and reverse recent improvements in poverty reduction.

-7

Poverty rate (%)

Real private consumption per capita (LCU constant)

100

5800005600008054000060

52000040

500000480000204600002014 2015 2016 2017 2018 2019 2020e 2021p 2022p 2023p
Private consumption
Private investment
Exports
GrowthPublic consumption
Public investment
Imports
Fiscal deficit (rhs)

Sources: Senegalese authorities and World Bank staff calculations.

04400002005 2007 2009 2011 2013 2015 2017 2019 2021 2023
International poverty rate
Upper middle-income pov. rate
Source: World Bank. Notes: See Table 2.

MPO 274 Oct 21

Lower middle-income pov. rate
Real priv. cons. pc

percent in 2020, due to weak demand in
key export markets, particularly tourism.
The deficit was financed by hydrocarbon
related FDI and increased development
assistance. In H1 2021, the terms of trade
deteriorated as oil and international foodprices increased.
In 2020, the fiscal deficit deteriorated to
6.4 percent of GDP. This reflects a combination of lower tax revenues from theslowdown in economic activity, with taxes
on goods and services down 0.4 ppts ofGDP, and an increase of 2.1 ppts of spending to mitigate the impact of the crisis,
notably in the health sector. Consequently,
debt-to-GDP increased from 63.8 percent
of GDP in 2019 to 68.7 percent in 2020.
Senegal’s monetary and exchange rate
policies are managed by the Central Bankof West African States (BCEAO), which
maintains a peg between the CFA Francand the Euro. Its reserves have remained
stable since 2019 and reached an estimated
5.8 months of imports in 2020 due to donor support and Eurobond issuances. To
support the regional economy and COVID-19 related extra spending, the BCEAO
implemented a set of monetary andmacroprudential measures beginning inMarch 2020, including a policy rate cut
and extended refinancing operations of
the 3-month COVID-19 bonds. These
measures were extended into 2021.

The poverty rate is expected to increase to
35 percent in 2021, from 33.8 percent in2019. As the recovery materializes mostly
in urban centers initially, vulnerable rural
households may not reap the benefits ofthe economic rebound for some time. An
extension of pre-COVID-19 cash transfer
programs to the most vulnerable rural
households and of universal health coverage would help to mitigate the negative
impacts of the pandemic.

Outlook
Assuming the pandemic gradually recedes, growth is expected to reach 4.7
percent in 2021, and average 7.3 percent
over 2022-23. It will be driven by exports, a pick-up in private investment,
and the resumption of major extractive
projects, with oil and gas production
expected to come onstream by end-2023.
Inflation is expected to return to its preCOVID levels, declining slightly to 2.4
percent in 2021.
The CAD is expected to widen to 12.2 percent of GDP in 2021. Whereas oil and gas
projects will be almost exclusively supported by FDI, the rest of the deficit will befinanced by a mix of concessional financing, commercial borrowing, and the G20’s

TABLE 2 Senegal / Macro poverty outlook indicators

Real GDP growth, at constant market prices
Private Consumption
Government Consumption
Gross Fixed Capital Investment
Exports, Goods and Services
Imports, Goods and Services
Real GDP growth, at constant factor prices
Agriculture
Industry
Services
Inflation (Consumer Price Index)
Current Account Balance (% of GDP)
Fiscal Balance (% of GDP)
Debt (% of GDP)
Primary Balance (% of GDP)
International poverty rate ($1.9 in 2011 PPP) a,b
Lower middle-income poverty rate ($3.2 in 2011 PPP) a,b
Upper middle-income poverty rate ($5.5 in 2011 PPP) a,b
GHG emissions growth (mtCO2e)
Energy related GHG emissions (% of total)

debt service suspension initiative (0.6 percent of GDP). The CAD is expected to remain elevated in 2022, at 11.6 percent ofGDP, before dropping sharply to around
6.0 percent in 2023, as hydrocarbon exports
gradually come on stream. In August 2021,
the BCEAO received 1.4 percent of aggregate GDP in additional SDR allocations
from the IMF that could be temporarily on-lent to member countries.
The fiscal deficit will fall to 5.4 percent of
GDP in 2021, as the Government reins incurrent expenditures to pre-pandemic
levels and tax revenues partially recoverfrom the crisis, increasing by 0.4 ppts ofGDP. While public debt remains sustainable, the debt-to-GDP ratio is expected toincrease to 71.9 percent of GDP in 2021,
before declining thereafter. Over the medium term, fiscal pressures will graduallyease as continued tax revenue mobilization efforts help to rebuild fiscal space,with the fiscal deficit expected to converge
to the WAEMU criterion of 3 percent of
GDP by 2023.
Higher expected growth (driven by anincrease in exports and public investment
and the ambitious socio-economic response plan) and low inflation should
improve household real incomes. Consequently, the international extreme poverty
rate is projected to decline to its prepandemic level of 33.2 percent by 2023.

(annual percent change unless indicated otherwise)
2018
6.2
4.7
3.5
13.7
8.2
9.0
6.2
8.1
6.5
5.5
0.5
-9.1
-3.9
62.4
-1.9
34.3
63.6
85.6
0.7
33.6

2019
4.4
3.4
5.5
8.4
11.2
5.3
4.4
4.5
3.7
4.7
1.0
-8.1
-3.9
63.8
-1.9
33.8
63.2
85.4
3.1
33.5

2020
1.5
1.5
6.3
6.2
-4.6
2.6
1.5
8.2
2.9
-1.0
2.5
-10.5
-6.4
68.7
-4.4
34.6
63.9
85.8
3.9
32.9

2021 e
4.7
2.8
5.9
8.3
7.2
5.5
4.7
4.8
4.2
4.9
2.4
-12.2
-5.4
71.9
-3.2
35.2
64.5
85.9
4.5
33.8

So urce: Wo rld B ank, P o verty & Equity and M acro eco no mics, Trade & Investment Glo bal P ractices. Emissio ns data so urced fro m CA IT and OECD.
No tes: e = estimate, f = fo recast.
NA(a) Calculatio ns based o n 2011-ESP S-II.A ctual data: 2011. No wcast: 2012-2020. Fo recast are fro m 2021to 2023.
(b) P ro jectio n using neutral distributio n (2011) with pass-thro ugh = 0.87 based o n private co nsumptio n per capita in co nstant LCU.

MPO 275 Oct 212022 f
5.5
3.8
5.6
8.5
7.8
5.7
5.5
6.4
5.2
5.4
2.0
-11.6
-4.2
70.1
-2.1
34.3
63.6
85.7
5.0
35.0

2023 f
9.2
4.9
4.9
11.5
16.3
6.0
9.2
7.3
16.1
6.5
1.5
-6.0
-3.0
64.5
-1.3
33.2
62.7
85.0
8.3
37.8

SEYCHELLES
Table 1

Key conditions andchallenges
2020

P o pulatio n, millio n

0.1

GDP , current US$ billio n

1.2

GDP per capita, current US$

12000.0

Internatio nal po verty rate ($ 1.9)

a

0.5
a

1.1

a

5.2

Lo wer middle-inco me po verty rate ($ 3.2)
Upper middle-inco me po verty rate ($ 5.5)a

32.1

Gini index

Scho o l enro llment, primary (% gro ss)bbLife expectancy at birth, years
To tal GHG Emissio ns (mtCO2e)

100.4
73.9
0.8

Source: WDI, M acro Poverty Outlook, and official data.
(a) M ost recent value (201 8), 201 1 PPPs.
(b) M ost recent WDI value (201 9).

Real GDP is expected to increase by 6.9
percent in 2021 and 7.7 percent in 2022
as the tourist industry recovers. This willcontribute to the narrowing of the current
account deficit. In addition, the fiscal balance is expected to return to a sustainable
path as the government undertakes fiscal
consolidation, the exchange rate appreciates, and the economy recovers. Poverty is
expected to stay high in 2021 due to theimpact of COVID-19.

Tourism and fisheries are the key sectorsof the Seychelles’ economy. The fishingindustry, which is host to one of the largest tuna canneries in the world, contributes to between 8 and 20 percent to GDP
annually and the tourism sector contributes 30 percent to GDP. The country is
also dependent on imports. This lack of
economic diversification exposes Seychelles to external shocks. These shocks
are transmitted through disruptions ininternational travel and tourism demand,
as well as through fluctuations in fishingstocks and instabilities in the price ofessential commodities such as food andfuel prices. Seychelles is also exposed tofiscal risks emanating from State-owned
enterprises (SOEs), particularly Air Seychelles, whose financial difficulties has
been exacerbated by the decline in the
global travel industry.
Poverty in Seychelles declined between
2013 and 2018, to 5.2 percent when measured against the poverty line for upper
middle-income countries of USD 5.50 aday per capita in PPP terms. This decline
has been driven by a rise in incomes frompaid employment and self-employment aswell as an increase in the benefits of various social protection programs. However,
the high level of social spending undertaken by the Government is expected to
become unaffordable in the wake of a rapidly aging population and in the context

of COVID-19, which has led to an increasein fiscal pressures.

Recent developments
Economic growth is projected to recover to
6.9 percent in 2021 due primarily to a recovery in the tourism sector. Tourist arrivals
begun to rebound in April 2021 following
the reopening of borders in late March 2021,
and the emergence of new tourist markets(Russia, UAE and Israel). The average inflation rate stood at 7.5 percent at end August2021 due to increased demand. Despite a
gradual revival of tourist activity, the current account deficit is projected to remainhigh at -25.7 percent of GDP in 2021
(compared to -29.5 percent in 2020). Grossinternational reserves stood at US$ 617 million in July 2021 (4.2 months of imports).
During the first six months of 2021, public
expenditure declined by 3.5 percentage
point compared to the same period of theprevious year, driven mainly by a reduction in government transfers by 2 percentage point. In the same period, revenue
collection declined by 0.5 percentage pointdue to generous loss-carry forward provisions for business taxes and the abolishment of Corporate Social Responsibility(CSR) tax. The GOS conducted a liability
management operation (LMO) in July
2021 that increased the average maturityof the domestic debt portfolio to 4.8 years(compared to 1 year) and reduced the costof the debt by 125-150 basis points.
Negative growth in 2020 took a toll on
poverty reduction. Poverty rose to 6.5

FIGURE 1 Seychelles / Fiscal balance and public sector debt

FIGURE 2 Seychelles / Actual and projected poverty rates
and real GDP per capita

Percent of GDP
10

Poverty rate (%)

Percent of GDP
120

5

100

Real GDP per capita (LCU constant)

16

12000014

100000

12
0

80

-5

60

80000

10
8

-10

40
Primary Balance (lhs)-15Overall Balance (lhs)

6

20000

2

20

0

0
2006 2008 2010 2012 2014 2016 2018 2020 2022

0International poverty rate
Upper middle-income pov. rate

2012 2013 2014 2015 2016 2017 2018 2019 2020
Sources: WDI and World Bank staff estimates.

40000

4

Public Sector Debt (rhs)
-20

60000

Source: World Bank. Notes: see Table 2.

MPO 276 Oct 21

Lower middle-income pov. rate
Real GDP pc

percent in 2020, compared to a prepandemic level of 5.2 percent, and is projected to fall only marginally to 6.4 percent
in 2021. The unemployment rate declined
to 4 percent in the fourth quarter of 2020
possibly thanks to the mitigating impact of
the financial assistance for job retention
program implemented by the government.

Outlook
Between 2022 to 2023 economic growth isexpected to average 5.9 percent. Economic
growth will be driven by tourism, which
is projected to grow by 53 percent and39.1 percent in 2022 and in 2023, respectively, driven by a rebound in tourist arrivals from traditional markets. Poverty(measured at $5.5 per capita per day) is
projected to decline from 6.4 percent in
2021 to 5.6 percent in 2023. The inflation
rate is projected to decline to 3.7 percent at
end-2022 and 3.2 percent in 2023 as tourism resumes and foreign exchange supply
increases, stabilizing the exchange rate.
The current account deficit is projected to
improve in the medium-term reaching 22.0 percent of GDP in 2023 from -29.5
percent of GDP in 2020, as exports ofgoods and services recover.
The fiscal deficit is projected to narrow in
2021 and continue declining in the medium term, as the government unwinds
COVID-19 related expenditures and undertakes fiscal consolidation. This improvement will be due to the expendituresaving measures introduced in the 2021
budget, which are expected to remain in

TABLE 2 Seychelles / Macro poverty outlook indicators

Real GDP growth, at constant market prices
Private Consumption
Government Consumption
Gross Fixed Capital Investment
Exports, Goods and Services
Imports, Goods and Services
Real GDP growth, at constant factor prices
Agriculture
Industry
Services
Inflation (Consumer Price Index)
Current Account Balance (% of GDP)Net Foreign Direct Investment (% of GDP)
Fiscal Balance (% of GDP)
Debt (% of GDP)
Primary Balance (% of GDP)
International poverty rate ($1.9 in 2011 PPP) a,b
Lower middle-income poverty rate ($3.2 in 2011 PPP) a,b
Upper middle-income poverty rate ($5.5 in 2011 PPP) a,b
GHG emissions growth (mtCO2e)
Energy related GHG emissions (% of total)

place until 2023. These measures include
limiting new recruitments to key positions
in certain ministries and departments;
freezing salaries for public service employees; freezing long service allowance; andbanning the introduction of new schemesof service. These expenditure measures areprojected to save approximately 5.2 percent of GDP. Revenue collection is expected to increase in the medium term,
driven by a resumption of economic activities as well as measures to improve tax
policy, including limits to international
profit shifting and the streamlining of VAT
exemptions. Revenue reforms are projected to generate 3.6 percent of GDP. The
public debt to GDP ratio is projected to
decline to 70 percent of GDP by 2026 as
economic growth recovers and the exchange rate is expected to appreciate.

