Sub-Saharan Africa

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

SpringMeetings2020

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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 199 Apr 20

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

Foreword
The projections contained in this volume are the joint product of theMacroeconomics, Trade and Investment, and the Poverty and Equity
Global Practices of the World Bank. They were produced by a team ofmacroeconomic and poverty economists spanning the globe. These projections were produced while the COVID-19 pandemic was
expanding rapidly, and the physical distancing and economic policy
responses to it were in constant flux. As a result, the level of
uncertainty over future events was particularly high. While we recognize that these projections will inevitably be revised as new information
becomes available, we hope that sharing them at this time will make apositive contribution to policymakers’ struggle to respond to this generational challenge.

Marcello Estevão

Carolina Sánchez-Páramo

Global Director
Macroeconomics Trade and Investment
The World Bank

Global Director
Poverty and Equity
The World BankThe global outlook is very uncertain. This outlook reflects information available at the time of its preparation. As more inf ormation becomes available,
these projections will be revised. They are presented now to assist policymakers to design alternative policy responses.

ANGOLA

Recent developments

Table 1

2019

P o pulatio n, millio n

30.1

GDP , current US$ billio n

86.4

GDP per capita, current US$

2866

Internatio nal po verty rate ($ 1.9)

a

47.6
a

69.8

a

87.2

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

Gini index

Life expectancy at birth, years

b

60.4

Source: WDI, M acro Poverty Outlook, and official data.
Notes:(a) M ost recent value (201 8), 201 1 PPPs.
(b) M ost recent WDI value (201 7).

The Government of Angola (GoA) remains committed to an ambitious reform
agenda to ensure macroeconomic stability
and to implement a more diversified andinclusive growth model. Government
policies are anchored on fiscal consolidation, tight monetary policy, and increasing exchange rate flexibility. The government is also pursuing a new growth model through structural reforms to improvethe business environment. Poverty is estimated at 48.7 percent in 2019. The
COVID-19 outbreak and low oil prices
pose significant risks to the outlook.

Despite significant progress toward macroeconomic stability and adopting muchneeded structural reforms, estimates suggest that the economy remained in recession in 2019 for the fourth consecutive
year. Real GDP growth is estimated at -1.1
percent in 2019. Negative growth was
driven by the decline in international oil
prices and the maturing of oil fields, leading to a decline in oil production by 5.2
percent. Growth in the non-oil sector
slowed to 0.6 percent.
The government’s budget surplus is estimated at 1 percent of GDP in 2019, downfrom 2 percent of GDP in 2018, and the
GoA approved a conservative budget for2020. Fiscal consolidation efforts are focusing on measures to restrain expenditure
growth and an increase in non-oil revenues. Despite the fiscal surplus, total public debt increased significantly to an estimated 111 percent of GDP, driven by thedepreciation of the currency. The government has made progress on more structural measures such as the approval of theprivatization program; the adjustment ofelectricity and water tariffs; anticorruption initiatives, and the approval ofa new anti-money laundering law.
The central bank continued its efforts toimplement a more flexible exchange rate
regime. The currency depreciated by 54
percent against the USD in 2019.
The spread between the official and parallel exchange rate narrowed from 140 percent in January 2018 to around 25 percent

at end-2019. Notwithstanding the depreciation and the introduction of the Value-Added Tax in October 2019, inflation
remained contained at 16.9 percent in
December 2019.
The current account surplus narrowed
to an estimated 3.3 percent of GDP in2019 due to lower oil revenues. Nonetheless, net international reserves increased to US$ 11.7 billion (equivalent
to 6 months of imports) owing to thelatest Eurobond issuance.
With negative GDP growth and elevated inflation, poverty is estimated tohave increased to 48.7 percent in 2019from 47.6 percent in 2018 based on aninternational poverty line of $1.90/
capita/day, in 2011 PPP.

OutlookAngola is expected to remain in recession
in 2020 due to the recent plunge in oil
prices and the global slowdown resulting
from the impact of COVID-19. Under thebaseline scenario in which global growth
drops to -2.2 percent in 2020 and oil prices
to US$ 30 per barrel, GDP is projected tocontract 2.3 percent in 2020, before recovering gradually in 2021 and 2022. Oil sector growth will be highly affected due tothe combined effect of supply and demand shocks. Non-oil sector growth isalso projected to decline due to spillover
effects from lower oil prices, reduced imports of capital goods, tighter financing
conditions, currency depreciation, andrestrictions in the movements of goods

FIGURE 1 Angola / Real GDP Growth, oil and non-oil sectors

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

Percent

12

Poverty rate (%)
100

8

80

Real GDP per capita (constant LCU)
70000
60000
50000

4

60

40000

40

30000

0
-4

20000
20

-8

10000

0

-12
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Real GDP

Oil sector

Source: Ministry of Finance, Angola. World Bank.

200 MPO / Apr 20

Non-oil sector

0
2008

2010

2012

2014

International poverty rate
Upper middle-income pov. rate

2016

2018

2020

2022

Lower middle-income pov. rate
Real GDP pc

Source: World Bank.
Notes: see Table 2.
The cut-off date for information in this MPO was April 02, 2020.

and people. As a result, COVID-19 will
negatively impact labor incomes, mostlyof the poor who work in vulnerable sectors such as services and tradables. The
GoA has already declared a state of emergency and started to implement several
measures to contain the outbreak of
COVID-19, after the first few cases werereported. Inflation is projected to increasesignificantly in 2020 given the high dependency on imported food, impact of
currency depreciation, increased propensity for hoarding, and lower domestic
production. High food prices and limited
import of food items will directly affectthe poor and may push vulnerable families into poverty. Inflation will revert to adownward trend in the medium term,
once these impacts phase out.
Lower international oil prices are expected to affect Angola’s fiscal position.
The adverse effect of lower oil prices
combined with additional health spending related to the COVID-19 pandemic
will be only partially offset by the reduced burden of fuel subsidies, leading
to a fiscal deficit of 5.0 percent of GDP in
2020. Public debt is expected to increase
further to 134.2 percent of GDP. It is expected that the GoA will seek to reprofile
its debt, secure additional financing atconcessional terms and negotiate newparameters under the IMF program.

External accounts are projected to deteriorate mostly due to lower oil exports in2020 but will improve in the medium term
once oil prices recover and the real effective exchange rate reaches its equilibrium
level. As the GoA’s short-term focus will
be on mitigating the impact of the current
crisis, the implementation of the broader
reform program may be delayed. Poverty
is projected at 50.1 percent in 2020 andwill present an upward trend throughout
the next three years.

Risks and challenges
Given its high dependence on the oil sector and its large exposure to China (itsmain trading partner), an even deeper
global recession due to the COVID-19
pandemic and even lower oil prices represent a major downside risk. Lower oil
prices will translate into lower oil production given high production costs. In addition, lower global economic activity including in China will reduce global demand for oil. In a context of high global
uncertainty, reduced international investor appetite may translate into lower foreign direct investment, which could hamper growth in the non-oil sector. Under adownside scenario of a decline in the oil

TABLE 2 Angola / Macro poverty outlook baseline scenario

price, from US$ 30 per barrel (baseline
scenario) to US $27 per barrel in 2020 andfrom US $40 to US $31 in 2021, GDP is
projected to fall by 5.2 percent in 2020 and
0.6 percent in 2021. A domestic outbreakof COVID-19 may result in a severe human and economic loss due to the limited
capacity of the healthcare system.
Angola’s high debt level and high grossfinancing needs, which are increasingly
financed externally, represent high andgrowing FX and refinancing risks for Angola's sovereign debt. A tightening of
global financing conditions may also leadto increasing debt vulnerabilities.
On the poverty side, the main challenge
is to compensate people for loss of income due to COVID-19 through a wideand fast disbursing cash transfers to existing beneficiaries and expansion ofsocial protection programs to cover vulnerable families. It is also important to
mitigate the impact of higher food prices
and possible food shortages throughtargeted meal programs.

(annual percent change unless indicated otherwise)
2017

2018

2019 e

2020f

2021f

2022 f

-0.1

-1.2

-1.1

-2.3

0.6

1.3

Private Consumption

2.9

2.1

2.8

2.0

2.5

3.0

Government Consumption

0.3

3.2

7.6

-4.9

4.1

5.7

Real GDP growth, at constant market prices

Gross Fixed Capital Investment

3.0

-6.2

2.5

-15.1

0.0

2.6

Exports, Goods and Services

24.5

-10.3

-3.4

-4.0

0.7

1.3

Imports, Goods and Services

11.2

8.7

12.2

-10.2

6.2

8.4

0.6

-1.2

-1.1

-2.3

0.6

1.3

Agriculture

0.5

-5.0

1.5

1.0

1.5

2.4

Industry

-3.9

-5.4

-3.0

-2.0

0.8

1.1

Services

7.8

5.5

0.9

-3.2

0.2

1.3

Inflation (Consumer Price Index)

29.8

19.6

17.1

28.6

27.7

15.0

Current Account Balance (% of GDP)

-0.5

7.0

3.3

-3.1

-1.2

-0.6

Net Foreign Direct Investment (% of GDP)

-7.2

-6.1

-0.6

4.4

4.6

6.6

Real GDP growth, at constant factor prices

Fiscal Balance (% of GDP)

-6.3

2.0

1.0

-5.0

-2.3

-0.8

Debt (% of GDP)

68.5

89.0

110.9

134.2

136.8

137.6

Primary Balance (% of GDP)

-3.0

6.5

6.6

1.2

3.2

4.5

..