(annual percent change unless indicated otherwise)
2018
4.1
3.3
8.8
3.8
2.9
4.0
4.1
0.9
2.4
4.4
3.7
-19.6
17.2
-0.2
59.7
2.9
0.5
1.1
5.2
4.9
79.5

2019
2.0
4.8
-0.2
-2.7
2.0
0.9
1.8
1.1
2.1
1.7
2.0
-18.8
17.7
1.0
58.7
3.6
0.5
1.1
5.0
2.9
79.7

2020
-13.3
-10.8
4.3
-37.7
-39.6
-38.2
-13.4
-0.2
0.7
-15.4
1.2
-29.7
10.1
-17.8
102.3
-14.3
0.7
1.5
6.5
-6.0
80.1

2021 e
6.9
13.1
4.6
-5.3
12.2
10.3
6.9
1.0
2.1
7.8
9.9
-25.7
14.0
-13.6
87.7
-10.2
0.6
1.5
6.4
7.1
80.0

So urce: Wo rld B ank, P o verty & Equity and M acro eco no mics, Trade & Investment Glo bal P ractices. Emissio ns data so urced fro m CA IT and OECD.
No tes: e = estimate, f = fo recast.
NA(a) Calculatio ns based o n 2018-HB S.A ctual data: 2018. No wcast: 2019-2020. Fo recast are fro m 2021to 2023.
(b) P ro jectio n using neutral distributio n (2018) with pass-thro ugh = 0.87 based o n GDP per capita in co nstant LCU.

MPO 277 Oct 212022 f
7.7
10.6
1.7
16.1
18.0
18.3
7.7
1.1
2.4
8.6
3.2
-22.0
14.2
-7.7
87.6
-4.5
0.6
1.3
5.9
7.9
80.0

2023 f
6.8
5.5
-1.5
8.0
20.1
14.4
6.8
1.1
2.0
7.6
3.0
-19.4
14.7
-2.9
83.0
0.2
0.5
1.2
5.6
7.0
79.9

SIERRA LEONE
Table 12020

P o pulatio n, millio n

8.0

GDP , current US$ billio n

4.0

GDP per capita, current US$

500.0

Internatio nal po verty rate ($ 1.9)

a

43.0
a

76.0

a

92.7

Lo wer middle-inco me po verty rate ($ 3.2)
Upper middle-inco me po verty rate ($ 5.5)a

35.7

Gini index

Scho o l enro llment, primary (% gro ss)

b

143.7

b

54.7

Life expectancy at birth, years
To tal GHG Emissio ns (mtCO2e)

11.0

Source: WDI, M acro Poverty Outlook, and official data.
(a) M ost recent value (201 8), 201 1 PPPs.
(b) M ost recent WDI value (201 9).

After contracting by 2 percent in 2020,
output is projected to expand by 4.2
percent in 2021. Both real GDP and per
capita income are expected to surpass
their pre-crisis levels in 2022-23, withpoverty expected to fall and return to
its 2019 level by 2022. Headline inflation and the budget deficit will decline
over the medium-term as the economy
recovers while exports will improve due
to strong global demand.

Key conditions andchallenges
Sierra Leone’s (SL) economy is highly
vulnerable to domestic and external
shocks due to its dependence on commodities (i.e., mining, which is sensitive toshifts in global demand and prices) andagriculture (which is rain-fed and subject
to weather changes). Economic growth
averaged 4.4 percent between 2010 and
2020, but with a large standard deviationof 10.6 percent. Moreover, the country’s
high population growth rate has meantthat per capita GDP has grown muchslower than the economy (at just 2.2 percent). Despite these challenges, the poverty rate fell from 54.7 percent in 2011 to
40.6 percent in 2019, albeit predominantly
in urban areas.
The country has experienced macroeconomic stress and fiscal imbalances in the
recent past. Between the Ebola outbreak
and the onset of the COVID-19 pandemic(2014–20), the budget deficit averaged 5.7
percent. In the same period, domestic revenue mobilization averaged 12.7 percent
of GDP, with an estimated tax gap of 4.5
percent of GDP. Since 2019, SL has beenranked at a high risk of debt distress. The
country’s medium-term national development plan for 2019–2023 prioritizes
productivity-raising structural reforms(under the economic diversification cluster) as well as improved cross-sector resource allocation through investments inphysical and human capital. However,

economic growth contracted by 2 percent
in 2020, as the COVID-19 pandemic led toa contraction in the services and industrial
sectors following global supply chain disruptions, suspension of international travel, lockdowns, and the closure of land borders. GDP per capita fell by 4 percent in
2020, reversing some of the recent gains inpoverty reduction. Non-farm households
dependent upon private sector income(whether self-employed or salaried) disproportionately saw incomes drop acrossthe board during the height of the pandemic. The poverty rate jumped from 40.6
percent in 2019 to 43.5 percent in 2020,
primarily affecting urban households.

Recent developments
Growth is expected to rebound in 2021
due to the easing of COVID-19-related
restrictions, implementation of the government’s fiscal response to the pandemic,
and resumption of iron ore mining. The
recovery has been broad-based on the
supply side, with all sectors contributing
to growth, and driven by domestic private
consumption and investment on the demand side. Real GDP per capita is estimated to increase by 2.1 percent in 2021 leading to a modest decline in the poverty
rate. However, a reversal in the sharp expansion of urban poverty is unlikely without higher growth rates especially in theservices sector.
Headline inflation fell to 8.9 percent inMarch 2021, before rising sharply to 10.2
percent by end-June, reflecting an increase

FIGURE 1 Sierra Leone / Real GDP growth and contributions
to real GDP growth

FIGURE 2 Sierra Leone / Actual and projected poverty rates
and real GDP per capita

Percent, percentage points
25

Poverty rate (%)

Real GDP per capita (millions constant LCU)

100

2

20
15

80

2

10
5

60

0

1

-5

40

-10

-15

1

20

-20
2017

2018

2019

Statistical discrepancy
Change in inventories
Public Consumption
Real GDP growth

2020

2021f

2022f

2023f

Net Exports
Gross fixed capital formation
Private Consumption

Sources: Sierra Leone authorities and World Bank staff estimates and projections.

0

0
2011

2013

2015

2017

International poverty rate
Upper middle-income pov. rate
Source: World Bank. Notes: see table 2.

MPO 278 Oct 21

2019

2021

2023

Lower middle-income pov. rate
Real GDP pc

in food and fuel prices. Indeed, food inflation reached 17.1 percent in June
(2021H1), well above its pre-COVID-19
level of 9.9 percent (reflecting an increasein the price of key food staples due to foodsupply difficulties), while non-food inflation declined from 6.9 percent in December 2020 to 4.5 percent in June 2021, reflecting subdued demand for nonfood
items. Given the price pressure and expected economic rebound, the Bank of
Sierra Leone (BSL) kept the monetary policy rate unchanged at 14 percent in
2021H1. The BSL intervened to provide
foreign exchange for the importation of
essential commodities, which helped keep
the Leone relatively stable (it depreciatedby less than 5 percent against the US dollar in 2021H1).
The current account deficit is expected to
improve by 1 percentage point to 16.4 percent of GDP in 2021 reflecting higher export receipts from the mining sector. In
2021H1, total public expenditure reached12.3 percent of GDP while total revenue
collection totaled 6.9 percent of GDP, below
the annual budget targets of 23.1 and 14
percent of GDP, respectively. The overallbudget deficit is projected to decline by
1.7 percentage points to 3.8 percent of
GDP in 2021, reflecting a resumption of
fiscal consolidation efforts (both on therevenue and expenditure side) as the pandemic recedes. Accordingly, public debt
is estimated to decline by 0.7 percentage
points to 72.9 percent of GDP in 2021,
although the risk of external and overall
debt distress was assessed as high in June
2021 (same as in 2020).

OutlookReal GDP per capita will grow by 3.1 percent in 2022-23, surpassing its pre-crisis
level in 2022. Agriculture is expected tocontribute to about half of real sector
growth as the government adopts policies
to promote private sector participationand investments in cash crops. The expected recovery in trade and tourism will
support a rebound in services while industry will be boosted by the resumptionof iron ore mining. On the demand side,
growth is expected to be driven mainly by

TABLE 2 Sierra Leone / Macro poverty outlook indicators

Real GDP growth, at constant market prices
Private Consumption
Government Consumption
Gross Fixed Capital Investment
Exports, Goods and Services
Imports, Goods and Services
Real GDP growth, at constant factor prices
Agriculture
Industry
Services
Inflation (Consumer Price Index)
Current Account Balance (% of GDP)Net Foreign Direct Investment (% of GDP)
Fiscal Balance (% of GDP)
Debt (% of GDP)
Primary Balance (% of GDP)
International poverty rate ($1.9 in 2011 PPP) a,b
Lower middle-income poverty rate ($3.2 in 2011 PPP) a,b
Upper middle-income poverty rate ($5.5 in 2011 PPP) a,b
GHG emissions growth (mtCO2e)
Energy related GHG emissions (% of total)

private consumption and investment.
With the boost in domestic food production, headline inflation should return tosingle digits by 2023. Moreover, the poverty rate is expected to fall slightly by 1.7
percentage points in 2021 and return to its
2019 level by 2022. The current accountdeficit is projected to narrow to 12.9 percent of GDP by 2023, financed by a combination of foreign direct investment andproject support grants. In addition, new
SDR allocation (US$283 million or 6.5 percent of GDP) from the IMF will help tocushion gross external reserves, reduce
exchange rate variability, and safeguard
external sector stability. About 14 percentof the total allocation have been earmarked to support SL’s COVID-19 response (amounting to 0.8 and 0.3 percent
of GDP in 2022 and 2023). The fiscal deficit is projected to decline to 2.3 percent of
GDP by 2023, driven by improvements indomestic revenue mobilization and expenditure rationalization. However, theoutlook is subject to significant downside
risks and uncertainties related to the pathof the pandemic and the pace of improvements in global economic conditions.

(annual percent change unless indicated otherwise)
2018
3.5
-7.0
250.2
-33.7
-34.9
-11.5
3.4
3.9
-2.5
4.1
16.0
-18.6
6.1
-5.6
69.1
-2.8
43.0
76.0
92.7
-2.9
15.2

2019
5.3
3.8
5.1
-34.2
-1.6
-7.0
5.3
5.4
10.9
3.7
14.8
-23.9
9.0
-2.4
71.4
-0.2
40.6
74.8
92.2
3.4
15.3

2020
-2.0
3.4
2.7
-4.1
-9.8
7.5
-2.0
1.6
-7.1
-5.8
13.5
-17.4
7.0
-5.5
73.6
-2.6
43.5
76.3
92.9
1.0
14.9

2021 e
4.2
12.3
-4.5
45.1
11.1
19.9
4.2
3.7
6.2
4.5
11.8
-16.4
4.8
-3.8
72.9
-1.1
41.8
75.6
92.5
2.6
14.6

So urce: Wo rld B ank, P o verty & Equity and M acro eco no mics, Trade & Investment Glo bal P ractices. Emissio ns data so urced fro m CA IT and OECD.
No tes: e = estimate, f = fo recast.
NA(a) Calculatio ns based o n 2018-SLIHS.A ctual data: 2018. No wcast: 2019-2020. Fo recast are fro m 2021to 2023.
(b) P ro jectio n using neutral distributio n (2018) with pass-thro ugh = 0.87 based o n GDP per capita in co nstant LCU.

MPO 279 Oct 212022 f
6.0
13.0
-28.5
45.3
33.2
16.7
6.0
5.7
9.4
5.6
10.2
-14.5
2.7
-2.9
72.0
0.4
39.5
73.8
91.8
2.7
14.5

2023 f
4.3
12.4
-36.6
16.7
23.0
14.8
4.3
3.6
4.7
5.3
9.6
-12.9
3.9
-2.3
70.1
0.3
38.3
73.0
91.5
2.7
14.5

SOMALIA

Key conditions andchallenges

Table 12020a

P o pulatio n, millio n
GDP , current US$ billio n

15.0

GDP per capita, current US$

333

5.0

Internatio nal po verty rate ($ 1.9)
Gini co efficient

b

68.6

b

36.8

Scho o l enro llment, primary (% gro ss)
Life expectancy at birth, years

c

d

33.0
57.4

Source: WDI, IM F & World Bank (2020), UNFPA
and M acro Poverty Outlook.
(a)Estimates based on 2013 population estimates by UNFPAand assumes an average annual population growth of 2.9%.
(b) M ost recent value (2017).
(c) Somali Poverty and Vulnerability Assessment Report(World Bank, 2019).
(d) Life expectancy for 2019 from WDI.

The Somali economy is projected to rebound in 2021 with a growth rate ofaround 2.3 percent, based on solid performance of the financial sector, increased
remittance inflows and higher exports.
However, with rural areas affected bypersistent weather shocks, the gains fromgrowth remain unevenly distributed. The
poverty rate is expected to stagnate at 71
percent until 2023. Increased politicalinstability and delays in the rollout of the
COVID-19 vaccine pose as risks to economic recovery.

Following prolonged negotiations, political stakeholders across Somalia’s
emerging federation have agreed on atimetable and modalities for elections,which are likely to be held at the end of2021 and early 2022. The upcoming election marks an important milestone inaddressing the drivers of fragility byworking towards rebuilding the social
contract. However, rising insecurity andinsurgence activities continue to test thestrength of governance institutions andintergovernmental cooperation.
A commitment to implement and sustain
the reforms agreed under the Heavily
Indebted Poor Countries Initiative(HIPC) has been maintained, which provides a pathway towards achieving fulland irrevocable debt relief. Real GDP
growth has remained modest since 2014,
averaging around 2.4 percent, lower
than the population growth rate. Publicresources are constrained, with tax collection at less than 5 percent of GDP. The
federal and state governments therefore
lack the resources to invest in humancapital and infrastructure; and public
spending remains focused on strengthening security and basic state apparatus.
As institutions are at a nascent stage ofdevelopment, the federal government
does not have the macroeconomic policy
tools to manage shocks to the economy,
while the central bank lacks the capacity

to conduct effective monetary policy.
The country is therefore dependent on
external partners to provide support
during shocks.
While the economy is projected to rebound in 2021, the 2020 triple crisis of the
COVID-19 pandemic, floods, and locust
infestation continues to have lingering
effects on high levels of joblessness andpoverty. Despite a slight rebound in employment since the start of the pandemic,
the overall employment rate is still low,
where just over half of the population are
participating in the labor market. The international poverty estimate (measured
using the $1.90/person/day poverty line)
remains at 71 percent in 2021.

Recent developments
Following an economic contraction estimated at 0.4 percent in 2020, GDP growthis projected to rebound to 2.3 percent in
2021, based on encouraging performancein the first six months of the year. Bank
deposits and credit to the private sector
are up on upward trend, while the demand for automobiles, electronics andconstruction materials increased, signaling increased business activity. Export
volumes have increased by nearly 30
percent, while total imports have grownby 12 percent as demand for consumer
products rises. Despite a revival in economic activities, inflation has remained
stable, averaging 4 percent in the threemajor cities of Mogadishu, Bosaso andHargeisa in the first six months of 2021.

FIGURE 1 Somalia /Real GDP growth, pre-covid forecast
versus current forecast

FIGURE 2 Somalia / Actual and projected poverty rates andreal private consumption per capita

Percent

Poverty rate (%)

4

120

470

100

465

3

Real private consumption per capita (LCU constant)

460

80
2

455
60
450

1

40

445

20

0

440

0

-1
2018

2019

2020e

Pre-COVID-19
Source: World Bank Staff Estimates, 2021.

2021f

2022f

435

2017

2023f

2018

2019

2020

International poverty rate
Upper middle-income pov. rate

RevisedSource: World Bank. Notes: see Table 2.

MPO 280 Oct 21

2021

2022

2023

Lower middle-income pov. rate
Real priv. cons. pc

Remittance inflows, used by households
for consumption and private businesses
for investment, increased by more than athird in the first half of 2021 compared tothe same period the year before. However, rural areas have been hit by localized
flooding and a locust invasion, which are
lowering domestic agricultural production. Worsening insecurity in southernand central regions may also dampen
agricultural activities and increase displacement to urban areas.
The prolonged election period is affecting the federal government’s capacity toraise domestic revenues and donor
grants, which reached only 37 percent
and 20 percent of annual budget targets,
respectively, by June 2021. Budget support from development partners (which
had been anticipated to finance 25 percent of spending in 2021) virtually ceased
due to the political stalemate, necessitating cuts in discretionary spending. However, the government is stepping up support to vulnerable populations in timesof crisis, notably through the Gargaara
lending facility which targets micro,
small, and medium enterprises, as wellas the national Baxnaano program toincrease cash transfers. However, thescale of support is dwarfed by needs,
particularly in a context of rising COVID19 infections. Access to vaccines remains
limited (716,000 doses have been received) and only 0.6 percent of the population has been fully vaccinated.
However, the nascent economic recovery
has not supported the improved of the
population, which remains unacceptably
dire. Poverty levels have stayed at 71 percent and a vast majority of the population
experienced a reduction in income compared to the pre-pandemic level. Similarly, food insecurity remains high; at thestart of the year, more than half of adults
reported that they were hungry but did
not eat.

Outlook
Economic growth is projected to reach 3.0
percent in 2022 and 3.4 percent in 2023,
returning to pre-pandemic levels over the
medium term (Figure 1). This outlook depends on a continued national commitment
to economic reform to reach the HIPCTABLE 2 Somalia / Macro poverty outlook indicators

Real GDP growth, at constant market prices
CPI Inflation, annual percentage change
Current Account Balance
Trade balancePrivate remittances
Official grants
Fiscal Balance a
Domestic revenue
External grants
Total expenditure
Compensation of employees
External debt
International poverty rate ($1.9 in 2011 PPP) b,c
Lower middle-income poverty rate ($3.2 in 2011 PPP) b,c
Upper middle-income poverty rate ($5.5 in 2011 PPP) b,cCompletion Point, regardless of the election
outcome, which is critical for medium-term
growth and access to much needed external resources. A peaceful election, smooth
political transition and the reform momentum are also likely to support increased
consumer and investor confidence.
Over the long-term, planned investments
in sectors such as energy, ports, and thefinancial sector are expected to graduallyshift the drivers of growth from consumption to investment. This will help to harness Somalia’s potential in sectors such as
fisheries, agriculture, and renewable power generation, and diversify the exportbase. An expected increase in the availability of vaccines will support the government’s plans to vaccinate 20 percent of its
population by 2022, and further abate theeffects of the pandemic.
The economic rebound is expected topush GDP per capita to US$352 in 2021,
from US$332 in 2020. The international
poverty rate is projected to remain at 71
percent in 2022 and 2023. Accelerating thepace of poverty reduction will requirepolicy interventions and public investments that raise productivity, create jobs,
and expand pro-poor programs.

(annual percent change unless indicated otherwise)
2018
2.8
3.2
-7.5
-84.8
31.4
46.6
0.1
3.9
1.8
5.7
3.0
112.8
69.2
89.2
97.9

2019
2.9
3.1
-10.5
-83.0
31.9
41.3
0.5
4.6
2.2
6.3
3.3
108.8
68.4
88.8
97.8

2020 e
-0.4
4.2
-14.3
-91.1
32.4
47.9
0.2
4.3
6.0
10.0
4.6
90.8
70.8
90.0
98.1

So urces: Wo rld B ank Staff Estimates (2021), IM F (2021), and FGS (2021).
No tes: e = estimate, f = fo recast.
(a) Federal Go vernment o f So malia (FGS).
(b) Calculatio ns based o n 2017 SHFS-wave 2. A ctual data: 2017. No wcast: 2018-20. Fo recast are fro m 2021-23.
(c) P ro jectio n using neutral distributio n (2017) with pass-thro ugh = 1based o n private co nsumptio n per capita in co nstant US$ .
NA

MPO 281 Oct 212021 f
2.3
4.3
-13.9
-88.4
32.4
43.7
0.0
4.0
3.8
7.8
4.2
83.1
70.9
90.0
98.1

2022 f
3.0
4.0
-14.3
-91.7
33.3
44.6
-0.6
4.9
4.8
10.3
4.0
78.9
70.7
90.0
98.1

2023 f
3.4
3.4
-12.7
-90.6
35.7
41.6
-0.8
5.0
5.9
11.6
3.8
75.6
70.6
89.9
98.1

SOUTH AFRICA
Table 12020

P o pulatio n, millio n

59.3

GDP , current US$ billio n

335.1

GDP per capita, current US$

5650.9Internatio nal po verty rate ($ 1.9)

a

18.7
a

37.3

a

56.9

Lo wer middle-inco me po verty rate ($ 3.2)
Upper middle-inco me po verty rate ($ 5.5)a63.0

Gini index

Scho o l enro llment, primary (% gro ss)bbLife expectancy at birth, years
To tal GHG Emissio ns (mtCO2e)

98.5
64.1
679.9

Source: WDI, M acro Poverty Outlook, and official data.
(a) M ost recent value (201 4), 201 1 PPPs.
(b) WDI for School enrollment (201 8); Life expectancy (201 9).

The South African economy has started
to recover, following a 6.4 percent contraction last year. GDP growth is expected to rebound to 4.6 percent in 2021,
driven by the favorable global environment. The domestic drivers of growth
remain weak and structural reforms –some of which have been implemented
over the last few months – need to continue to achieve higher growth and job
creation. Poverty is reaching levels notseen for more than a decade, which puts
further pressure on budget spending.

Key conditions andchallenges
The global environment – higher growthin trade partners and favorable commodity prices – is supporting South Africa’s
economic recovery. Terms of trade have
improved by more than 20 percent since
end-2019, driven primarily by metal prices. Historically, commodities have played
a big role in South Africa’s economic trajectory. The mining sector only accounts
for 7 percent of GDP but for over half ofmerchandise exports (platinum groupmetals, gold, iron ore and coal). Commodity cycles also tend to affect financial variables such as investment flows, the exchange rate and the stock market.
The pandemic has worsened social outcomes. Poverty rates have climbed back tolevels of more than a decade ago, undoing
years of progress. About 1 in 4 South African of working-age are unemployed or discouraged. Combined with political tensions
over the imprisonment of former President
Zuma, social hardship translated in civil
unrest and looting in July, leading to significant damages (destruction of retail andwarehouse facilities, disruption of majorroad transport corridors, etc.). President
Ramaphosa has cited that the economic costof the unrest, based on property owners’
estimates could mount to R50 billion (0.9
percent of GDP). Following these events,
the government reinstated the COVID-19
Social Relief of Distress grant until the endof this fiscal year (March 2022).

FIGURE 1 South Africa / Mining production and sales

Percent change, year-on-year
120
100
80

60

0

82000

80

70

80000

60

78000

50

76000

40

74000

30

72000

20

70000

10

68000

40

-40
-60

80

50

-20

South Africa’s economy continued to recover in the first half of 2021. Real GDP
increased by 1 percent on a quarterly basis
in Q1 and by 1.2 percent in Q2. Finance,
mining, trade and transports were themain drivers of growth on the production
side. On the demand side, households’
consumption, change in inventories(lower destocking) and net exports (Q2)drove the increase while investment continued to lag. Recovering from last year’s
low base as a result of the pandemicrelated hard lockdown, GDP increased by
7.5 percent in H1 2021 compared to H1
2020, with mining and manufacturing
having the largest recoveries (+25.2 and+17 percent respectively).

Rand billion
90

60

20

Recent developments

FIGURE 2 South Africa / Actual and projected poverty rates
and real GDP per capita

70

40

Given persistently weak domestic growth
drivers, South Africa is vulnerable tochanges in the global environment. Lower
global growth accompanied by fallingcommodity prices would hamper the recovery. Generally benign financial conditions and trade dynamics have supported
the Rand so far this year. However, portfolio investments continue to record net
outflows which could put pressure on
government bond yields and make fiscal
consolidation more difficult. Domestically,
additional waves of COVID-19 infections
could translate into further job losses. A
lack of improvement in living standards
could threaten social stability and put
additional pressure on public finances
which are already constrained.

Poverty rate (%)

Real GDP per capita (LCU constant)030
Jan-19 May-19 Sep-19 Jan-20 May-20 Sep-20 Jan-21 May-21
Real mining production (left axis)

Source: STATS SA.

66000
2005 2007 2009 2011 2013 2015 2017 2019 2021 2023
International poverty rate
Upper middle-income pov. rate

Mineral sales (right axis)

Source: World Bank. Notes: see Table 2.

MPO 282 Oct 21

Lower middle-income pov. rate
Real GDP pc

South Africa suffered from a third wave of
COVID-19 infections during its wintermonths. Weekly infections increased to apeak of 134,000 in July despite renewed
restrictions to contain the pandemic. The
vaccination program suffered delays at its
start, but it has gathered pace. About 14
percent of the population has been fully
inoculated as of end-September 2021 andall adults (above 18 years old) are now
eligible. The economic impact of the pandemic has been severe. The unemployment rate has continued to increase,reaching 34.4 percent at end-June 2021.
The poverty rate has increased from 57.7
percent in 2019 to 59.8 percent last year,
based on the upper middle income country poverty line.
Thanks to high commodity prices, thecurrent account balance has recorded asurplus of 5 percent of GDP over JanuaryJune 2021, supporting external balances.
Boosted by higher growth, fiscal revenue
has performed better than budgeted. At
the same time, spending is also set to increase this fiscal year as the government
announced additional expenditure forR38 billion (about 0.6 percent of GDP) to
mitigate the effects of the pandemic. CPI
inflation averaged 4 percent over January-July and inflation expectations remain
well anchored. Monetary policy has remained accommodative with the SARB
keeping the repo rates at 3.5 percent since
July 2020.

Outlook
Driven by the global recovery, the vaccination rollout and favorable commodity
prices, GDP growth is expected to rebound to 4.6 percent this year. However,the domestic drivers of growth remain
muted. The growth recovery hasn’t translated in job recovery so far and social
outcomes are expected to remain deteriorated this year. The poverty rate is projected to hover around 59 percent in 2021
based on the upper middle income country poverty line, and to stay around thatlevel in 2022-23 unless growth recovers
more decisively.
South Africa’s public finances are in adifficult position. Public debt has been
rising fast over the last decade Based on
the government’s ambitious consolidation
plan, the fiscal deficit is expected to decrease to 7.8 percent of GDP in 2021 andTABLE 2 South Africa / Macro poverty outlook indicators

Real GDP growth, at constant market prices
Private Consumption
Government Consumption
Gross Fixed Capital Investment
Exports, Goods and Services
Imports, Goods and Services
Real GDP growth, at constant factor prices
Agriculture
Industry
Services
Inflation (Consumer Price Index)
Current Account Balance (% of GDP)Net Foreign Direct Investment (% of GDP)
Fiscal Balance (% of GDP)
Debt (% of GDP)
Primary Balance (% of GDP)
International poverty rate ($1.9 in 2011 PPP) a,b
Lower middle-income poverty rate ($3.2 in 2011 PPP) a,b
Upper middle-income poverty rate ($5.5 in 2011 PPP) a,b
GHG emissions growth (mtCO2e)
Energy related GHG emissions (% of total)

further to 5.2 percent of GDP in 2023. Public debt is projected to reach 72 percent of
GDP in 2021 and increase further to 78.7
percent by 2023. However, the government could face spending pressures in thecontext of the pandemic and its economic
and social impacts. In this context, it willbe critical to prioritize the allocation oflimited resources where they can have thehighest developmental impact.
Structural reforms are needed to support
higher growth rates in the medium term.
Constraints such as weak investment,
electricity shortages and transport andlogistical costs and bottlenecks continue toweigh on economic activity. Important
long-standing steps have been taken recently such as the increase of the licensing
threshold for embedded electricity generation, the announcement of the opening ofSouth African Airways’ capital, the separation of the ports’ authority from theoperating SOE Transnet and plans to open
ports to private investment. The reform
momentum must continue in order tostimulate private investment and foster
job creation. Taking advantage of the favorable global environment to deepenSouth Africa’s participation in global value chains would support growth.