47.6

48.7

50.1

50.8

51.3

Lower middle-income poverty rate ($3.2 in 2011 PPP) a,b

..

69.8

70.6

71.6

72.0

72.4

a,b

..

87.2

87.6

88.1

88.3

88.5

International poverty rate ($1.9 in 2011 PPP) a,b
Upper middle-income poverty rate ($5.5 in 2011 PPP)

So urce: Wo rld B ank, P o verty & Equity and M acro eco no mics, Trade & Investment Glo bal P ractices.
No tes: e = estimate, f = fo recast.
(a) Calculatio ns based o n 2008-IB EP -M ICS and 2018-IDREA . A ctual data: 2018. No wcast: 2019. Fo recast are fro m 2020 to 2022.
(b) P ro jectio n using average elasticity (2008-2018) with pass-thro ugh = 0.5 based o n GDP per capita in co nstant LCU.

The cut-off date for information in this MPO was April 02, 2020.

MPO / Apr 20 201

The global outlook is very uncertain. This outlook reflects information available at the time of its preparation. As more inf ormation becomes available,
these projections will be revised. They are presented now to assist policymakers to design alternative policy responses.

BENIN

Recent developments

Table 1

Economic activity remained robust in 2019as growth reached 6.4 percent in 2019 (3.5
percent per capita), just about the estimated potential of 6.3 percent. The Nigeria
border closure shaved off an estimated 0.3
percentage points of the growth rate. On
the supply side, growth was driven by
agriculture, linked to strong cotton production (+18 percent) in the first half of theyear. Industry and services also positively
contributed to growth with domesticallyproduced electricity significantly increasing after the opening of a new power
plant. On the demand side, private consumption and investments contributed themost to economic activity. Inflation remained subdued at -0.9 percent in 2019
due to high agriculture production inspite of higher fuel prices.
The external current account deficit(including grants) widened from -4.6 percent in 2018 to -5.1 percent of GDP in 2019
due to lower cotton prices and higher imports of construction inputs and energy
products. Exported products were mainly
cotton and cashew nuts while imports were
dominated by energy, machinery and construction materials. The border closure, in
effect since August 22, 2019 has limited thesmuggling of fuel from Nigeria.
The fiscal deficit (including grants) significantly narrowed from 2.9 percent of GDP
in 2018 to 0.5 percent in 2019. This is mostly due to the under-execution of externally-financed projects, which contracted capital expenditure to 4 percent of GDP, while

2019

P o pulatio n, millio n

11.8

GDP , current US$ billio n

14.0

GDP per capita, current US$

1187

Internatio nal po verty rate ($ 1.9)

a

49.5
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)
Life expectancy at birth, years

b

126.6

b

61.2

Source: WDI, M acro Poverty Outlook, and official data.
Notes:(a) M ost recent value (201 5), 201 1 PPPs.
(b) M ost recent WDI value (201 7).

Growth remained strong in 2019, supported by agriculture, services andelectricity, despite the Nigeria borderclosure. As a result, poverty declined
gradually. The fiscal position improved
thanks to the under-execution of capitalspending and supported by the good
performance of non-customs revenue.
The near-term outlook is clouded by
COVID-19 global economic effects on
trade and capital flows. Risks are highfrom protracted border closure, local
COVID-19 transmission and potential
political tensions ahead of the 2021
Presidential elections.

FIGURE 1 Benin / Fiscal deficit and government debt

Percent of GDP

domestic and non-tax revenues overperformed and partly offset the shortfall incustoms revenue. The deficit was financedby external borrowing and FDI. The debtto-GDP ratio stabilized at 41.6 percent of
GDP. The risk of overall debt distress remains moderate.
Benin’s monetary and exchange rate policies are managed by the Central Bank ofWest African States (BCEAO), which
maintains a fixed peg between the CFA
Franc and the Euro. BCEAO’s international reserves reached 4.9 months of imports
in 2019, up from 4.5 months in 2018, on
the back of fiscal consolidation and higher net capital inflows. Despite an unchanged tight monetary policy, regionalliquidity pressures were alleviated due tohigher BCEAO supply and lower demand for refinancing from banks. The
real effective exchange rate (REER) depreciated by 5 percent in 2019, due to theEuro nominal depreciation against the
US dollar combined with persistently
lower inflation of the WAEMU comparedwith trading partners.
Poverty levels remain substantial with adeclining trend. World Bank estimates
based on official consumption aggregatessuggest that $1.9 a day (2011 PPP) poverty declined from 49.5 percent in 2015 to45.4 percent in 2019. Non-monetary poverty indicators have improved over thisperiod as well. Inequality is estimated tobe moderate based on consumption aggregates, with a Gini index of 48.0 percent in 2015. Recent acceleration in thepace of poverty reduction is explained bycontinued GDP growth in agriculture,mainly in the cotton sector.

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

Percent of GDP

45

-5.0

40

-4.5

35

-4.0

Poverty rate (%)

Real GDP per capita (constant LCU)

100

100000080

80000060

60000040

40000020200000

-3.5

30

-3.0

25

-2.5

20

-2.0

15

-1.5

10

-1.0

5

-0.5

0

0.0
2017

2018

External Debt

2019

2020

2021

Domestic Debt

Sources: Beninese authorities and World Bank projections.

202 MPO / Apr 20

2022
Budget balance

0

0
2003

2006

2009

2012

International poverty rate
Upper middle-income pov. rate

2015

2018

2021

Lower middle-income pov. rate
Real GDP pc

Source: World Bank.
Notes: see table 2.
The cut-off date for information in this MPO was March 31, 2020.

Outlook
The outlook is negative in the near-termas the COVID-19 adverse effect on global economic activity weight down on
growth in 2020. Decade-low cotton prices and a recession in Nigeria would severely reduce exports. This could be
exacerbated by supply-chain disruptions for Chinese imports for re-export(informal re-export to Nigeria represent
half of Benin’s exports). These negative
shocks are amplified by the border closure. Limited movement of people andgoods will be aggravated by a contraction of remittances and FDI that willslow down private-sector financed projects. As a result, growth is expected todrop to 4.1 percent in 2020, but shouldpick up to 6.4 in 2021 as the global economy bounces back. As the output gaps
turns positive, inflation will rise to 2
percent in 2022.
In the short-term, Benin external position will deteriorate. The external current account deficit will widen to 5.4
percent of GDP. The benefits of improved terms of trade from lower oil
prices should be contained due to limited domestic supply capacity and highdependency on informal smuggled

fuel from Nigeria (85 percent ofdomestic fuel).
Higherspending
linkedtothe
COVID-19 health emergency, and insupport of vulnerable households andbusinesses, coupled with reduced customs and domestic revenue, will push
the fiscal deficit (including grants) near
the WAEMU threshold of 3.0 percent in2020. As capital flight reduces FDI andfinancing in the regional market, thecost of borrowing will increase sharply.
Securing grants and concessional borrowing to address financing gaps will bea priority. Public debt should increase in
the short-term raising risks of debt distress and stabilize below 40 percent of
GDP by 2022. BCEAO will provide liquidity for the banking sector ensuring
passthrough to the private sector andsupporting PMEs.
Poverty is expected to decrease over the
projection period but might suffer fromthe effects of the ongoing COVID-19,
decelerating its pace from previous projections. The $1.9/day PPP poverty
headcount rate would decrease from45.4 percent in 2019 to only 41.8 percent
in 2022 (against 38 percent previously
expected), while the $3.2/day PPP poverty rate would decrease only slightly
from 72.2 percent in 2019 to 69.2
percent by 2022.

TABLE 2 Benin / Macro poverty outlook baseline scenario

Risks and challenges
Risks remain high in the short term. An
extended COVID-19 pandemic thatspreads in the region, limiting flows ofpeople, goods and capital beyond Q2,
would severely disrupt economic activity
and affect Benin’s external and fiscal positions. A protracted border closure with
Nigeria would add to this downside scenario. Local contagion and socialdistancing measures would negatively
affect private consumption and investment decisions. Additional risks stemfrom adverse weather conditions, risingsocio-political and security fragility in the
Sahel region, and uncertainty ahead of
Presidential elections in 2021. All theserisks could distress household income anddisproportionately affect the consumptionof the poor, particularly those in informal
services linked to tourism and agriculture.
Declining remittances in response to therecession in Europe will also negatively
affect vulnerable households.
A medium-term challenge remains how toachieve economic diversification and reduce the economic and fiscal dependence
from Nigeria. Addressing this challenge
would accelerate economic transformationand poverty reduction.