(annual percent change unless indicated otherwise)
2018
1.5
2.4
1.0
-1.8
2.8
3.2
1.5
0.4
0.8
1.7
4.5
-3.2
0.3
-3.6
51.5
-0.1
19.0
37.7
57.2
0.4
87.8

2019
0.1
1.1
2.7
-2.4
-3.4
0.5
0.1
-6.3
-1.7
0.9
4.1
-2.7
0.5
-5.1
57.3
-1.4
19.4
38.2
57.7
-0.7
87.9

2020
-6.4
-6.5
1.3
-14.9
-12.0
-17.4
-5.9
13.4
-12.6
-4.3
3.3
2.0
1.5
-11.5
71.0
-7.1
21.4
40.8
59.8
-4.5
87.5

2021 e
4.6
4.0
-0.2
-1.8
11.0
8.6
4.6
1.5
5.5
4.4
4.2
2.6
1.0
-7.8
72.0
-3.4
20.6
39.7
58.9
2.5
87.5

So urce: Wo rld B ank, P o verty & Equity and M acro eco no mics, Trade & Investment Glo bal P ractices. Emissio ns data so urced fro m CA IT and OECD.
No tes: e = estimate, f = fo recast.
NA(a) Calculatio ns based o n 2014-LCS.A ctual data: 2014. No wcast: 2015-2020. Fo recast are fro m 2021to 2023.
(b) P ro jectio n using neutral distributio n (2014) with pass-thro ugh = 0.87 based o n GDP per capita in co nstant LCU.

MPO 283 Oct 212022 f
2.1
3.1
-1.6
5.0
2.5
6.0
2.1
2.5
1.6
2.2
4.5
-0.6
0.3
-6.2
76.0
-1.5
20.4
39.4
58.7
0.8
87.5

2023 f
1.5
2.6
-1.4
4.5
2.5
5.0
1.5
2.5
1.2
1.5
4.5
-1.7
0.4
-5.2
78.7
-0.3
20.3
39.3
58.6
0.3
87.4

SOUTH SUDAN
Table 12020

P o pulatio n, millio n

11.2

GDP , current US$ billio n

4.9

GDP per capita, current US$

437.5

Internatio nal po verty rate ($ 1.9)

a

76.4
a

91.6

a

97.8

Lo wer middle-inco me po verty rate ($ 3.2)
Upper middle-inco me po verty rate ($ 5.5)a44.2

Gini index

Scho o l enro llment, primary (% gro ss)bLife expectancy at birth, years
To tal GHG Emissio ns (mtCO2e)

b

73.0
57.8
79.2

Source: WDI, M acro Poverty Outlook, and official data.
(a) M ost recent value (201 6), 201 1 PPPs.
(b) WDI for School enrollment (201 5); Life expectancy (201 9).

South Sudan’s economy is estimated tohave contracted by 5.4 percent in
FY2020/21 as the pandemic affected key
sectors, notably oil and services. Living
conditions deteriorated and continue to beaffected by displacement and inadequate
access to basic services. Poverty is estimated to have reached 79 percent in
FY2020/21, up from 77 percent in
FY2019/20. While a mild growth recovery
is expected in FY2021/22, medium term
growth prospects will depend on sustainability of peace, commitment to reforms,
and economic diversification.

Key conditions andchallenges
Despite vast oil wealth and considerable
access to development assistance both
before and after independence, South Sudan emerged in 2011 as one of the poorest
countries in the world. At the same time,recurring cycles of conflict and violence
have placed large constraints on both institutional and human capital development, sustaining large capability deficits.
Consequently, South Sudan has struggled
to leverage its vast natural resource
wealth to develop a modern economy.
A decade after independence, South Sudan remains caught in a web of fragility,
economic stagnation, and instability. Economic mismanagement and monetizationof the fiscal deficit led to soaring inflation
and widening exchange rate premium,with output contracting for consecutive
years during 2015 – 2018. Consequently,
real household disposable income declined, and the poverty rate increased
from 44.7 percent in 2009 to about 76 percent in 2016. Extremely high poverty levels have been sustained in subsequent
years by conflict, displacement, andshocks. The conflict has caused severe
damages to productive assets, resulted ina major economic crisis, while sustaining
large humanitarian needs. It is estimatedthat about 1.6 million people remain internally displaced and 2.2 million South
Sudanese refugees are still residing inneighboring countries. Food insecurity

deteriorated consistently from late 2012
onward, with the number of South Sudanese facing severe food insecurity estimated at 7.2 million people (60 percent of
total population) in FY2020/21.
As the COVID-19 pandemic has disrupted
a fragile economic recovery, diversifying
sources of growth and revenue will be
critical as the current oil led growth model
has reached its limits. In the past, the oil
sector provided the wherewithal for large
government consumption outlays, butcurrent production levels, estimated atabout 160,000 bpd in FY2020/21, are expected to remain just about one half of pre-crisis levels. Nevertheless, strengthening
service delivery institutions, governance,
economic, and public financial management systems will prove critical as thecountry seeks to build resilience to future
shocks, providing building blocks for an
inclusive and sustainable growth path.

Recent developments
The economy is estimated to have contracted by 5.4 percent in FY2020/21, withgrowth negatively impacted by the
COVID-19 pandemic, floods, and conflictin parts of the country. Oil production
declined by 5.9 percent, as floods affected production and the COVID-19 pandemic delayed new investments to replace exhausted wells. Food insecurity
remained dire, with nearly three out offour households experiencing food priceincreases and nine out of 10 rural households worried about having enough to

FIGURE 1 South Sudan / Exchange rate developments

FIGURE 2 South Sudan / Actual and projected poverty
rates and real GDP per capita

SSP/USD
700

Poverty rate (%)

Percent
350

600

300

500

250

Real GDP per capita (LCU constant)

120

3500

100

3000
2500

80
400

200

300

150

2000
60
1500

200

100

40

100

50

20

0

0

Source: World Bank.

Official XR (lhs)5000Jan-20Feb-20Mar-20
Apr-20May-20Jun-20Jul-20Aug-20
Sep-20
Oct-20Nov-20Dec-20Jan-21
Feb-21
Mar-21
Apr-21
May-21
Jun-21
Jul-21
Aug-21
Spread, % (rhs)

1000

0
2009

2011

2013

2015

International poverty rate
Upper middle-income pov. rate

Parallel XR (lhs)

Source: World Bank. Notes: see Table 2.

MPO 284 Oct 21

2017

2019

2021

2023

Lower middle-income pov. rate
Real GDP pc

eat in October 2020. The poverty rateincreased by about 2 percentage points
in FY2020/21, to an estimated 79 percent.
Inflation continued to decline in FY2020/21,
reflecting the authorities’ implementationof basic macroeconomic and fiscal management reforms. According to official CPI
data, the 12-month inflation rate fell to 18
percent in June 2021, from a peak of nearly
70 percent in January 2021. At the sametime, exchange rate policy is on course toachieve unification, and this has contributed to declining inflation. The gap between
the market and official exchange rates declined from 250 percent in January 2021 toabout 1 percent in August 2021.
The FY2020/21 budget deficit is estimatedto have narrowed to about 6.9 percent of
GDP from 9.8 percent in FY2019/20, reflecting higher than projected oil and nonoil revenue and fiscal consolidation
efforts. The budget revenue impact oflower oil production was offset by higher
prices, with oil revenue increasing to 26.7
percent of GDP in FY2020/21 from 25.5
percent in FY2019/20. At the same time,
non-oil revenue increased to about 5 percent of GDP from 4.0 percent, reflecting
the authorities’ efforts to expand the tax
base. On the expenditure side, the fiscal
position benefited from a large adjustmentof operating expenditure which declined to
6.6 percent of GDP in FY2020/21 from 10.5
percent in FY2019/20. The current accountdeficit is estimated to have narrowed to 5.5
percent in FY2020/21 from 20.3 percent in
FY2019/20, reflecting higher oil export values and weaker import demand.

OutlookSouth Sudan’s economy could grow by 1.0
percent in FY2021/22, with challenges in
the oil sector constraining a faster recovery. Over the medium-term, growth may
average around 4.5 percent with developments in the non-oil sectors, along recovering consumption, being the main contributing factors. However, a stronger broadbased recovery is needed to achieve poverty reduction gains. At these growth
rates, per capita GDP will not revert toFY2019/20 levels until FY2024/25 and poverty is expected to remain stagnant at 79
percent in the coming years. The ongoing
PFM reforms, if successful, could create
opportunities for the achievement of fasterand more inclusive growth going forward.
Inflation is expected to decline gradually
and will benefit from improved fiscal and

TABLE 2 South Sudan / Macro poverty outlook indicators

Real GDP growth, at constant market prices
Real GDP growth, at constant factor prices
Agriculture
Industry
Services
Inflation (Consumer Price Index)
Current Account Balance (% of GDP)Net Foreign Direct Investment (% of GDP)
Fiscal Balance (% of GDP)
Debt (% of GDP)
Primary Balance (% of GDP)
International poverty rate ($1.9 in 2011 PPP) a,b
Lower middle-income poverty rate ($3.2 in 2011 PPP) a,b
Upper middle-income poverty rate ($5.5 in 2011 PPP) a,b
GHG emissions growth (mtCO2e)
Energy related GHG emissions (% of total)monetary discipline, exchange rate market liberalization, and deepening PFM
reforms. While the new FY2021/22 budget envisions a fiscal deficit of about 1.9
percent of GDP, the fiscal outlook could
improve further, reflecting higher oil
prices and a fiscal adjustment that has
led to lower current spending. Expenditures are expected to remain contained,
despite a one-off doubling of salaries
contained in the FY2021/22 budget. South
Sudan remains at high risk of debt distress with total public debt estimated at
54.9 percent of GDP in FY2020/21, of
which 44.8 percent is external debt. However, the country’s debt sustainability
could benefit from utilization of part of
the SDR allocation to pay nonconcessional debt.
The major downside risk to the outlook
relate to the sustainability of peace andsecurity, especially as subnational conflict continues in parts of the country. A
large decline in oil prices would also adversely affect the macroeconomic outlook, posing a significant risk to growth
as well as fiscal and external sustainability. Additional risks relate to the future
path of the pandemic, particularly as
additional waves and mutations of thevirus provide added uncertainty.

(annual percent change unless indicated otherwise)
2018
-3.5
-3.5
-2.5
15.0
-14.6
121.6
-9.8
-0.5
-3.4
46.1
-3.1
80.3
93.1
98.4
4.0
2.7

2019
3.2
3.2
9.9
20.9
-12.1
63.6
17.3
-1.7
-1.0
32.7
-0.5
79.5
92.8
98.3
7.8
2.6

2020
9.5
9.5
6.0
27.5
-9.6
33.3
-20.3
-0.4
-9.8
40.7
-7.8
76.9
91.8
97.9
7.3
2.7

2021 e
-5.4
-5.4
3.5
-6.1
-6.5
43.1
-5.5
0.9
-6.9
54.9
-4.5
79.2
92.7
98.2
0.0
3.8

So urce: Wo rld B ank, P o verty & Equity and M acro eco no mics, Trade & Investment Glo bal P ractices. Emissio ns data so urced fro m CA IT and OECD.
No tes: e = estimate, f = fo recast.
NA(a) Calculatio ns based o n 2016-HFS-W3.A ctual data: 2016. No wcast: 2017-2020. Fo recast are fro m 2021to 2023.
(b) P ro jectio n using neutral distributio n (2016) with pass-thro ugh = 0.87 based o n GDP per capita in co nstant LCU.

MPO 285 Oct 212022 f
1.0
1.0
3.7
-0.7
3.1
24.0
0.7
0.9
-0.7
52.6
1.3
79.5
92.9
98.3
3.2
4.3

2023 f
5.2
5.2
3.9
5.5
5.0
16.0
2.1
0.8
1.9
48.0
3.4
78.8
92.5
98.2
5.4
4.5

SUDANKey conditions andchallenges

Table 12020

P o pulatio n, millio n

43.8

GDP , current US$ billio n

20.4

GDP per capita, current US$

465.8

Internatio nal po verty rate ($ 1.9)

a

12.2
a

44.0

a

79.3

Lo wer middle-inco me po verty rate ($ 3.2)
Upper middle-inco me po verty rate ($ 5.5)a34.2

Gini index

Scho o l enro llment, primary (% gro ss)

b

b

76.8
65.3

Life expectancy at birth, years
To tal GHG Emissio ns (mtCO2e)

117.6

Source: WDI, M acro Poverty Outlook, and official data.
(a) M ost recent value (201 4), 201 1 PPPs.
(b) WDI for School enrollment (201 7); Life expectancy (201 9).

The Government remains committed tostabilizing the economy and containing
the fiscal deficit, but success will dependon measures to bring mounting energy
subsidies under control. Economic
growth is expected to turn positive at 0.9
percent in 2021 following three years ofrecession. Poverty is estimated to haveincreased in 2020 and 2021 and risks ofincreased vulnerability and poverty remain elevated but can be mitigated, tosome extent, by expansion of the Sudan
Family Support Program (SFSP).

Sudan’s Transitional Government hasforged ahead with ambitious reforms toaddress macroeconomic imbalances andcontain the fiscal deficit. In FY2021, thesereforms include liberalizing the exchange
rate, sharply reducing fuel subsidies, androlling out the SFSP. By clearing arrears toMultilateral Financial Institutions (MFIs),
Sudan has embarked on full re-engagementwith these institutions, paving the way forthe country to access external support, including nearly USD 2 billion in grants fromthe World Bank. The government has also
committed to adopt a zero ceiling on thecontraction of non-concessional debt and to
the regular publication of debt data.
Although Sudan received a boost fromsome capital inflows following the exchange rate unification, the country is still
struggling to turn the corner toward stabilization and economic growth in 2021.
Exchange rate unification has increased
capital inflows through official channels
and has helped improve the trade balance,increase remittances, and shift the current
account into a surplus in early 2021.
However high inflation persists, due tomonetization of the fiscal deficit in theabsence of government debt markets.
Government must continue to addressenergy subsidies in a bold manner, to contain the fiscal deficit.
Major risks to economic stabilization include uncertainty around COVID-19,

flooding, and potential instability of money demand in the context of exceptionallyhigh inflation. The COVID-19 pandemic,
and negative external shocks, such as
flooding in 2020, could exacerbate an already difficult situation. Results from theBank’s ongoing COVID-19 high frequency
survey suggest that about one-third ofhouseholds are worried about having
enough food to eat, and many modified
their eating habits. These impacts are partially mitigated by the Sudan Family Support Program (SFSP) which is providing
cash transfers to households.

Recent developments
A third wave of COVID-19 hit Sudan in
April and May, prompting a reinstatement of various containment measuresand travel bans. However, the adverse
impacts of COVID-19 containment
measures were mitigated by government’s
policy permitting the food industry tooperate under strict adherence to ministryof health guidelines. Non-food industries(i.e., tourism, cloth manufacturing) wereclosed from April until July. As a result,agriculture has fared better relative toother sectors in the first half of 2021.
The balance of payments received a boost
from exchange rate liberalization, with net
capital inflows turning strongly positivein the second quarter of the year. The
trade balance also improved with higher
gold prices and an increase in gold exports, leading to a 240 percent increase in
the value of gold exports in the first half of

FIGURE 1 Sudan / Real GDP growth and sectoral contributions
to real GDP growth

FIGURE 2 Sudan / Actual and projected poverty rates andreal GDP per capita

Percent, percentage points
6
Agriculture

Poverty rate (%)

Real GDP per capita (constant LCU)

100

800
700

Industry480Services

600

Gross Value Added at Basic Prices

2

500

60

400
0

40

-2

20

300
200
100

-4

0

0
2009

-6

2018

2019

2020

2021e

2022f

Sources: National Bureau of Statistics and World Bank staff calculations.

2011

2013

2015

International poverty rate
Upper middle-income pov. rate

2023f

Source: World Bank. Notes: see Table 2.

MPO 286 Oct 21

2017

2019

2021

2023

Lower middle-income pov. rate
Real GDP pc

2021 relative to the same period in 2020. A
positive balance of payments position has
allowed for a much-needed accumulationin gross foreign exchange reserves of US$
160 million in the first half of 2021.
Inflation continued to accelerate in the firsthalf of 2021, registering a record high of
422.8 percent in July (in annual terms). Reducing inflation remains the primary policy objective of the Government in 2021, andSudan has been working under ambitious
targets on fiscal consolidation and slower
monetary expansion, supported by the IMF
program. The Government made important reform progress in the first half of2021, bringing down the fiscal deficit to an
estimated 2.2 percent of GDP and limiting
growth of currency in circulation to 36 percent. Following a period of stability after
unification, the exchange rate started todepreciate in April, moving from 381 to 485
SDGs to the dollar by early June; as of midAugust it appreciated somewhat, to 450.
Based on estimates using the latest household survey from 2014, and GDP growth

projections, poverty rates may have increased in 2020, reaching an estimated20.2 percent at $1.90/day PPP and 55.5
percent at $3.20/day PPP. These estimatedtrends are supported by data from therecent high frequency COVID-19 survey.
Overall, 26 percent of the men and 10 percent of the women that lost their jobs atthe onset of the pandemic remained unemployed in April 2021. The SFSP is helping to mitigate some of these effects. To
date, of the 2.5 million households registered, 1 million have received at least one
payment, with 25 percent of these going tohouseholds headed by women.

OutlookGDP growth is expected to pick up to 0.9
percent in 2021, from -3.6 percent in 2020,
driven by favorable conditions in agriculture and improved economic activity as
the COVID-19 related restrictions were

TABLE 2 Sudan / Macro poverty outlook indicators

Real GDP growth, at constant market prices
Private Consumption
Government Consumption
Gross Fixed Capital Investment
Exports, Goods and Services
Imports, Goods and Services
Real GDP growth, at constant factor prices
Agriculture
Industry
Services
Inflation (Consumer Price Index)
Current Account Balance (% of GDP)Net Foreign Direct Investment (% of GDP)
Fiscal Balance (% of GDP)
Debt (% of GDP)a
Primary Balance (% of GDP)
International poverty rate ($1.9 in 2011 PPP) b,c
Lower middle-income poverty rate ($3.2 in 2011 PPP) b,c
Upper middle-income poverty rate ($5.5 in 2011 PPP) b,c
GHG emissions growth (mtCO2e)
Energy related GHG emissions (% of total)

lifted. Economic growth is expected torebound further in 2022 and 2023, as progress towards economic stabilization leads
to higher capital inflows and development
financing. On the supply side, services
are expected to be the main driver ofgrowth in the short term. Against continued fiscal consolidation, inflation is expected to slow down to double digits in
2023. Tax and customs reforms shouldhave a positive impact on revenue mobilization. On the expenditure side, a sharp
reduction in subsidies is expected facilitate increased social spending and transfers to states. In addition, continued
efforts to contain the fiscal deficit would
reduce the need for monetization andmoderate the expansion of the money
supply. The pace of poverty reduction is
expected to be slow. Projections suggest
poverty will continue to increase until
2021. Even though poverty is expected tostart declining in 2022, poverty rates
measured by all poverty lines are still
higher than the pre-COVID levels in 2023.

(annual percent change unless indicated otherwise)
2018
-2.7
-2.5
-2.5
-2.3
7.6
2.4
-2.7
-1.8
-1.9
-6.1
63.3
-9.3
3.4
-7.9
185.6
-7.8
14.7
48.1
82.3
0.5
15.5

2019
-2.2
-0.9
-10.9
-0.2
6.9
-0.9
-2.2
-1.0
-0.7
-7.8
51.0
-11.4
2.8
-10.8
200.3
-10.6
16.8
51.4
84.1
-0.8
15.1

2020
-3.6
-3.4
-6.0
-5.8
5.0
-3.9
-3.6
-2.5
-5.7
-2.5
163.3
-13.2
2.1
-5.9
249.1
-5.9
20.2
55.5
86.1
-2.5
14.5

2021 e
0.9
2.4
1.0
-7.0
7.7
26.0
0.9
0.4
0.7
2.6
347.0
-5.9
3.6
-2.9
208.6
-2.8
21.0
56.7
86.7
-2.3
14.3

So urce: Wo rld B ank, P o verty & Equity and M acro eco no mics, Trade & Investment Glo bal P ractices. Emissio ns data so urced fro m CA IT and OECD.
No tes: e = estimate, f = fo recast.
NA(a) Debt pro jectio ns do no t include any restructuring achieved during the HIP C pro cess.
(b) Calculatio ns based o n 2014-NB HS.A ctual data: 2014. No wcast: 2015-2020. Fo recast are fro m 2021to 2023.
(c) P ro jectio n using neutral distributio n (2014) with pass-thro ugh = 1 based o n GDP per capita in co nstant LCU.

MPO 287 Oct 212022 f
3.5
4.7
2.5
7.7
25.0
21.3
3.5
2.7
3.1
6.3
112.0
-5.5
4.3
-1.5
191.9
-1.3
20.5
55.9
86.2
-0.2
14.9

2023 f
5.0
5.8
4.1
8.3
24.4
16.0
5.0
4.1
4.5
8.2
34.4
-5.2
4.5
-1.0
184.0
-0.8
18.8
54.1
85.4
1.0
15.8

TANZANIA

Key conditions andchallenges

Table 12020

P o pulatio n, millio n

59.7

GDP , current US$ billio n

61.8

GDP per capita, current US$

1035.2

Internatio nal po verty rate ($ 1.9)

a

49.4
a

76.8

a

91.8

Lo wer middle-inco me po verty rate ($ 3.2)
Upper middle-inco me po verty rate ($ 5.5)a

40.5

Gini index

Scho o l enro llment, primary (% gro ss)bbLife expectancy at birth, years
To tal GHG Emissio ns (mtCO2e)

98.8
65.5
185.3

Source: WDI, M acro Poverty Outlook, and official data.
(a) M ost recent value (201 8), 201 1 PPPs.
(b) M ost recent WDI value (201 9).

Tanzania’s economy is projected to expand by 4.3 percent in 2021, following
the modest growth of 2 percent in 2020.
Macroeconomic outlook hinges on improvements in external demand, domestic COVID-19 indicators, and support tothe private sector. The international poverty rate is projected to fall marginally in
2021 but remain above the pre-pandemic
level. The pandemic underscored theneed to accelerate reforms to foster inclusive private sector-led growth, while ensuring fiscal sustainability.

Tanzania became a lower middle-income
country in July 2020 thanks to the solid
income growth over two decades, averaging 6.5 percent per year, and macroeconomic stability. Inflation rates remained
low, and fiscal and current-account deficits
were manageable. Investment has been akey driver of growth, consistently contributing two-thirds to it. About three quartersof total investment was from private
sources, but lately this ratio has declinedwith waning extractives FDI and a morechallenging business environment. Poverty response to rapid economic growthhas been moderate in recent years, andgrowth has not been very inclusive. Highpopulation growth, insufficient levels of
education, low agricultural productivity,and slow and uneven creation of moreproductive income earning opportunities
have hindered the inclusiveness of growth.
The COVID-19 pandemic has further exacerbated existing challenges, reversing
some of the gains in poverty reduction
achieved over the last decade, especially inurban areas. Tackling the COVID-19 pandemic will require overcoming institutional inertia and strengthening the country’s
health and economic response. To realize
Tanzania’s Development Vision 2025 andensure sustainable and inclusive growth
beyond 2021, the government must implement a well-calibrated package of policies
focused on macroeconomic stability, fiscal

sustainability, and more inclusive andresilient growth. Policy priorities include
accelerating productive investments, prioritizing human capital development, enabling agricultural transformation, leveraging digital technologies, and building public sector institutions and capabilities.

Recent developments
According to official data, in 2020 GDP
growth was 4.8 percent, driven by construction, agriculture, and transport andstorage, aided by the absence of lockdowns. However, high-frequency datasuggest that GDP growth rate slowed toan estimated 2.0 percent in 2020, as shocks
to export-oriented sectors such as tourism,
manufacturing, and related services diminished business revenue and labor income, which adversely affected domestically oriented firms of all sizes across all
sectors. Tourism declined significantly in2020 as the number of visitors plummeted
by 60 percent and the revenues fell by 72
percent. Private sector credit growthplunged to 3 percent in December 2020
from 11.1 percent a year earlier. Year on
year decline in other indicators (electricity
generation, capital goods import, government expenditures and taxes) point to alower growth in 2020. High-frequency
indicators from 2021 present mixed signals and suggest that the global pandemic
continues to take a toll. Inflation remained
stable at 3.3 percent throughout 2020 but
accelerated moderately to 3.6 percent inJune 2021. Despite increased gold exports,

FIGURE 1 Tanzania / Real GDP growth forecasts under alternative scenarios

FIGURE 2 Tanzania /Actual and projected poverty rates andreal private consumption per capita

Percentage change

Poverty rate (%)

7

Real private consumption per capita(millions constant LCU)

100

1400000

6

1200000

80

5

1000000
60

800000340600000

2

20

1

0

4

40000020000002007 2009 2011 2013 2015 2017 2019 2021 2023

0
2015

2016

International poverty rate
Upper middle-income pov. rate

2017 2018e 2019e 2020e 2021p 2022p 2023p

Sources: NBS (2015-2017), World Bank Staff Estimates and Projections(2018-2023).

Source: World Bank. Notes: see Table 2.

MPO 288 Oct 21

Lower middle-income pov. rate
Real priv. cons. pc

the current-account deficit is estimated towiden to 1.9 percent of GDP during theyear ending June 2021 due to declines in
tourism and traditional exports. Helpedby the DSSI and external financing, grossinternational reserves stood at 6.1 monthsof projected imports at end-June 2021. The
fiscal deficit has widened to an estimated
2.6 percent of GDP in FY2020/21 due tothe shortfall in revenues, which was partially offset by cuts in expenditures. The
fiscal policy response to COVID-19 waslimited and included expediting clearanceof domestic arrears, expanding the coverage of social security schemes, and supporting public sector tourism institutions.
According to the August 2021 joint IMFWorld Bank Debt Sustainability Analysis,
Tanzania’s risk of external debt distresshas increased from low to moderate mostly due to the pandemic-induced shock on
tourism and the change in the country’s
debt carrying capacity from strong tomoderate. In 2020, real per capita GDP
declined for the first time in over 25 years.
The poverty rate based on the international extreme poverty line is estimated tohave risen from 49.3 percent in 2019 to50.4 percent in 2020. Households that saw
the highest drop in welfare were thoserelying on self-employment and informal
microenterprises in urban areas.

Outlook
Tanzania’s real GDP growth rate is projected to rebound to 4.3 percent in 2021 conditional on successful global rollout of a
COVID-19 vaccine and improvement inbusiness environment and fiscal management. Both external and fiscal positions are
expected to weaken because of implementation of the Tanzania Covid-19 Socioeconomic Response Plan and the government’s ambitious infrastructure program.
The emergency imports (vaccine, medication, testing equipment) and higher capital-goods imports are expected to widen current-account deficit to 3.1 percent of GDP
in 2021. The fiscal deficit is projected towiden to 3.3 percent of GDP due to higher
pandemic-related spending. Under thedifferent upside and downside scenarios,
GDP growth could range between 3.5 and5.5 percent in 2021. The evolution of thepandemic and the pace of vaccination,
both globally and domestically, will be themost crucial factors driving the outlook.
The shift in the government’s approach to
COVID-19, its renewed focus on regional
trade and cooperation, and its commitment to domestic policy reforms designed
to improve the business environment have

TABLE 2 Tanzania / Macro poverty outlook indicators

Real GDP growth, at constant market prices
Private Consumption
Government Consumption
Gross Fixed Capital Investment
Exports, Goods and Services
Imports, Goods and Services
Real GDP growth, at constant factor prices
Agriculture
Industry
Services
Inflation (Consumer Price Index)
Current Account Balance (% of GDP)Net Foreign Direct Investment (% of GDP)
Fiscal Balance (% of GDP)
Debt (% of GDP)
Primary Balance (% of GDP)
International poverty rate ($1.9 in 2011 PPP) a,b
Lower middle-income poverty rate ($3.2 in 2011 PPP) a,b
Upper middle-income poverty rate ($5.5 in 2011 PPP) a,b
GHG emissions growth (mtCO2e)
Energy related GHG emissions (% of total)

somewhat attenuated downside risks.
However, the spread of new variants of
COVID-19 could extend the pandemic,
while challenges around the procurementand distribution of vaccines could slow thedomestic recovery. In the meantime, adifficult global context marked by restricted international borders, financial stress,and elevated debt levels continues to adversely impact trade, travel, and capital
flows, threatening the projected recovery.
The international poverty rate is projected
to fall to 49.8 percent in 2021 but remain
above the pre-crisis level. However, if the
future growth projections are materialized,
the international poverty rate in 2023 will
be 48.6 percent, the lowest since 2000. But
to sustainably reduce poverty, and lower
the number of poor people, the recovery
must create jobs, including for low-skilledworkers, enable small enterprises growth,and foster productivity of agriculture, on
which three-quarters of poor households
depend. Lowering population growth andexpanding the Tanzania Social Action
Fund Productive Social Safety Net, including to urban areas, will also be essential.
Also, the government will need to maintain prudent macroeconomic and fiscal
stance to ensure that adequate fiscal space
is available to finance major investments inphysical, human, and institutional capital.