(annual percent change unless indicated otherwise)
2017

2018

2019 e

2020f

2021f

2022 f

5.7

6.7

6.4

4.1

6.4

6.7

Private Consumption

3.5

5.8

7.1

5.8

6.9

7.5

Government Consumption

7.0

5.9

0.3

12.7

0.6

2.9

Gross Fixed Capital Investment

40.4

-1.6

16.6

0.6

1.6

12.1

Exports, Goods and Services

1.2

11.0

4.6

1.2

13.9

7.4

Imports, Goods and Services

18.8

0.9

12.0

5.1

7.6

11.4

Real GDP growth, at constant market prices

Real GDP growth, at constant factor prices

6.0

6.7

6.4

4.1

6.4

6.7

Agriculture

7.3

7.3

7.2

3.5

6.1

6.7

Industry

10.5

6.2

6.2

5.0

6.8

6.5

Services

1.6

6.7

5.7

4.0

6.3

6.9

Inflation (Consumer Price Index)

1.8

0.8

-0.9

-0.8

0.6

2.0

Current Account Balance (% of GDP)

-4.2

-4.6

-5.1

-5.5

-3.6

-3.7

Net Foreign Direct Investment (% of GDP)

1.1

1.2

1.3

0.6

0.6

0.5

Fiscal Balance (% of GDP)

-4.3

-2.9

-0.5

-3.0

-2.2

-2.0

Debt (% of GDP)

39.7

42.0

41.6

41.9

40.7

38.6

Primary Balance (% of GDP)

-2.8

-1.4

1.1

-1.4

-0.7

-0.6

International poverty rate ($1.9 in 2011 PPP) a,b

48.2

46.7

45.4

44.7

43.1

41.8

Lower middle-income poverty rate ($3.2 in 2011 PPP) a,b

75.2

73.6

72.2

71.6

70.3

69.2

a,b

90.4

90.1

89.9

89.8

89.5

89.2

Upper middle-income poverty rate ($5.5 in 2011 PPP)

So urce: Wo rld B ank, P o verty & Equity and M acro eco no mics, Trade & Investment Glo bal P ractices.
No tes: e = estimate, f = fo recast.
(a) Calculatio ns based o n 2015-EM ICOV. A ctual data: 2015. No wcast: 2016-2019. Fo recast are fro m 2020 to 2022.
(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.

The cut-off date for information in this MPO was March 31, 2020.

MPO / Apr 20 203

The global outlook is very uncertain. This outlook reflects information available at the time of its preparation. As more inf ormation becomes available,
these projections will be revised. They are presented now to assist policymakers to design alternative policy responses.

BOTSWANA
Table 1

Recent developments
2019

P o pulatio n, millio n

2.4

GDP , current US$ billio n

18.7

GDP per capita, current US$

7702

Internatio nal po verty rate ($ 1.9)

a

16.1
a

38.5

a

60.4

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

53.3

Gini index

Life expectancy at birth, years

b

68.8

Source: WDI, M acro Poverty Outlook, and official data.
Notes:(a) M ost recent value (201 5), 201 1 PPPs.
(b) M ost recent WDI value (201 7).

Having struggled to maintain its growth
momentum in 2019, Botswana is set for afurther growth upset in 2020 as global
demand shocks rock the diamond and tourism industries. Extreme poverty is expected to increase by 6.5 percent in 2020.
Whilst growth will recover towards 4.4
percent in the medium-term, a structuraltransformation in the growth model iscrucial if Botswana is to develop a diversified and robust economy.

Botswana struggled to maintain its growth
momentum in 2019. Weakening global
demand for diamonds alongside severe
droughts affecting the region contributed tothe slowdown in growth to 3.5 percent in2019 (from 4.5 percent in 2018). Decelerating production in the mineral and agriculture sectors outweighed the improvement
in services (trade, finance and businessactivities; which account for a third of output), with increased demand supported by
low inflation and accommodative monetary policy. Per capita income is set to haveincreased by 1.7 percent in 2019, resulting
in a small reduction in estimated extreme
poverty. However, the estimated poverty
reduction in 2019, from 13.9 percent to 13.6
percent, was less than half that in 2018 dueto the growth slowdown.
Fiscal outturns were weaker than expected.
The overall budget deficit for FY 2019/20 isestimated at 4 percent of GDP, above the 3.5
percent factored into the budget. Supplementary spending approved by Parliamentcontributed to this, as did faltering revenues
due to decelerating activity, lower mineralrevenues and receipts from the Southern
African Customs Union (SACU). Having
entered its 4th consecutive year of budget
deficits, the fiscal performance has contributed to an erosion of fiscal buffers. However, the central government debt levels, estimated at 13 percent of GDP in 2019, remain
low – largely due to the country’s ability tap
into the Government Investment Account(GIA) for reserve financing. In November

2019, the GIA stood at USD 1.5 billion, compared to USD 2.6 billion in November 2018,indicating the impact of government spending on reserves.
Struggling mining exports have caused
Botswana’s current account balance to slip
into negative territory - the first time since2012. Hampered by the downturn in diamond output, due to closure of the Orapa
mine in April 2019 and lackluster global
demand, merchandise exports contracted
by 16 percent in 2019. Export earnings are
estimated to have dropped below 2017
levels – when exports were affected by closure of a major copper-nickel mining company – whilst import growth has remained
steady. Whilst this negative external balance undermines the growth of the country’s foreign exchange reserves, these remained at a comfortable USD 7 billion
equivalent to 14 months of import cover.

Outlook
The global slowdown in demand following
the COVID-19 pandemic is expected to havea profound impact on Botswana’s economy,
with the largest hit to the diamond industry
and tourism. The global diamond industry,
which already faced headwinds in February
as weakened demand from China led to a 40
percent reduction in sales (compared to lastyear), is set to remain constrained. Slowing
activity in key markets including the US andIndia (home to the largest diamond cutting
and polishing operation in the world) willkeep demand for Botswana’s rough diamonds muted, with mining output expected

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

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

Percent, percentage points

Poverty rate (%)

670Real GDP per capita (constant LCU)
50000

60

40000

4

50
2
0

40

30000

30

20000

20
-2

10000

10
0

-4

2014

2015

2016

Agriculture

20172018 2019e 2020f 2021f 2022f

Industry

Services

Sources: Statistics Botswana and World Bank staff estimates.

204 MPO / Apr 20

GDP

0
2009

2011

2013

2015

International poverty rate
Upper middle-income pov. rate

2017

2019

2021

Lower middle-income pov. rate
Real GDP pc

Source: World Bank.
Notes: see Table 2.
The cut-off date for information in this MPO was April 02, 2020.

to contract by 9 percent in real terms. This
global shock, along with muted tourism
activity due to travel restrictions and dwindling demand in Europe, provide basis foran expected 1.2 percent contraction in
growth this year. Extreme poverty is expected to increase by 6.5 percent in 2020.
Growth is predicted to stabilize at 4.4 percent by 2022 as global demand recovers andthus create conditions for a reduction in
extreme poverty levels from 14.5 percent in2020 to 12.6 percent in 2022. Despite this, inthe absence of significant structural change,
growth will remain low to achieve Botswana’s long-term development objectives andcreate enough jobs to absorb the new entrants into the labor market.
The Government’s’ recently announced plan
to restore the fiscal balance and rebuild buffers that were eroded in recent years is likely
to face setbacks this year. With the diamondindustry being the largest single contributor
to government revenues, measures to diversify revenue sources and improve the revenue outturn – including an adjustment in allfees, charges and levies in April 2020 andtighter controls at the border on imported
goods – are unlikely to suffice. This, alongwith increased spending on health care andefforts to support the private sector, is set towiden the fiscal deficit by 1-2 percent ofGDP, before falling towards a more manageable 2 percent of GDP by 2022.
Botswana’s external position is set to worsen as a sharp decline in exports due to falling prices and subdued demand overshadow gains from cheaper fuel imports. Recent
developments highlight Botswana’s exposure to commodity market volatility andunderscore the need for further export diversification. Despite this, financing pressures are likely to be manageable given the
country’s stable deposits, and relatively
low debt levels.