(annual percent change unless indicated otherwise)
2018
5.4
5.6
2.0
7.7
-1.7
16.7
5.4
3.4
9.7
3.8
3.5
-3.9
1.7
-2.6
39.9
-0.9
49.4
76.8
91.8
0.0
20.5

2019
5.8
3.1
2.3
8.0
19.0
-1.4
5.8
3.5
10.3
4.2
3.5
-2.3
2.0
-2.2
38.3
-0.5
49.3
76.7
91.8
3.0
21.3

2020
2.0
1.0
7.4
2.4
-8.6
-7.6
2.0
3.1
2.5
0.9
3.4
-1.6
1.1
-2.0
38.7
-0.3
50.4
77.5
92.1
2.5
21.9

2021 e
4.3
5.2
12.3
5.4
2.2
13.3
4.3
4.1
6.5
2.8
3.5
-3.1
1.2
-3.3
39.5
-1.4
49.8
77.2
92.0
3.1
22.7

So urce: Wo rld B ank, P o verty & Equity and M acro eco no mics, Trade & Investment Glo bal P ractices. Emissio ns data so urced fro m CA IT and OECD.
No tes: e = estimate, f = fo recast.
NA(a) Calculatio ns based o n 2018-HB S.A ctual data: 2018. No wcast: 2019-2020. Fo recast are fro m 2021to 2023.
(b) P ro jectio n using neutral distributio n (2018) with pass-thro ugh = 1 based o n private co nsumptio n per capita in co nstant LCU.

MPO 289 Oct 212022 f
5.4
4.9
8.5
7.7
3.3
9.8
5.4
4.6
7.6
4.1
3.6
-3.8
1.3
-3.9
39.6
-1.7
49.1
76.6
91.7
3.2
23.3

2023 f
5.9
4.3
3.9
7.0
6.6
3.6
5.8
5.2
8.2
4.4
3.8
-3.1
1.4
-3.7
38.8
-1.1
48.6
76.3
91.6
3.2
23.7

TOGO

Key conditions andchallenges

Table 12020

P o pulatio n, millio n

8.3

GDP , current US$ billio n

7.4

GDP per capita, current US$

891.6

Internatio nal po verty rate ($ 1.9)

a

51.1
a

74.2

a

90.8

Lo wer middle-inco me po verty rate ($ 3.2)
Upper middle-inco me po verty rate ($ 5.5)a

43.1

Gini index

Scho o l enro llment, primary (% gro ss)

b

124.3

b

61.0

Life expectancy at birth, years
To tal GHG Emissio ns (mtCO2e)

10.0

Source: WDI, M acro Poverty Outlook, and official data.
(a) M ost recent value (201 5), 201 1 PPPs.
(b) M ost recent WDI value (201 9).

Growth decelerated in 2020 as the containment and mitigations measures tocurb the spread of COVID-19 negatively
affected private consumption, investment,
and tourism. External and fiscal balances
also worsened, while debt and poverty
rose. Growth and poverty reduction will
gradually recover over the medium term.
Downside risks to the outlook include
larger-than-expected COVID-19 effects,
heightened insecurity in neighboring
countries, tightening financial conditions
as inflationary pressure emerge, and fiscal
risks from SOEs and PPPs.

Togo experienced a robust economic
growth prior to the COVID-19 pandemic,
averaging 5 percent (2.4 percent in percapita terms) between 2017-19. However,it was lower than many peers and did notlead to significant improvements in living
standards. Access to electricity and safe
drinking water in 2018-19 were both only
about 56 percent for the poor and 76 percent and 69 percent, respectively among
the nonpoor. The COVID-19 crisis halted
economic growth and poverty reduction,with the extreme poverty rate estimatedto have increased by 0.1 percentage point
between 2019-2020. The COVID-19 crisis
has also disrupted the labor market. As
illustrated by the COVID-19 high frequency survey (HFPS) conducted in MayJune 2020, nearly 3 out of 10 workers experienced some disruption and this increased by more than twofold during
June-July 2020.
The Government has maintained themomentum of reforms in the areas oftax revenue mobilization, public investment efficiency, debt management andtransparency. To attract private investors, critical business enabling reforms
and investments in infrastructures havebeen implemented.
The path to an inclusive and sustained
post-COVID recovery remains uncertainand depends on successful management ofseveral downside risks that could narrow

the fiscal space and depress private investment. These include additional
COVID-19 waves, delays in achieving
mass immunization, mounting and costly
domestic debt, growing insecurity in theregion, fiscal risks from PPPs and SOEs
(notably two state-owned banks, waterand energy utility companies) and rising
inflationary pressures.

Recent developments
Growth decelerated to 1.8 percent in 2020(-0.8 percent in per capita terms), as private consumption and investment fellfollowing social-distancing measures that
affected household incomes and businessactivity. Travel restrictions negatively
impacted tourism, while the agriculture
sector remained resilient. By end May
2021, the industrial production had increased by 19.8 percent y/y and traffic at
the port resumed (+53.3 percent y/y), exceeding pre-COVID levels. Inflation rose
to 1.8 percent in 2020and reached 6.2 percent (y/y) in June 2021, reflecting increasein oil prices and rising demand for food.
The current account deficit rose to 1.5 percent in 2020 from lower exports and higher imports of health products to combat
COVID-19. Lower demand from key trading partners and a drop in the prices ofphosphate and coffee lowered exports. In
the first half of 2021, the trade deficit widened to 8.0 percent of GDP, as the recovery in export remains subdued while imports increased in nominal terms due tohigher global commodity prices.

FIGURE 1 Togo / Evolution of fiscal indicators

FIGURE 2 Togo / Actual and projected poverty rates andreal GDP per capita

Government balance (percent of GDP)
2

Poverty rate (%)

Public debt (percent of GDP)
64

1

62

0

60

-1

Real GDP per capita (LCU constant)

100

600000500000

80

58

-2

56

-3

40000060
300000

54

-4

52

-5

-6

50

-7

48

-8

46
2018

2019

2020

2021

2022

2023

40

20000020
002006 2008 2010 2012 2014 2016 2018 2020 2022

General Government Balance, LCU
Primary Balance, LCU
General Government Debt
Sources: INSEED and World Bank staff estimates.

100000International poverty rate
Upper middle-income pov. rate
Source: World Bank. Notes: See Table 2.

MPO 290 Oct 21

Lower middle-income pov. rate
Real GDP pc

The fiscal deficit rose to 6.9 percent of
GDP in 2020, reflecting a drop of 1 percent
of GDP in government revenues as activity declined and due to tax breaks forfirms, and a rise by 4.6 percent of GDP in
expenditures to address the COVID-19
crisis and promote economic recovery.
Public debt increased to 60.3 percent of
GDP in 2020, driven by higher concessional borrowing from multilateral donors. In
the first half of 2021, tax revenues werehigher by 1.3 percent of GDP and expenditures marginally increased with lower
execution of capital expenditures.
Togo’s monetary and exchange rate policies are managed by the Central Bank ofWest African States (BCEAO), which
maintains a peg between the CFA Francand the Euro. Its reserves have remained
stable since 2019 and reached an estimated
5.8 months of imports in 2020 due to donor
support and a Eurobond issuance in Coted’Ivoire. To support the regional economy
and COVID-19 related spending, theBCEAO implemented monetary andmacroprudential measures beginning inMarch 2020, including a policy rate cut andextended refinancing operations with 3month COVID-19 bonds. These measures
were extended into 2021.

Extreme poverty stood at 45.3 percent in2019 and is estimated to have increased
to 45.4 percent in 2020 due to the
COVID-19 outbreak, pushing almost 0.1
million people into extreme poverty.
The negative effect of the pandemic
mostly affected poor in urban areas asurban workers were more disproportionately affected by job losses, compared to their rural counterparts (72percent and 51 percent, respectively).

Outlook
Output will grow by 4.7 percent (2.2 percent in per capita terms) in 2021, supported
by higher agricultural exports as economic
activity resumes in key trading partners
and private investment increases. Also,
plans to build or rehabilitate rural roads
will boost activity in the construction sector, while the re-opening of borders will
improve access to agricultural inputs. Average inflation is projected to reach 3.5 percent in 2021, driven by higher food prices.
The current account deficit will rise to 2.6
percent of GDP in 2021, as the demand forintermediary inputs rises. The current

TABLE 2 Togo / Macro poverty outlook indicators

Real GDP growth, at constant market prices
Private Consumption
Government Consumption
Gross Fixed Capital Investment
Exports, Goods and Services
Imports, Goods and Services
Real GDP growth, at constant factor prices
Agriculture
Industry
Services
Inflation (Consumer Price Index)
Current Account Balance (% of GDP)Net Foreign Direct Investment (% of GDP)
Fiscal Balance (% of GDP)
Debt (% of GDP)
Primary Balance (% of GDP)
International poverty rate ($1.9 in 2011 PPP) a,b
Lower middle-income poverty rate ($3.2 in 2011 PPP) a,b
Upper middle-income poverty rate ($5.5 in 2011 PPP) a,b
GHG emissions growth (mtCO2e)
Energy related GHG emissions (% of total)

account deficit will be financed by grants,
and concessional loans. In August 2021,
the BCEAO received 1.4 percent of aggregate GDP in additional SDR allocations
from the IMF, that can be on lent to member countries.
The fiscal deficit is projected at 5.9 percent
of GDP in 2021 and will return below 3 percent by 2024. Revenues will rise after the tax
holidays to support firms in 2020 expire.
Total expenditure as a percent of GDP willremain unchanged, as the decrease in current expenditures is fully offset by the risein capital expenditures. Public debt will
peak at 62.4 percent of GDP in 2021, before
declining over the medium-term as the primary fiscal deficit is gradually reduced. The
risk of external debt distress is moderate,
while the risk of overall debt distress is highdue to increase in regional debt.
Extreme poverty will remain high at 44.5
percent in 2021, as food prices and otherconsumer prices remain high, reflecting apoor harvest and supply chain disruptions. Extreme poverty is projected to return to the pre-COVID downward trajectory in 2022, supported by the scaling-up
of Government cash transfer programs to
the poorest and other social measures
such as school fees waivers.

(annual percent change unless indicated otherwise)
2018
5.0
2.8
23.1
16.8
2.0
5.3
5.2
3.2
3.9
6.6
0.9
-2.6
3.5
-0.6
57.0
1.2
46.4
71.5
88.8
4.6
30.8

2019
5.5
3.0
-2.9
20.2
1.0
1.2
4.4
1.9
6.5
4.5
0.7
-0.8
4.0
-0.9
52.4
1.2
45.3
69.5
88.3
4.4
31.4

2020
1.8
-4.9
21.1
13.7
3.6
4.1
1.9
4.0
0.8
1.5
1.8
-1.5
2.2
-6.9
60.3
-4.6
45.4
69.9
88.3
3.7
31.3

2021 e
4.7
2.0
6.0
13.1
5.0
6.0
4.7
6.0
6.8
3.2
3.5
-2.6
2.6
-5.9
62.4
-3.5
44.5
68.8
87.8
5.0
30.8

So urce: Wo rld B ank, P o verty & Equity and M acro eco no mics, Trade & Investment Glo bal P ractices. Emissio ns data so urced fro m CA IT and OECD.
No tes: e = estimate, f = fo recast.
NA(a) Calculatio ns based o n 2015-QUIB B .A ctual data: 2015. No wcast: 2016-2020. Fo recast are fro m 2021to 2023.
(b) P ro jectio n using neutral distributio n (2015) with pass-thro ugh = 1 based o n GDP per capita in co nstant LCU.

MPO 291 Oct 212022 f
5.8
3.0
5.0
15.1
4.5
6.0
5.8
5.9
7.0
5.2
2.5
-2.6
1.9
-5.0
61.4
-2.8
42.5
67.3
87.1
6.0
31.0

2023 f
6.0
4.6
6.5
9.5
4.5
5.4
6.0
5.9
7.0
5.6
2.0
-2.5
2.5
-4.1
59.8
-1.8
40.6
65.8
86.3
6.7
31.4

UGANDAKey conditions andchallenges

Table 12020

P o pulatio n, millio n

45.7

GDP , current US$ billio n

37.4

GDP per capita, current US$

817

Internatio nal po verty rate ($ 1.9)

a

41.3
a

69.6

a

87.6

Lo wer middle-inco me po verty rate ($ 3.2)
Upper middle-inco me po verty rate ($ 5.5)a

42.8

Gini index

Scho o l enro llment, primary (% gro ss)

b

102.7

b

63.4

Life expectancy at birth, years
To tal GHG Emissio ns (mtCO2e)

73.9

Source: WDI, M acro Poverty Outlook, and official data.
(a) M ost recent value (201 6), 201 1 PPPs.
(b) WDI for School enrollment (201 7); Life expectancy (201 9).

A reasonable recovery in early 2021
pushed GDP growth to 3.2 percent for
FY21, before the second COVID-19
wave hit. Despite liquidity support, domestic demand slumped. The fiscal stimulus raised the deficit to 9.2 percent ofGDP, which escalated public debt, elevating the risk of debt distress to‘moderate’. A stronger economic recovery is expected starting from FY23 asdomestic and global conditions benefit
from steadier vaccine rollout. Extreme
poverty will likely rise, due to sustained
employment and income losses.

Prior to the COVID-19 outbreak, anemerging
structuraltransformation
drove a decline in poverty, despite adecade-long slowdown in average economic growth. The transformation wascharacterized by a reduction in theworkforce employed in agriculture and atake-off in mainly agro-processing industries, an expansion of the services
sector, and a surge in use of digital technology. Nonetheless, the bulk of theworkforce is still in low productivity
jobs and total factor productivity growth
remains negative.
Uganda’s infrastructure drive over the
past decade has reduced spending on
human development, raised its fiscal anddebt vulnerabilities, and crowded out theprivate sector. For the first time since receiving debt relief in 2006, the country’s
risk of debt distress rose from ‘low’ to‘moderate’ in mid-2021. Private sector
investments are also growing sluggishly
and real per capita investments in sectors
such as education and health have been
declining, to the detriment of service delivery, and now worsened by the effects
of COVID-19. Urgent remedial action by
government is required to avoid longterm impacts on labor productivity andincome inequality. The competition for
public spending is only likely to intensify
as Uganda approaches likely first oil in
2025 and additional demands placed on

government to meet its commitments indeveloping this sector.
COVID-19 is exacerbating the decelerationin per capita income growth, poverty, andinequality, under the weight of high population growth (3.6 percent by 2019). Per
capita real GDP growth had halved to 1.1
percent in the five years prior to the
COVID-19 and the elasticity of poverty
reduction with respect to growth declined.
The service sector contributes most to
GDP growth (Figure 1), but many jobs are
informal and low-skilled, contributing
minimally to poverty reduction. Climatechange and weather shocks are increasing
income volatility and vulnerabilities, especially in rural areas.

Recent developments
Given sustained COVID-19 impacts on
domestic demand, real GDP growth increased only marginally to 3.2 percent in
FY21, from 3.0 percent in FY20. Following
the sharp contraction after the initial
COVID-19 shock, real GDP growth rebounded strongly to 6 percent in Q3 of
FY21, driven by industry and services,amidst the continued strain on particularly the education and leisure subsectors.
Agriculture remains volatile, due to limited adoption of improved farming practices to manage weather variability. The
sharp fall in output and employment—
according to Uganda’s Purchasing Managers Index—suggests that the second
COVID-19 wave and subsequent lockdown slowed growth in Q4 of FY21.

FIGURE 1 Uganda / A gradual recover: Real GDP growthand sectoral contributions to real GDP growth

FIGURE 2 Uganda / Actual and projected poverty rates andreal private consumption per capita

Percent, percentage points

Poverty rate (%)

Real private consumption per capita(millions constant LCU)

7%

100

250000080

2000000

60

1500000

40

1000000

20

500000

6%
5%
4%
3%
2%
1%
0%
-1%

FY18

FY19

FY20

FY21e

Agriculture

Industry

Net taxes

GDP Growth

Source: Uganda Bureau of Statistics.

FY22f

FY23f

0

0
2005

Services

2012

International poverty rate
Upper middle-income pov. rate
Source: World Bank. Notes: see Table 2.

MPO 292 Oct 21

2019
Lower middle-income pov. rate
Real priv. cons. pc

Despite improving global conditions,Uganda’s external position deteriorated
during FY21. A doubling in gold shipments (now Uganda’s top export) was
partially offset by gold, food and machinery imports as global supply chains reopened, and overshadowed by the sluggish
recovery of the tourism industry. The current account deficit, reached over 9 percent of GDP, financed mainly with FDI
and government borrowing. Foreign reserves dropped to US$3.6 billion or 4months of import cover in June 2021, from
4.4 months in June 2020. The special allocation of SDR 346 million could haveboosted reserves in Q1 of FY22.
The central bank reduced its policy rate inJuly 2021 (by half percentage point to 6.5
percent) as private sector credit shrank,
amidst liquidity assistance and credit relief measures. However, these measures
minimally benefitted the small and medium enterprises and the informal sector.
Government’s fiscal stimulus went
through supplementary spending worth
3.4 percent of GDP during FY21, covering covid-related medicines, equipment
and food aid, and increased militaryspending. Slower business activity, combined with tax exemptions and deferrals,
reduced revenues and contributed towidening the fiscal deficit to 9.2 percent

of GDP (Table 2). Borrowing, especiallynon-concessional and domestic, financed
the stimulus, raising public debt by about
10 percentage points of GDP and heightening liquidity risks.
With lower consumption growth, amidst
low remittances, limited credit, and job
losses, poverty measured at the Uganda’s
official poverty line increased from 18.7
percent to 21.9 percent after the lockdown
in March 2020, according to the 2019/20
National Household Survey. Despite recovery of employment rates in FY21,
household incomes remained below prepandemic levels, according to the frequentphone surveys. Employment could haveslumped again after the second lockdown
in June 2021.

OutlookGiven the impact of additional waves ofthe pandemic and associated lockdowns,
real GDP growth will likely average about
4.5 percent in FY22 and FY23. This is a fullpercentage point lower than the Marchprojections, and further widens the output
gap. Investment and exports are expectedto accelerate as the global economy stabilizes. However, sustained improvements

TABLE 2 Uganda / Macro poverty outlook indicators

Real GDP growth, at constant market prices
Private Consumption
Government Consumption
Gross Fixed Capital Investment
Exports, Goods and Services
Imports, Goods and Services
Real GDP growth, at constant factor prices
Agriculture
Industry
Services
Inflation (Consumer Price Index)
Current Account Balance (% of GDP)Net Foreign Direct Investment (% of GDP)
Fiscal Balance (% of GDP)
Debt (% of GDP)
Primary Balance (% of GDP)
International poverty rate ($1.9 in 2011 PPP) a,b
Lower middle-income poverty rate ($3.2 in 2011 PPP) a,b
Upper middle-income poverty rate ($5.5 in 2011 PPP) a,b
GHG emissions growth (mtCO2e)
Energy related GHG emissions (% of total)

in domestic demand conditions are
hinged on the successful COVID-19 vaccine rollout, currently covering only 0.5
percent of the population out of the targeted 49.6 percent (22 million people) by December 2021.
The government plans to reduce the fiscal
deficit to 4.0 percent of GDP by FY23, assuming pandemic pressures ease. This
would allow public debt to stabilize ataround 53 percent of GDP. Nonetheless,given the weakened capacity to carry debt
and increased vulnerabilities, the country’s risk of debt distress may deterioratebeyond ‘moderate’ with further relianceon non-concessional debt and the costlier
domestic market.
The World Bank projects that growth inprivate consumption could reduce poverty to 40.9 percent in 2022, from 41.4
percent in 2021. However, poverty will
still be 0.6 percentage points above thepre-COVID-19 level, with a return to thatlevel only expected in 2023. These prospects will also depend on how COVID19 evolves and on the environmental
shocks which may affect many households due to their limited adaptive capacity to disasters and limited alternative
off-farm income streams.

(annual percent change unless indicated otherwise)
2018
6.3
6.0
11.6
5.7
9.3
8.8
6.3
4.4
4.8
8.2
3.4
-5.3
2.8
-4.1
36.2
-2.2
41.6
69.9
87.7
1.3
31.7

2019
6.4
5.9
6.9
9.9
6.3
8.6
6.4
5.2
9.0
5.6
2.6
-7.2
3.4
-4.9
36.6
-2.8
40.3
68.9
87.2
2.5
32.1

2020
3.0
1.5
7.9
-0.1
0.6
-5.4
3.0
4.6
3.1
2.0
2.3
-6.7
2.6
-7.1
40.5
-4.5
41.4
69.7
87.6
2.0
32.3

2021 e
3.2
3.8
9.6
3.5
3.2
8.3
3.2
2.9
4.4
2.7
2.5
-9.1
2.1
-9.2
50.2
-6.5
40.9
69.4
87.5
2.8
32.3

So urce: Wo rld B ank, P o verty & Equity and M acro eco no mics, Trade & Investment Glo bal P ractices. Emissio ns data so urced fro m CA IT and OECD.
No tes: e = estimate, f = fo recast.
NA(a) Calculatio ns based o n 2016-UNHS.A ctual data: 2016. No wcast: 2017-2020. Fo recast are fro m 2021to 2023.
(b) P ro jectio n using neutral distributio n (2016) with pass-thro ugh = 0.87 based o n private co nsumptio n per capita in co nstant LCU.

MPO 293 Oct 212022 f
3.7
2.9
0.9
5.1
14.2
9.4
3.7
3.4
5.1
3.1
4.0
-8.2
2.4
-6.4
53.4
-3.7
40.9
69.3
87.5
3.5
33.4

2023 f
5.5
4.4
2.5
7.8
12.6
9.1
5.5
4.0
7.6
5.0
5.0
-8.3
2.9
-4.0
53.3
-1.1
39.9
68.7
87.1
3.8
34.6

ZAMBIAKey conditions andchallenges

Table 12020

P o pulatio n, millio n

18.4

GDP , current US$ billio n

18.7

GDP per capita, current US$

1016.3

Internatio nal po verty rate ($ 1.9)

a

58.7
a

75.4

a

88.1

Lo wer middle-inco me po verty rate ($ 3.2)
Upper middle-inco me po verty rate ($ 5.5)a

57.1

Gini index

Scho o l enro llment, primary (% gro ss)

b

b

98.7
63.9

Life expectancy at birth, years
To tal GHG Emissio ns (mtCO2e)

99.4

Source: WDI, M acro Poverty Outlook, and official data.
(a) M ost recent value (201 5), 201 1 PPPs.
(b) WDI for School enrollment (201 7); Life expectancy (201 9).

The Zambian economy is expected to
grow moderately by 2.2 percent in 2021
following a historic contraction of 2.9%
in 2020, driven by high copper prices,
rising market confidence, and normal
rainfall patterns. Poverty is expected toincrease slightly by 0.2 percentage
points to 60.3 percent, reflecting
COVID-19 impacts. Economic activity
will gradually pick up to potential
growth rates beginning in 2023. However, risks stemming from prolonged debt
negotiations and low COVID-19 vaccination rates will need to be managed.

The Zambian economy was under considerable stress on multiple fronts even before the onset of the COVID-19 pandemic.
Economic growth averaged only 3.1 percent over 2015-19 and had slumped to 1.4
percent in 2019--the lowest in the past
two decades, due to drought and a downturn in global copper prices. Fiscal andexternal indicators worsened, due to sizable public investments and a weakening
exchange rate.
The impact of the COVID-19 pandemicheightened these macroeconomic imbalances in 2020. The economy contracted by
2.9% in 2020, marking Zambia’s first recession since 1998. Mining and services
suffered from lower global demand andsocial distancing measures, respectively,
earlier in 2020. A relaxation of lockdown
measures in the second half of 2020, alongwith a global pick-up of copper prices did,
however, help activity to recover. Falling
revenues and COVID-19 related expenditure pressures saw the fiscal deficit increase to 14.8% of GDP compared to an
approved budget of 6.5%. The Kwacha
depreciated by over 50% against the US$
while reserves declined to $1.2 billion
against at least US$1.3 billion in debt service obligations. As a result, Zambia became the first Sub-Saharan African country to default on the Eurobonds in the
midst of the COVID-19 crisis in 2020. Despite the persistent inflationary pressures

FIGURE 1 Zambia / Fiscal operations (2011-20)

Recent developments
Recent economic developments point to a
weak recovery in 2021, with higher copper
prices and post-election rise in market confidence expected to strengthen economic
activity in the second half. GDP in the firstquarter of 2021 grew by 0.7% year-on-year,
largely driven by agriculture and manufacturing, while continued challenges in tourism affected the services sector. The decade-high increase in copper prices is expected to help boost production, fiscal
revenues, and external balances. The successful conduct of the August 2021 elections followed by the ushering in of a newadministration and smooth power transfer
have also helped improve market confidence and economic outlook, as reflectedin the recent Kwacha appreciation andincreasing participation of foreign investors on the domestic debt market.
Zambia’s exchange rate flexibility and the
new IMF SDR allocation have helped toabsorb the impact of the economic shockon the external sector. The Kwacha depreciation in 2020 led to huge import compressions, leading to a current accountsurplus of 12.0% of GDP. Preliminary
data for 2021 also shows a sizeable current account surplus in Q1 of 2021 (about
5% of 2020 GDP), driven by increased

FIGURE 2 Zambia / Actual and projected poverty rates andreal GDP per capita

Percent of GDP

Percent of GDP

that saw CPI inflation average 15.7% for
the year, the central bank kept a relaxedmonetary policy stance throughout 2020
to temper the adverse economic effects ofthe pandemic.

40

16

35

14

30

12

25

10

20

8

15

6

10

4

5

2

0

0

Poverty rate (%)

100

10000

80

8000

60

6000

40

4000

20

2000

0

0
2004 2006 2008 2010 2012 2014 2016 2018 2020 2022

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Fiscal deficit (rhs)International poverty rate
Upper middle-income pov. rate

Sources: Zambian authorities and World Bank Staff estimates and projections.

Source: World Bank. Notes: see Table 2.

Revenue

Expenditure

Real GDP per capita (LCU constant)

MPO 294 Oct 21

Lower middle-income pov. rate
Real GDP pc

copper sales and further declines in imports. Following a depreciation of 7%
from the beginning of the year throughmid-July 2021, the Kwacha has significantly appreciated in the past twomonths, reflecting an improved reserve
position from the new IMF SDR allocation, improved post-election market confidence, and increased foreign currency
sales by private sector agents. Overall, theKwacha had appreciated by over 20%
against the US dollar from the beginningof the year through mid-September 2021.
Nonetheless, the effects of the pandemic
on poverty and vulnerability have continued in 2021. The national poverty headcount rate is projected to increase byaround 1.7 percentage points since thestart of the pandemic, from 58.6 percent
in 2019 to 60.3 percent in 2021. This haslargely been driven by increases in poverty in urban areas, and among thoserelying on employment income from theinformal sector. A World Bank Household Monitoring phone survey found that
4 in 5 households reported a drop-in income from nonfarm business, and that 1
in 3 reported a reduction or disappearance of wages. A recent Socio-economic
Impact Assessment conducted by the
National Statistical Office found that 9 in

10 households have experienced spikes in
the price of food, and that 64 percent ofthese had to reduce food consumption asa result. Core recurrent spending, including social benefits, has suffered in recent
years, with only about one third percentof the government’s budget on social cashtransfers (SCT) disbursed in FY20. While
the government has budgeted for a higher amount in SCT in FY21, this could befurther affected by the increasing fiscalpressures due to the crisis, with a substantial impact on the most vulnerable
households in the population.