Risks and challenges
The outlook is dependent on the how
COVID-19 continues to unfold. A downside scenario, where the price of oil continues to fall (and subsequently commodity prices), would result in a greater contraction in mineral production. A slower
than expected recovery in key markets
such as China, USA and the EU also provides additional downside risks to theoutlook. This, in turn, would further
dampen the revenue outturn and could
result in a larger use of the Pula fund anddomestic borrowing to cover the financing

TABLE 2 Botswana / Macro poverty outlook baseline scenario

gap. The extent at which the authorities
can contain the spread of the virus also
poses a challenge to their ability to keep
expenditures below the cap of 30 percent
of GDP, as additional health related expenditures are likely.
Risks underscore the importance of adjusting the current growth model – especially if Botswana is to achieve its Vision2036 high-income status. A shift awayfrom reliance on diamond exports, to amore diversified export basket is key. Investing in human capital is equally important if Botswana is to become a skillsbased economy. Moreover, initiatives toimprove the business environment andthe implementation of ongoing strategies,
as laid out in the National Development
Plan 11 Medium-Term Review, to diversify production and exports away frommining and into other growth-enhancing
and job-creating sectors will be crucial.
Achieving the fiscal target will require
improved efficiency in spending as well as
the delivery of services to promote thegrowth of the private sector. Rationalizing
the SOE sector and addressing constraints
that hinder private sector engagement intrade and investment will also be crucial
for a change in the growth model.

(annual percent change unless indicated otherwise)
2017

2018

2019 e

2020f

2021f

2022 f

2.9

4.5

3.5

-1.2

5.1

4.4

6.5

4.1

3.7

-2.1

1.9

3.7

Government Consumption

1.5

3.7

4.7

6.7

0.4

2.8

Gross Fixed Capital Investment

-8.8

8.1

25.5

9.1

10.8

9.2

Exports, Goods and Services

-16.0

8.0

-14.6

-20.0

6.5

5.9

Imports, Goods and Services

-21.4

11.3

3.6

-5.0

6.0

9.2

2.8

4.5

3.7

-1.2

5.1

4.4

Agriculture

1.9

2.6

0.1

2.0

1.3

1.2

Industry

-2.5

5.5

0.7

-8.5

7.3

4.1

Services

5.1

4.1

5.0

1.6

4.4

4.5

Inflation (Consumer Price Index)

3.2

3.5

2.8

3.2

3.6

4.0

Current Account Balance (% of GDP)

6.0

1.4

-1.4

-5.5

-3.2

-2.3

Net Foreign Direct Investment (% of GDP)

1.0

0.6

0.6

0.4

0.6

0.7

Real GDP growth, at constant market prices
Private Consumption

Real GDP growth, at constant factor prices

Fiscal Balance (% of GDP)
Debt (% of GDP)

a

-1.1

-3.3

-4.4

-5.8

-3.3

-1.3

13.6

13.9

13.1

14.5

14.7

15.5

Primary Balance (% of GDP) a,b

-0.6

-2.8

-3.7

-5.6

-3.0

-1.1

International poverty rate ($1.9 in 2011 PPP) c,d

14.9

13.9

13.6

14.5

13.4

12.6

Lower middle-income poverty rate ($3.2 in 2011 PPP) c,d

37.0

35.7

34.9

36.3

34.8

33.6

c,d

59.4

58.6

58.0

58.9

57.9

57.0

Upper middle-income poverty rate ($5.5 in 2011 PPP)

So urce: Wo rld B ank, P o verty & Equity and M acro eco no mics, Trade & Investment Glo bal P ractices.
No tes: e = estimate, f = fo recast.
(a) Fiscal year starts fro m A pril 1st.
(b) No n-mineral primary balance.
(c) Calculatio ns based o n 2015-B M THS. A ctual data: 2015. No wcast: 2016-2019. Fo recast are fro m 2020 to 2022.
(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.

The cut-off date for information in this MPO was April 02, 2020.

MPO / Apr 20 205

The global outlook is very uncertain. This outlook reflects information available at the time of its preparation. As more inf ormation becomes available,
these projections will be revised. They are presented now to assist policymakers to design alternative policy responses.

BURKINA FASO
Table 1

2019

P o pulatio n, millio n

20.3

GDP , current US$ billio n

15.2

GDP per capita, current US$

746

Internatio nal po verty rate ($ 1.9)

a

43.7
a

76.4

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)
Life expectancy at birth, years

b

93.7

b

60.8

Source: WDI, M acro Poverty Outlook, and official data.
Notes:(a) M ost recent value (201 4), 201 1 PPPs.
(b) M ost recent WDI value (201 7).

Despite a deteriorating security situation,
growth was sustained at 5.7 percent in2019 in a non-inflationary environment
supporting a reduction of poverty. The
fiscal deficit fell below the WAEMU fiscal
convergence criteria of 3 percent of GDP.
Growth is projected to drop to 2 percent
in 2020 due to COVID-19 and worsening
insecurity. Substantial downside risks
relate to volatile commodity prices, tensions ahead of elections in 2020 and the
COVID-19 outbreak.

Recent developments
Growth declined from 6.8 percent in 2018
to 5.7 percent in 2019 (2.9 percent percapita). GDP rebasing was completed in
2019. The economy benefited from agood cereal production owing to favorable weather conditions. Meanwhile,
cotton production contracted due to poor
access to inputs, arrears in payment tofarmers, and security problems. On the
demand side, economic growth was driven by increased private and public consumption. Average inflation decreased
from 2 percent in 2018 to -3.2 percent in2019 because of good food harvest anddeclining telecommunications prices.
A rising import bill of capital goods widened the current account deficit from 4.1
percent of GDP in 2018 to 4.4 percent in2019. Higher international prices pushed
growth of goods exports to 11.2 percent in2019. Cotton exports contracted by 26.4
percent in 2019, reflecting the sharp dropin production and lower international
prices. FDI inflows, project loans, andother external public borrowing will finance the current account deficit.
The fiscal deficit (including grants) improved in 2019 to 2.7 percent of GDP
despite security challenges. Tax revenuerose marginally 0.9 percent of GDP withimproved tax collection measures. The
sale of 4G licenses pushed non-tax revenues by 1.5 percentage points of GDP.
Total expenditures remained at 23.7 percent of GDP. Capital spending dropped
by 2.3 percentage points of GDP by

delaying infrastructure projects. This
compensated for higher security spending and subsidies to SOEs. Public debt
increased for the third consecutive year
to 40 percent of GDP in 2019. Burkina
Faso remains at moderate risk of externaland overall debt distress.
Burkina Faso’s monetary and exchange
rate policies are managed by the Central
Bank of West African States (BCEAO),
which maintains a fixed peg between the
CFA Franc and the Euro. BCEAO’s international reserves reached 4.9 months ofimports in 2019, up from 4.5 months in
2018, on the back of fiscal consolidationand higher net capital inflows. Despite an
unchanged tight monetary policy, regional liquidity pressures were alleviateddue to higher BCEAO supply and lower
demand for refinancing from banks. The
real effective exchange rate (REER) depreciated by 5 percent in 2019, due to theEuro nominal depreciation against the
US dollar combined with persistently
lower inflation of the WAEMU comparedwith trading partners.
Robust growth is expected to translate
into poverty reduction. The share of the
population living on less than $1.90 a day
in 2011 Purchasing Power Parity (PPP) isestimated to have declined from 38.1 percent in 2018 to 36.7 percent in 2019. However, violence against civilians intensified
in 2019, with an average of nearly 30 incidents per month. Insecurity has resulted
in serious disruption in livelihood and led
to a high number of forced displacements.
According to the UHNCR latest report,
more than 838,000 people have been displaced by end-March 2020.

FIGURE 1 Burkina Faso / Composition of government
spending

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

Percent of GDP

Poverty rate (%)
100

30
25
20

Real GDP per capita (constant LCU)
5000008040000060

30000040

20000020

100000

15
10
5
0

0
2017
Wage bill
Transfers

2018f

2019f

2020f

Goods and Services
Capital Expenditures

2021f

Interest Payments

Sources: Burkinabè authority and World Bank Staff estimates.

206 MPO / Apr 20

2022

02003 2005 2007 2009 2011 2013 2015 2017 2019 2021
International poverty rate
Upper middle-income pov. rate

Lower middle-income pov. rate
Real GDP pc

Source: World Bank.
Notes: see Table 2.
The cut-off date for information in this MPO was April 02, 2020.

Outlook
Economic growth is projected to temporarily decline to 2 percent in 2020 becauseof the mixed impacts of COVID-19 andinsecurity. Lower oil prices would reduce
oil imports. Moreover, the economy
could benefit from higher gold prices. In
contrast, the COVID-19 outbreak may
lower regional and global demand forexports, slow down output, and generatefiscal pressures to finance public healthand safety net spending. Regional monetary policies are expected to contain inflation under the 3 percent WAEMU target. The external current account deficit
will remain broadly stable around 4.4
percent of GDP in 2020-22.
The fiscal deficit (including grants) will
temporarily surpass the WAEMU targetof 3 percent of GDP in 2020-21 to accommodate higher spending related to the
COVID-19 outbreak and the insecurity
situation. Higher grants will push total
revenue and grants to 20.9 percent of
GDP in 2020-22. Lower growth could
hurt tax revenue, highlighting the importance of implementing tax administration measures (e.g., e-filing and epayment and improved registration of
taxpayers). On the expenditure side,

security spending and transfer to local
governments related to COVID-19 are
expected to rise, but offset by a mild reduction in the wage bill (in GDP terms),
cost-savings in rationalizing social programs, and delayed implementation offinanced public investment, resulting inlower than expected capital expenditure
to 6.4 percent of GDP in 2021-22.
WAEMU reserves would reach about 5.1
months of imports by 2022 as member
countries continue to implement fiscal
consolidation measures and external
competitiveness improves. In December
2019, the WAEMU authorities announced
a currency reform involving changes tothe underlying arrangements withFrance. Market reactions have been muted so far, likely reflecting expectations
that the foundations of the currency regime would remain broadly unchanged
for the foreseeable future.
Due to social and economic impacts of
COVID-19 outbreak, poverty projection
for 2020 is revised upward by 0.8 percentage point to 36.7 percent, an equivalenceof nearly 170,000 people more falling intopoverty. However, poverty is expected to
decline to 33.8 percent by 2022 thanks torecovered growth in agricultural sector,
artisanal mining and services, and domestic migration and job creation in the service and construction sectors.

TABLE 2 Burkina Faso / Macro poverty outlook baseline scenario

Risks and challenges
Risks to the downside are high. The deterioration of the country’s security and humanitarian situation have adverse effects
on growth and labor supply. Rural-urban
displacement of people disrupt agriculture
production and increase the number ofvulnerable populations. Armed attacks togold mines generate a detrimental environment for mining production. Land degradation and climate changes pose challenges
to agricultural production and food security. The COVID-19 outbreak is a downsiderisk to growth and poverty and will lead to
additional budgetary pressures. The reduction in oil prices and the surge of gold prices will have a positive impact on the real,fiscal and external sector. But a decline in
the international demand and prices ofagricultural products (e.g., cotton and cashew nuts) will affect agricultural producers.
Moreover, COVID-19 will expose people tohealth shocks with significant effects onhousehold welfare as the poor have limited
savings and access to financial services. In
the context, the Government needs to accelerate progress on domestic resource mobilization, secure mining sites, and implement
health and social protection measures.

(annual percent change unless indicated otherwise)

2017

2018

2019 e

2020f

2021f

2022 f

6.2

6.8

5.7

2.0

5.8

5.6

2.8

1.5

7.2

14.4

3.9

7.0

Government Consumption

-10.1

8.1

19.6

6.1

2.4

1.2

Gross Fixed Capital Investment

15.2

18.0

-6.4

-32.6

23.5

7.6

Exports, Goods and Services

15.9

6.0

-2.3

-7.1

4.6

4.6

Imports, Goods and Services

4.1

3.5

-1.6

-2.4

7.0

7.0

5.5

6.5

5.7

2.0

5.8

5.6

Agriculture

-1.1

9.9

4.6

0.0

3.6

3.6

Industry

9.3

3.6

1.9

0.1

6.3

6.1

Services

6.7

6.6

8.2

4.0

6.6

6.2

Inflation (Consumer Price Index)

0.4

2.0

-3.2

3.2

2.1

2.5

Current Account Balance (% of GDP)

-5.0

-4.1

-4.4

-4.3

-4.5

-4.6

Fiscal Balance (% of GDP)

-6.8

-4.2

-2.7

-5.0

-3.5

-3.0

Debt (% of GDP)

33.5

37.7

40.0

42.9

43.1

42.8

Primary Balance (% of GDP)

-6.0

-3.2

-1.5

-3.7

-2.1

-1.6

International poverty rate ($1.9 in 2011 PPP) a,b

40.0

38.1

36.7

36.2

35.0

33.8

Lower middle-income poverty rate ($3.2 in 2011 PPP) a,b

74.6

73.6

72.8

72.6

71.9

71.2

a,b

91.6

91.2

90.9

90.8

90.5

90.3

Real GDP growth, at constant market prices
Private Consumption

Real GDP growth, at constant factor prices

Upper middle-income poverty rate ($5.5 in 2011 PPP)

So urce: Wo rld B ank, P o verty & Equity and M acro eco no mics, Trade & Investment Glo bal P ractices.
No tes: e = estimate, f = fo recast.
(a) Calculatio ns based o n 2009-ECVM and 2014-EM C. A ctual data: 2014. No wcast: 2015-2019. Fo recast are fro m 2020 to 2022.
(b) P ro jectio n using annualized elasticity (2009-2014) with pass-thro ugh = 0.87 based o n GDP per capita in co nstant LCU.

The cut-off date for information in this MPO was April 02, 2020.

MPO / Apr 20 207

The global outlook is very uncertain. This outlook reflects information available at the time of its preparation. As more inf ormation becomes available,
these projections will be revised. They are presented now to assist policymakers to design alternative policy responses.

BURUNDI

Recent developments

Table 1

2019

P o pulatio n, millio n

11.6

GDP , current US$ billio n

3.0

GDP per capita, current US$

260

Internatio nal po verty rate ($ 1.9)

a

71.8
a

89.3

a

96.8

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)
Life expectancy at birth, years

b

123.9

b

60.9

Source: WDI, M acro Poverty Outlook, and official data.
Notes:(a) M ost recent value (201 3), 201 1 PPPs.
(b) M ost recent WDI value (201 7).

Evidence suggests that growth increased
marginally in 2019 to 1.8 percent from
1.6 percent in 2018. Deflation persisted in
2019, led by a continuous decline in foodprices. With negative GDP per capita
growth and uncertainty revolving around
COVID-19, poverty is expected tocontinue rising, reaching 84.7 percent in
2022. The medium-term growth outlook
is clouded by downside risks. The
COVID-19 outbreak is having a growing
impact on the global economy and Burundi will be impacted by the spillover effects.

Evidence suggests that real GDP growth
improved marginally to 1.8 percent in2019 from 1.6 percent in 2018. Agriculture
benefited from good weather conditions
leading to higher food crop harvest. Highfrequency indicators suggest that industrial growth was supported by the performance in manufacturing and agroprocessing. Growth in services was moderate, hampered by foreign exchange
shortages. Deflationary pressures persisted in 2019 as good agricultural harvests
continued to keep food prices low.
The latest fiscal data suggest that theoverall fiscal deficit remained largely
unchanged to an estimated 4.9 percent of
GDP in 2019, a rise in domestic revenue
mobilization offsetting higher public
spending. The fiscal deficit was mostly
financed by borrowing from the banking
system. The government’s fiscal position
has led to a sharp rise in the stock ofpublic debt, to an estimated 59.1 percent
of GDP in 2019.
The external position remained unchanged at an estimated 11.9 percent of
GDP in 2019 as higher aid flows offset a
deteriorated trade balance. The declineof tea and mining exports and an increase in imports were among the main
factors driving the deterioration of the
trade balance. The gross official reserves
continued to decline to represent an estimated 0.7 month of imports as of October 2019 compared to 0.9 month at theend of 2018. Continued central bank

FIGURE 1 Burundi / Real GDP growth, fiscal and current
account balances

6

0

4

-2

2

-4

0

-6

-2

-8

-4

-10

-6

-12

-8

-14

-10

-16
2014 2015 2016 2017 2018 2019e 2020f 2021f 2022f
Real GDP growth (lhs)

Fiscal balance (rhs)

CAB (rhs)

Sources: Central Bank of Burundi, Ministry of Finance and World Bank calculations.
208 MPO / Apr 20

Outlook
The outlook will be adversely affected by
the global economic slowdown resulting
from the COVID-19 pandemic. Our baseline scenario assumes no major domestic
COVID-19 outbreak, a smooth election
period and a gradual revival in international community support. In our baseline scenario in which global growth
drops to -2.2 percent in 2020, Burundi’s
growth is projected to slow down to 1.7
percent before gradually rising to 2.5
percent in 2022. Average inflation is expected to rise steadily to reach 6 percent

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

Percent of GDP

Percent

interventions limited the depreciation of
the official exchange rate to 3.5 percent
in 2019 year-on-year while the parallelmarket premium remained elevated ataround 50 percent by end-2019.
GDP growth per capita remained negative, and poverty incidence was estimated at 82.6 percent in 2019 (based on aninternational poverty line of $1.90/capita/
day, in 2011 PPP), up from 71.8 percent
in 2013 (last year with data availability).
Food insecurity is alarming, with 56 percent of children under 5 stunted acrossthe country. In most provinces, outsideof the capital city, malnutrition rates areeven higher. This is also mirrored in a
low Human Capital Index – with children in Burundi today living up to only
38 percent of their productive potential compared to the counterfactual if they
had enjoyed full health, including adequate nutrition, and education.