OutlookGDP growth is projected at 2.2 percent
in 2021, gradually moving towards its
potential growth region of between 4-5
percent by 2023. Higher copper prices,
the commissioning of a new hydro power station, and a return to normal rainfall
patterns are expected to support growthin agriculture and electricity production.
However, the impact of COVID-19 willcontinue to dampen activity, especiallyin tourism and retail and wholesaletrade. While the recent uptick in copper

TABLE 2 Zambia / Macro poverty outlook indicators

Real GDP growth, at constant market prices
Private Consumption
Government Consumption
Gross Fixed Capital Investment
Exports, Goods and Services
Imports, Goods and Services
Real GDP growth, at constant factor prices
Agriculture
Industry
Services
Inflation (Consumer Price Index)
Current Account Balance (% of GDP)Net Foreign Direct Investment (% of GDP)
Fiscal Balance (% of GDP)
Debt (% of GDP)
Primary Balance (% of GDP)
International poverty rate ($1.9 in 2011 PPP) a,b
Lower middle-income poverty rate ($3.2 in 2011 PPP) a,b
Upper middle-income poverty rate ($5.5 in 2011 PPP) a,b
GHG emissions growth (mtCO2e)
Energy related GHG emissions (% of total)

prices could help in ramping up mining
activity in the next few years, a stable
fiscal regime and clarity on the role of thestate will be critical for increased longterm investment in the sector. More importantly, while mining will remain a key
sector for driving growth in the foreseeable future, the country must begin to
make significant steps towards economic
diversification and structural transformation to generate sufficient jobs for its
young and growing population and reduce poverty and inequality.
Risks to the outlook are balanced. On the
one hand, the persistent upward trajectoryin global copper prices will boost copper
production, domestic revenue, and externalstability. On the other, slow progress on
debt restructuring negotiations will weaken the confidence that creditors and markets have given to the new government
and may affect the economic outlook. Further, the continued low rates of COVID-19
vaccinations pose significant health andeconomic risks in case of a new outbreak.
Rainfall variability remains a key structuralrisk to Zambia’s sustainable growth, affecting key sectors like agriculture and electricity, and highlights the need to incorporate
climate-smart solutions in the country’s
long-term growth strategy.

(annual percent change unless indicated otherwise)
2018
4.2
1.2
-14.9
9.9
8.7
4.9
4.0
-21.2
4.6
7.3
7.5
-1.3
1.4
-10.1
77.8
-5.5
58.3
74.9
87.7
-0.7
11.8

2019
1.4
2.3
-10.1
-14.3
-7.2
-13.7
1.5
7.7
-3.3
3.5
9.1
0.6
-0.6
-9.5
87.8
-5.6
58.6
75.3
88.0
1.7
11.2

2020
-3.0
3.1
10.8
-35.8
10.7
-10.7
-2.5
17.2
0.6
-6.2
15.7
12.0
-1.1
-10.5
87.0
-7.2
60.1
76.4
88.8
4.8
10.4

2021 e
2.2
3.6
11.7
3.7
8.7
17.4
1.7
5.0
1.1
1.5
22.5
10.3
1.8
-2.6
73.6
0.5
60.3
76.6
89.0
1.2
10.7

So urce: Wo rld B ank, P o verty & Equity and M acro eco no mics, Trade & Investment Glo bal P ractices. Emissio ns data so urced fro m CA IT and OECD.
No tes: e = estimate, f = fo recast.
NA(a) Calculatio ns based o n 2015-LCM S-VII.A ctual data: 2015. No wcast: 2016-2020. Fo recast are fro m 2021to 2023.
(b) P ro jectio n using neutral distributio n (2015) with pass-thro ugh = 0.7 based o n GDP per capita in co nstant LCU.

MPO 295 Oct 212022 f
2.9
4.5
-33.1
16.5
9.8
14.3
2.9
4.4
1.4
3.5
15.0
8.5
2.7
-0.9
72.4
2.5
60.3
76.6
89.0
1.2
10.1

2023 f
4.5
4.5
-4.4
14.5
6.9
13.1
4.4
4.0
3.5
5.0
10.0
5.4
2.7
-0.1
99.6
2.4
60.0
76.3
88.7
1.6
9.8

ZIMBABWE
Table 1

Key conditions andchallenges
2020

P o pulatio n, millio n

14.9

GDP , current US$ billio n

20.2

GDP per capita, current US$

1355.7

Internatio nal po verty rate ($ 1.9)

a

39.5
a

63.8

a

82.8

Lo wer middle-inco me po verty rate ($ 3.2)
Upper middle-inco me po verty rate ($ 5.5)a

50.4

Gini index

Scho o l enro llment, primary (% gro ss)

b

109.9

b

61.5

Life expectancy at birth, years
To tal GHG Emissio ns (mtCO2e)

116.9

Source: WDI, M acro Poverty Outlook, and official data.
(a) M ost recent value (201 9), 201 1 PPPs.
(b) WDI for School enrollment (201 3); Life expectancy (201 9).

The economy is expected to rebound in
2021, underpinned by an exceptional
agriculture season. Annual inflation fellto two-digit levels in July 2021 for the
first time in two years, helped by monetary and exchange rate policies. Fiscal
accounts will turn into a small deficit
after two consecutive years of cash surplus, as revenue continues to recoverwhile expenditure increases in responseto the pandemic. Economic recovery will
support poverty reduction, but poverty
levels will remain high.

Macroeconomic challenges and natural
disasters have kept Zimbabwe’s growthvolatile. High inflation, unstable exchange rates, and unsustainable debt
have constrained macroeconomic stability and productivity growth. Trade integration has declined, and foreign direct
investment has remained low, limitingtransfer of new technologies and investment in modernizing the economy. Increased frequency of unfavorable weather events, including a drought persisting
for almost three years and the devastating Cyclone Idai, downsized rain-fed
agriculture, electricity and water production with ripple effects to other economic
sectors and social conditions.
With no access to concessional externalfinancing, Zimbabwe has relied on mobilizing domestic resources, donor assistance,and expensive external loans to mitigate
the impact of natural disasters and the pandemic. Zimbabwe continues to be in debt
distress: 62 percent of total external debt
(US$10.5 billion) is in arrears. To containinflation, fiscal policy remained tight during the pandemic which has weakened
delivery of basic social services. As a resultof low or negative economic growth andnatural disasters, extreme poverty has
steadily increased over the last decade,rising from 21 percent in 2011 to 42 percentof the population in 2020 (based on $1.90
poverty line).

Zimbabwe’s recovery needs to be underpinned by policies promoting productivity
growth, such as reducing state intervention
in the economy; lessening the regulatoryburden; strengthening governance and anti
-corruption efforts; lowering barriers toregional trade integration; and removing
forex retention requirements. Bringing the
pandemic under control so that economic
activity can resume as normal remains thepriority in the near term. Service delivery
needs to be strengthened and household
vulnerability reduced through robust social
safety net programs.

Recent developments
The economy has shown signs of recovery,
mainly boosted by higher agricultural production, improved capacity utilization inindustry, and stabilization of prices andexchange rates. GDP is expected to rebound to 5.1 percent in 2021 after contracting for two years in a row. The strong
rebound of the economy is anchored on abetter 2020/21 rainfall season, boosting
agriculture, electricity and water. Despite
continuing lockdown restrictions, capacity
utilization in industry strengthened as
inflation slowed down markedly and forex
availability improved. Domestic demand
was bolstered by stabilizing prices, increasing incomes from the bumper harvest, and increased investment in public
infrastructure.
Monetary and exchange rate polices helped
bring down inflation to two-digit levels forthe first time in two years. Annual inflation

FIGURE 1 Zimbabwe / Exchange rates

FIGURE 2 Zimbabwe / Actual and projected poverty rates
and real GDP per capita

ZWL$/US$

Poverty rate (%)

160

100

Real GDP per capita (constant LCU)
1600

140

1400
80

120
100

1200
1000

60

80

800

forex
auctionintroducedon June 23

60
40

40

600
400

20

20

200

0
0

0
2011

Official exchange rate

2015

2017

International poverty rate
Upper middle-income pov. rate

Parallel market exchange rate

Sources: Zimstat and World Bank staff estimates.

2013

Source: World Bank. Notes: See Table 2.

MPO 296 Oct 21

2019

2021

2023

Lower middle-income pov. rate
Real GDP pc

stood at 50 percent in August 2021 downfrom the peak of 838 percent in July 2020
following the introduction of rule-based
reserve money management, a foreign exchange auction, and relaxation of dedollarization. However, the continual widening
gap between parallel market and official
exchange rates (79 percent at end-August2021) is likely to weigh on price stability inthe future, with annual inflation expected
to average 94 percent in 2021.
Fiscal accounts on cash basis were in small
surplus in the first half of the year due tocontinued revenue growth coupled withexpenditure restraint, particularly in relation to public wages. COVID-19 containment measures delayed implementationof key social programs. The fiscal balanceis expected to turn into deficit (1.5 percent
of GDP) after two consecutive years offiscal surplus as expenditure increased tobuy vaccines and strengthen social services. Improved economic environment
eased social conditions although poverty
levels remained high. The share of households that were able to buy basic fooditems increased noticeably in round 3 of
the PICES survey (contacted between December 2020 and March 2021) comparedto survey results of round 2 (September2020) and round 1 (July 2020). The shareof households experiencing severe or
moderate food insecurity also declined inearly 2021 from mid-2020, which could
partly be due to the bumper harvest. Nevertheless, poverty and vulnerability levelremain high, with a significant proportionof households reporting reduced or no
income since the onset of the pandemic.
The number of people living below theinternational poverty line is expected to be
6.1 million in 2021 amid continued elevated prices, and a slow recovery of jobs andwages in the formal and informal sectors.

Outlook
Growth is expected to strengthen further in
2022 as the negative impacts of the pandemic subside, rain levels remain good,and implementation of structural policies
outlined in the National Development
Strategy accelerates. Good progress in vaccination in Zimbabwe is likely to boost
tourism, trade, transport, and other sectorsthat were previously negatively affected bydisruptions caused by COVID-related restrictions. Agriculture is expected to be

TABLE 2 Zimbabwe / Macro poverty outlook indicators

Real GDP growth, at constant market prices
Private Consumption
Government Consumption
Gross Fixed Capital Investment
Exports, Goods and Services
Imports, Goods and Services
Real GDP growth, at constant factor prices
Agriculture
Industry
Services
Inflation (Consumer Price Index)
Current Account Balance (% of GDP)Net Foreign Direct Investment (% of GDP)
Fiscal Balance (% of GDP)
Debt (% of GDP)
Primary Balance (% of GDP)
International poverty rate ($1.9 in 2011 PPP) a,b
Lower middle-income poverty rate ($3.2 in 2011 PPP) a,b
Upper middle-income poverty rate ($5.5 in 2011 PPP) a,b
GHG emissions growth (mtCO2e)
Energy related GHG emissions (% of total)robust underpinned by good rain levels.
Continued implementation of disinflation
policies and fine-tuning of the foreignexchange auction market are expected tobring down inflation to below 35 percent
in 2022 and 2023. Risks to the outlook aresignificant, as COVID-19 pandemic persists, commodity prices are volatile, andthe widening gap between parallel market
and official exchange rates may disturb
macroeconomic stability.
Fiscal deficit is projected to narrow in
2022, as the economy continues to recover, boosting revenue. Expenditure will
moderate due to lower pressures fromCOVID response. Zimbabwe received
equivalent of US$961 from IMF SDR allocation and intends to use the funds tosupport economic recovery (productive
and infrastructure sectors and buildup ofreserves) and mitigate the impact of thepandemic on the vulnerable groups.
Poverty levels are expected to marginallydecline in 2022, supported by expectedeconomic growth and relatively lower
inflation. Getting the pandemic undercontrol with widespread vaccination andadoption of preventive measures is crucial to reduce poverty and vulnerability
through accelerated economic recovery.

(annual percent change unless indicated otherwise)

2018
4.8
-4.5
-2.3
178.3
11.6
22.8
4.8
18.3
3.2
3.5
10.6
-8.4
-4.3
-6.7
52.4
-5.7

2.3
12.7

2019
-6.1
-28.2
24.9
-38.1
1.7
-29.4
-6.1
-17.8
-11.1
-2.1
255.3
5.8
-1.6
0.2
56.2
0.5
39.5
63.8
82.8
-1.2
13.1

2020
-4.1
-26.8
3.0
67.8
-0.1
1.7
-4.1
4.2
-5.5
-4.7
557.2
5.4
-0.8
1.7
57.9
1.8
41.8
65.8
84.0
-0.4
13.3

2021 e
5.1
4.8
5.2
4.5
3.0
2.8
5.1
16.0
5.8
3.1
94.0
4.0
-0.4
-1.5
50.9
-1.4
40.3
64.8
83.1
4.4
14.8

So urce: Wo rld B ank, P o verty & Equity and M acro eco no mics, Trade & Investment Glo bal P ractices. Emissio ns data so urced fro m CA IT and OECD.
No tes: e = estimate, f = fo recast.
NA(a) Calculatio ns based o n 2019-P ICES.A ctual data: 2019. No wcast: 2020. Fo recast are fro m 2021to 2023.
(b) P ro jectio n using neutral distributio n (2019) with pass-thro ugh = 0.87 based o n GDP per capita in co nstant LCU.

MPO 297 Oct 212022 f
5.4
5.3
3.0
6.0
3.5
2.8
5.4
6.0
6.1
5.0
33.0
3.6
-0.6
-1.4
53.1
-1.4
38.9
63.3
82.4
4.5
17.0

2023 f
4.2
5.0
4.3
2.0
5.8
5.0
4.2
5.6
6.0
3.3
20.0
3.0
-0.6
-1.7
54.2
-1.6
37.7
62.4
81.9
4.0
19.0

Macro Poverty Outlook

10 /2021