Poverty rate (%)
120

Real GDP per capita (constant LCU)
200000100
15000080
60100000

40

50000
20
0

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

Lower middle-income pov. rate
Real GDP pc

Source: World Bank.
Notes: see table 2.
The cut-off date for information in this MPO was April 02, 2020.

by 2022 as domestic demand strengthens
and base effects dissipate. The externalcurrent account deficit is projected tonarrow owing to the sharp decline in oil
prices and higher gold prices.
The fiscal deficit is projected to widen to 5.1
percent of GDP in 2020 as the contraction ininternational trade will impact fiscal revenue and higher spending on health due to
COVID-19 combined with electoral related
spending will create additional pressures.
The fiscal deficit will narrow to 4.9 percent
of GDP in 2021 and 4.0 percent in 2022
driven by efforts to bolster tax revenue
collection. Total public debt is expected toincrease steadily to almost 72 percent of
GDP by 2022 and will remain mostly composed of domestic debt.
The indirect effects of COVID-19 could
translate into higher unemployment rates
and informality in urban areas, especiallyin the capital city, as tourism and related
services are likely to see cutbacks. Moreover, households are likely to experiencedecreases in remittances as flows appear
to be significantly affected worldwide,with major payment services filing forbankruptcy. In the wake of COVID-19,
demographic pressures, environmental
shocks and degradation, as well as limited
diversification and low resource endowments, poverty is expected to continue
increasing to 84.7 percent in 2022.

Risks and challenges
Notwithstanding the positive outlook,there are significant downside risks. The
main short-term risk is related to the economic fallout of the COVID-19 pandemic
that will affect Burundi through trade.
Lower global economic activity may translate into lower global demand for commodities, which may lower Burundi´scommodity exports, such as coffee andtea. There is a further effect through commodity prices. On the one hand, lower
export prices for tea and coffee due tolower demand would negatively impact
real, external and fiscal sectors. Higher
import prices of consumer products suchas food due to some supply disruptions
may also negatively affect Burundi’s termsof trade. On the other hand, declining oil
prices and higher-than-expected gold prices represent upside risks and would havea positive impact on the economy. Undera downside scenario where global growthslows down to -3.6 percent in 2020 and oil
prices drop from $30 (baseline scenario) to$27 per barrel in 2020, Burundi’s growth
could narrow by an additional 0.1 percentage point in 2020. The fiscal deficit would
widen by 0.1 percent of GDP in 2020 andthe current account deficit would improve

TABLE 2 Burundi / Macro poverty outlook baseline scenario

by 0.5 percent of GDP in 2020 comparedto the baseline scenario. Additional financing needs may require increasing
multilateral concessional budget support.
Another short-term risk is political uncertainty related to the 2020 general elections
and the formation of a new governmentthat will take office in August 2020.
Given the inadequate financing of thecurrent account deficit and the extremely
low levels of foreign exchange reserves,
Burundi may face further pressures on thenational currency. Risks to macroeconomic stability also stem from continued monetization of the fiscal deficit, exacerbating
financial sector vulnerabilities.
Reliance on rainfed agriculture keeps Burundi’s vulnerability to adverse weather
conditions and climate change elevated, inparticular for subsistence farmers – whomake up the largest part of the country’s
labor force. COVID-19 presents additionalrisks to livelihoods. An uncontained
spread of the virus could impact households across the income distribution but
could be particularly severe for the poor
who may be forced to sell productive assets or reduce expenditures on educationand food, with long-lasting repercussions
on human capital.

(annual percent change unless indicated otherwise)
2017

2018

2019 e

2020f

2021f

2022 f

0.5

1.6

1.8

1.7

2.3

2.5

Private Consumption

0.2

3.5

3.0

2.9

3.2

3.2

Government Consumption

8.8

6.7

9.1

0.7

1.6

1.6

Gross Fixed Capital Investment

-2.5

24.9

14.9

7.7

7.7

9.7

Exports, Goods and Services

32.2

11.0

-1.2

3.4

4.8

4.7

Imports, Goods and Services

13.0

19.0

12.1

5.6

5.7

5.9

0.5

1.7

1.8

1.7

2.3

2.5

Agriculture

0.3

3.0

3.1

3.1

3.2

3.2

Industry

0.7

2.4

2.1

1.8

2.0

2.0

Services

0.6

0.7

1.0

0.8

1.9

2.3

Inflation (Consumer Price Index)

16.1

-2.6

-0.8

5.0

5.5

6.0

Current Account Balance (% of GDP)

-11.3

-11.9

-11.9

-10.0

-12.6

-12.8

0.0

0.0

0.0

0.0

0.0

0.0

Real GDP growth, at constant market prices

Real GDP growth, at constant factor prices

Net Foreign Direct Investment (% of GDP)
Fiscal Balance (% of GDP)

-4.5

-4.9

-4.9

-5.1

-4.9

-4.0

Debt (% of GDP)

44.2

50.9

59.1

62.8

67.7

71.7

Primary Balance (% of GDP)

-3.5

-4.5

-4.4

-4.6

-4.3

-3.4

International poverty rate ($1.9 in 2011 PPP) a,b

80.3

81.6

82.6

83.7

84.3

84.7

Lower middle-income poverty rate ($3.2 in 2011 PPP) a,b

94.6

95.3

96.0

96.6

97.0

97.2

a,b

99.1

99.4

99.7

99.9

..

..

Upper middle-income poverty rate ($5.5 in 2011 PPP)

So urce: Wo rld B ank, P o verty & Equity and M acro eco no mics, Trade & Investment Glo bal P ractices.
No tes: e = estimate, f = fo recast.
(a) Calculatio ns based o n 2006-QUI B B and 2013-ECVM B . A ctual data: 2013. No wcast: 2014-2019. Fo recast are fro m 2020 to 2022.
(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.

The cut-off date for information in this MPO was April 02, 2020.

MPO / Apr 20 209

The global outlook is very uncertain. This outlook reflects information available at the time of its preparation. As more inf ormation becomes available,
these projections will be revised. They are presented now to assist policymakers to design alternative policy responses.

CABO VERDE
Table 1

Recent developments
2019

P o pulatio n, millio n

0.6

GDP , current US$ billio n

2.1

GDP per capita, current US$

3760

Internatio nal po verty rate ($ 1.9)

a

3.2
a

14.9

a

40.8

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)
Life expectancy at birth, years

b

103.3

b

72.6

Source: WDI, M acro Poverty Outlook, and official data.
Notes:(a) M ost recent value (201 5), 201 1 PPPs.
(b) M ost recent WDI value (201 7).

Growth accelerated to 5.5 percent in 2019supporting poverty reduction. A primaryfiscal surplus was achieved, and public
debt fell for a third year. An economy
reversal is in the making, with a projected
contraction of 4 percent in 2020 due tothe COVID-19 pandemic. Medium-term
growth is projected to bounce back to 5
percent. The outlook is subject to substantial downside risks stemming from delays
in global recovery and the magnitude ofthe domestic COVID-19 outbreak.

Economic growth accelerated from 5.1
percent in 2018 to 5.5 percent in 2019 (4.2
in per capita terms) above the potential
growth rate of 3.6 percent. On the demandside, growth was driven by high consumption (public and private) and strong
export performance. On the supply side,
construction, retail, transport, and tourism
services contributed to the dynamism of
the economy. Agricultural output recovered modestly (0.6 percent) for the firsttime since the 2017 drought.
The external current account deficit decreased from 5.3 percent of GDP in 2018 to
3.0 percent in 2019 driven by a strong performance in exports of services, notably
tourism. The current account deficit was
financed largely through Foreign Direct
Investment (FDI), which helped international reserves reach 5.5 months of imports,
compared to the 3.6 months consideredadequate by the IMF.
The primary fiscal balance stood at 0.7
percent of GDP in 2019, turning positive
for the first time in a decade. The overall
fiscal deficit declined from 2.8 percent of
GDP in 2018 to 1.9 percent in 2019. Improved fiscal performance is due to central government consolidation efforts
combined with the reforms of state-owned
enterprises (SOEs). Tax and non-tax revenue expanded from 28.2 percent of GDP
in 2018 to 29.4 percent in 2019. Total expenditure remained relatively stable,
moving from 31.0 percent of GDP in 2018
to 31.3 percent in 2019. The stock of public

FIGURE 1 Cabo Verde / Fiscal and growth outlook

Percent of GDP

Outlook
The country is extremely vulnerable tothe economic impacts of the global
COVID-19 pandemic, given its highreliance on tourism, remittances, and FDI

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

Percent of GDP

8

140

6

135

4

debt fell for a third year in row, from 124
percent of GDP in 2018 to 123 percent in2019. However, the risk of external debt
distress remains high.
Cabo Verde’s monetary policy is closelyaligned with Europe, with the local currency pegged to the Euro. With inflation
expectations relatively low and limitedpressure on the peg, the Central Bank policy rate remained at 1.5 percent, unchanged since June 2017. Inflation remained subdued at 1.1 percent, slightly
lower than the 1.3 percent observed in2018, in the context of a stable and slightly
negative output gap.
The share of the population subsisting below the national basic-needs poverty line
(US$ PPP 5.4/day) fell from 32.5 percent in2018 to 31.5 percent in 2019. As the droughtthat impacted the agricultural sector since2017 ended, food poverty based on a national poverty line of US$ PPP 2.9/day, fellmarginally from 9.6 percent in 2018 to 9.3
percent in 2019. The poor are likely to havebenefited from a 2 percent increase in theemployment rate in 2019 and from the increased demand for horticultural products
following urban consumption growth. The
continuing uptick of the construction andthe tourism sectors is expected to have benefitted the poor.

Poverty rate (%)

Real GDP per capita (constant LCU)

60

35000050300000

130

2

125

0

120

-2

115

-4
-6

110

-8

105

-10

100
2017

2018

2019e

Overall Balance (lhs)Real GDP growth (lhs)
Source: World Bank.

210 MPO / Apr 20

2020f

2021f

2022f

Primary Balance (lhs)
Public Debt (rhs)25000040

2000003015000020

100000

10

50000

0

0
2007

2009

2011

2013

2015

International poverty rate
Upper middle-income pov. rate

2017

2019

2021

Lower middle-income pov. rate
Real GDP pc

Source: World Bank.
Notes: see table 2.
The cut-off date for information in this MPO was March 30, 2020.

flows. The unfolding global crisis will shut
down growth prospects in 2020. In a scenario where Europe starts lifting containment measures in May, followed by asluggish recovery, the economy is projected to contract by 4 percent in 2020. Economy growth is expected to bounce back to 5
percent over the medium-term.
The key transmission channels of the pandemic crisis are threefold. First, the tourism
sector, which represents 25 percent of GDP
and drives overall economic performance,
would be affected by the pandemic. Currently, the sector is completely closed tointernational visitors. The services sector is
projected to contract by 3.9 percent in 2020.
Second, the delay or cancelation of planned
investment projects would reduce FDI andfurther exacerbate the economic downturn.
FDI is projected to decline by 3.1 percentage points to 1 percent of GDP in 2020.
Finally, on the upside, as a net oil importer,
the reduction in international prices would
improve the terms of trade. Inflation
should remain subdued below 2 percent in
the medium-term.
The pandemic will halt fiscal consolidationand public debt reduction in 2020. A reduction on fiscal revenue due to containment
measures and unforeseen additional public
expenditure to prevent and mitigate thepandemic will increase the fiscal deficit andpublic debt. The overall fiscal deficit isprojected to reach 9.4 percent of GDP. The
stock of public debt will reach 134.3 percent
of GDP. Over the medium-term fiscal equilibrium will be restored, and public debt isprojected to return to its downward trend
and reach 121.2 percent of GDP in 2022.
The external current account deficit is projected to reach 10.1 percent of GDP in 2020,
driven by the reduction in export of services. Over the medium-term, the current
account deficit is expected to narrow driven by a recovery in remittance flows andtourism receipts.
Poverty –using the national poverty line of
US$ PPP 5.4/day– is projected to increaseby 2.3 percentage points to 33.8 percent in2020 due to the contraction of the services
that employs about half of the poor and aslowdown in construction due to the dropin FDI. Job and income losses will negatively affect the welfare of many, with the poor
likely to be hit hardest. Reductions in international remittances due to the economic
slowdown in Europe will worsen theirsituation. Extreme poverty would rise by
0.7 percentage points to 10 percent in 2020.

increase pressure on external and fiscal
balances. A widespread domestic outbreak would also call for additional
reprioritization of government expenditure towards public health, and further
revenue mobilization measures, impacting public debt. This would increasefiscal unbalances and require stronger
adjustment efforts in the medium-term
to maintain a downward trajectoryfor public debt.
Fiscal pressures could be further compounded by unforeseen support to SOEs
and the possible realization of their contingent liabilities. The country is at a critical juncture to find an adequate balance
between responding effectively to theglobal COVID-19 pandemic, preserving
recent social gains, and ensuring a sustainable macro framework routed in fiscal
and debt discipline.

Risks and challenges
A sharper or more sustained contractionin Europe will weigh more on growth and

TABLE 2 Cabo Verde / Macro poverty outlook baseline scenario(annual percent change unless indicated otherwise)
2017

2018

2019 e

2020f

2021f

2022 f

3.7

5.1

5.5

-4.0

5.0

5.0

Private Consumption

7.1

1.5

3.9

-1.5

5.5

5.5

Government Consumption

7.7

2.2

7.2

1.0

7.6

4.8

Gross Fixed Capital Investment

12.3

7.2

8.9

1.1

2.9

6.3

Exports, Goods and Services

7.5

11.9

8.5

-32.0

11.1

8.7

Imports, Goods and Services

16.4

6.7

7.2

-17.0

8.3

8.5

2.0

3.0

5.5

-4.0

5.0

5.0

Agriculture

-12.5

-19.0

0.6

4.2

5.0

5.0

Industry

11.9

8.1

5.0

-6.7

3.4

3.4

Services

1.5

4.3

6.2

-3.9

5.5

5.4

Inflation (Consumer Price Index)

0.8

1.3

1.1

1.3

1.4

1.8

Current Account Balance (% of GDP)

-7.9

-5.3

-3.0

-10.1

-8.2

-6.7

Net Foreign Direct Investment (% of GDP)

5.6

4.0

4.1

1.0

5.3

5.7

Real GDP growth, at constant market prices

Real GDP growth, at constant factor prices

Fiscal Balance (% of GDP)

-3.0

-2.8

-1.9

-9.4

-3.1

-1.6

125.9

124.0

123.0

134.3

128.3

121.2

Primary Balance (% of GDP)

-0.4

-0.3

0.7

-6.7

-0.5

0.9

International poverty rate ($1.9 in 2011 PPP) a,b

3.0

2.9

2.8

2.9

2.8

2.7

a,b

14.2

13.8

13.4

13.9

13.5

13.1

Upper middle-income poverty rate ($5.5 in 2011 PPP) a,b

39.7

39.0

38.3

39.2

38.5

37.8

Debt (% of GDP)

Lower middle-income poverty rate ($3.2 in 2011 PPP)

So urce: Wo rld B ank, P o verty & Equity and M acro eco no mics, Trade & Investment Glo bal P ractices.
No tes: e = estimate, f = fo recast.
(a) Calculatio ns based o n 2001-IDRF and 2015-IDRF. A ctual data: 2015. No wcast: 2016-2019. Fo recast are fro m 2020 to 2022.
(b) P ro jectio n using po int-to -po int elasticity (2001-2015) with pass-thro ugh = 0.7 based o n GDP per capita in co nstant LCU.

The cut-off date for information in this MPO was March 30, 2020.

MPO / Apr 20 211

The global outlook is very uncertain. This outlook reflects information available at the time of its preparation. As more inf ormation becomes available,
these projections will be revised. They are presented now to assist policymakers to design alternative policy responses.

CAMEROON
Table 1

Recent developments
2019

P o pulatio n, millio n

25.3

GDP , current US$ billio n

38.7

GDP per capita, current US$

1530

Internatio nal po verty rate ($ 1.9)

a

23.8
a

44.7

a

68.9

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

46.6

Gini index

Life expectancy at birth, years

b

58.5

Source: WDI, M acro Poverty Outlook, and official data.
Notes:(a) M ost recent value (201 4), 201 1 PPPs.
(b) M ost recent WDI value (201 7).

Economic activity slowed down in 2019,with GDP growth estimated at 3.9 percent compared to 4.1 percent in 2018.
Fiscal policy remains set on fiscal consolidation, mostly driven by improved tax
administration, despite security spending
pressures. The poverty rate is estimated tohave fallen to 22.4 percent in 2019 and is
expected to decline marginally to 21.9
percent by 2022. The economic outlook ismostly influenced by the COVID-19 outbreak and the pace of implementation of
structural reforms.

Real GDP growth slowed in 2019 as compared to 2018 (3.9 percent vs 4.1 percent
respectively). This is due to the decline in
the labor-intensive agriculture and agribusiness sectors affected by continued
secessionist conflict in the anglophoneregions as well as the adverse impact ofthe damage after the fire at the national
refinery (SONARA) and lower prices fortimber and aluminium. Higher than expected oil and gas production partially
offset the contraction in non-oil activities.
Inflation rose to 2.5 percent from 1.1 percent last year, mostly due to continued
disruptions in food production in the anglophone regions. The Government maintained its efforts towards fiscal consolidation in 2019 despite security spending
pressures. The overall fiscal deficit narrowed to 2.2 percent of GDP from 2.5 percent of GDP in 2018 as a result of better
controls of expenditures in goods andservices, cut in nonpriority public investments and better recovery of tax arrears
and reduction in tax expenditures. The
deficit was financed through budget support from multilateral and bilateral donors, domestic financing and accumulation of domestic arrears. The public debtto-GDP ratio continued to increase andreached 40.8 percent in 2019. Cameroon
remains at high level of debt distress.
The current account deficit stabilized at
3.6 percent of GDP despite increased liquefied natural gas (LNG) exports and recovery in the cocoa sector, primarily due

to increased refined oil imports after thefire at SONARA. Following the implementation of BEAC’s new foreign exchange
regulations, official reserves attributed to
Cameroon is estimated to have reached
5.4 months of imports at end-December
2019 from 5.1 months of imports in 2018.
The year-on-year growth in credit to theprivate sector slowed to 3.0 percent reflecting the disappointing performance inthe non-oil sector.
The international poverty rate (at $1.9 perperson per day, 2011 PPP) is expected tohave declined to 22.4 percent in 2019(from 23.8 percent in 2014 according to thelatest available household budget survey).
Poverty has, however, increased in the
North and Far North regions where growing security risks are making the local
population more vulnerable. Diverging
regional trends in poverty have contributed to a 3.8 percentage point increase in theGini coefficient from 2007 to 2014.

OutlookGDP growth is projected to ease to 3.1
percent in 2020 from 3.9 percent in 2019
mostly following the global slowdown
that is expected to reduce demand for
Cameroon’s exports of oil and non-oil
commodities (cocoa, timber, aluminium).
Government’s measures to prevent the
spread of the COVID-19 pandemic, including social distancing and avoidance
behavior, are expected to affect the domestic demand for services (restaurants,
hotels, transportation). GDP per capita

FIGURE 1 Cameroon / Twin deficit and annual GDP Growth

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

Percent, percent of GDP
6

Poverty rate (%)
100

Real GDP per capita (constant LCU)
800000700000480600000250000060

040000040-2-430000020000020

100000

-6

0
-8

0
2007

2015

2016

Fiscal deficit

2017

Sources: National Authorities and World bank.

212 MPO / Apr 20

2018

Current account deficit

2019e

2020e

GDP growth

2009

2011

2013

2015

International poverty rate
Upper middle-income pov. rate

2017

2019

2021

Lower middle-income pov. rate
Real GDP pc

Source: World bank.
Notes: see table 2.
The cut-off date for information in this MPO was April 02, 2020.

growth is projected to decline to 0.5 percent in 2020 and then expected to gain
momentum (around 0.9 - 1.2 percent) in
2021-2022. GDP growth is expected torecover gradually to 3.5 percent in 2021
and 3.7 percent in 2022 driven by global
recovery, improved electricity supply
with the entry into service of new hydroelectric dams; but would remain 3 percent
below potential over 2020-2022.
Lower international oil prices are expected
to affect Cameroon’s fiscal position
through lower fiscal revenues in 20202021. The adverse effect of lower oil prices
combined with continued pressures on
security expenditure and the fiscal impactof the Government’s response to the
COVID-19 pandemic would be only partially offset by the reduced burden on fuelsubsidies, widening the overall fiscal deficit to 2.4 percent of GDP in 2020 from 2.2
percent of GDP in 2019. Continued tightened tax controls, improved recovery ofarrears and reduction of tax expenditures
are expected to drive down the fiscal deficit to 1.8 percent of GDP in 2022. The deficit is expected to be financed by domestic
debt issuance, bilateral and external borrowing. Inflation is expected to be contained below the regional criteria of 3 percent over 2020-2022.
The current account deficit is projected
to deteriorate to 4 percent in 2020 from

3.6 percent of GDP in 2020; driven byfalling oil and non-oil commodities(cotton, timber, aluminium) prices. The
current account is projected to stabilize
in 2021 -2022 driven by improved termsof trade resulting from a rebound in non-oil commodity exports (especially cocoa
sector exports the prices of which are
forecasted to increase annually by 2.8
percent in 2021-2022). Limited achievements in human development and slower than potential economic growth leadto a projection of very limited progressin poverty reduction. The modest rebound of economic growth expected in
2021 and 2022 would lead to a marginal
decline in poverty with the share of the
population living under $1.9/day reaching around 21.9 percent by 2022.

Risks and challenges
Domestically, the violent conflict in theSouth-West and North-West regions remains the major source of social and economic risk. On the external side, delay inthe recovery or further deterioration of
economic activity in the Euro Area andChina economies (first and second trading
partners, representing 49.1 percent and13.1 percent of total exports, respectively

TABLE 2 Cameroon / Macro poverty outlook baseline scenario

in 2014-2018) would further affect Cameroon’s external position. Under a downside scenario of a drop of oil price, from
US$ 30 per barrel (baseline scenario forthis MPO) to US $ 27 per barrel in 2020and from US $ 39.8 to US $ 31 in 2021, thecurrent account deficit would widen by
0.2-0.6 percent of GDP in 2020 and 2021.
The regional central bank’s current concerns about rebuilding its foreign exchange reserves and the possible adverse
effects of the virus on the region’s external
position will limit the room for an easingin the monetary stance. Additional financing needs may require increasing bilateraland multilateral concessional budget support. To mitigate risks, further structuralreforms are vital to improve the businessenvironment, diversify the economy, andbuild resilience to external shocks as wellas continued efforts in implementing the
CEMAC regional strategy including, bycomplying with CEMAC’s convergencecriteria and FX regulations to rebuild fiscal and external buffers.

(annual percent change unless indicated otherwise)
2017

2018

2019 e

2020f

2021f

2022 f

3.5

4.1

3.9

3.1

3.5

3.7

Private Consumption

3.3

5.7

5.3

3.5

4.0

5.3

Government Consumption

2.5

-0.2

0.5

7.4

5.7

-1.8

Gross Fixed Capital Investment

4.2

7.9

4.6

3.7

4.4

5.4

Exports, Goods and Services

-1.6

1.8

2.0

-0.4

0.4

0.5

Imports, Goods and Services

-0.6

8.1

5.0

4.1

4.5

4.6

3.3

4.1

3.9

3.1

3.5

3.7

Agriculture

3.2

5.1

4.2

3.5

4.1

4.2

Industry

1.3

3.1

3.0

2.4

3.4

3.5

Services

4.3

4.4

4.3

3.3

3.4

3.6

Inflation (Consumer Price Index)

0.6

1.1

2.5

2.5

2.5

2.5

Current Account Balance (% of GDP)

-2.7

-3.8

-3.6

-4.0

-3.9

-3.9

Fiscal Balance (% of GDP)

-4.9

-2.5

-2.2

-2.4

-2.2

-1.8

Debt (% of GDP)

37.6

39.3

40.8

41.5

40.8

40.6

Primary Balance (% of GDP)

-4.0

-1.6

-1.3

-1.4

-1.1

-0.7

International poverty rate ($1.9 in 2011 PPP) a,b

22.8

22.6

22.4

22.3

22.1

21.9

Lower middle-income poverty rate ($3.2 in 2011 PPP) a,b

43.9

43.6

43.5

43.4

43.2

43.1

a,b

67.6

67.2

66.9

66.8

66.6

66.4

Real GDP growth, at constant market prices

Real GDP growth, at constant factor prices

Upper middle-income poverty rate ($5.5 in 2011 PPP)

So urce: Wo rld B ank, P o verty & Equity and M acro eco no mics, Trade & Investment Glo bal P ractices.
No tes: e = estimate, f = fo recast.
(a) Calculatio ns based o n 2011-, 2017-, and 2014-ECA M -IV. A ctual data: 2014. No wcast: 2015-2019. Fo recast are fro m 2020 to 2022.
(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.

The cut-off date for information in this MPO was April 02, 2020.

MPO / Apr 20 213

The global outlook is very uncertain. This outlook reflects information available at the time of its preparation. As more inf ormation becomes available,
these projections will be revised. They are presented now to assist policymakers to design alternative policy responses.

CENTRAL
AFRICAN REP.
Table 1

Recent developments

2019

P o pulatio n, millio n

4.8

GDP , current US$ billio n

2.1

GDP per capita, current US$

442

Internatio nal po verty rate ($ 1.9)aaLife expectancy at birth, years

66.3
56.2

Gini index

b

52.2

Source: WDI, M acro Poverty Outlook, and official data.
Notes:(a) M ost recent value (2008), 201 1 PPPs.
(b) M ost recent WDI value (201 7).

The Central African Republic (CAR)’seconomy grew at 3.9 percent in 2019 as
the security environment improved withthe peace accord. The economic outlook is
positive as the economic impacts of
COVID-19 fade away and security conditions improve. Downside risks arise fromuncertainty about the implementation of
the peace accord, especially with the upcoming elections. CAR’s authorities must
maintain efforts toward consolidating thepeacebuilding process and speed up reforms to sustain economic growth
and reduce poverty.

As the implementation of the peace agreement is materializing, the security andhumanitarian situation in CAR is improving. As of December 2019, 600,000 people
were internally displaced – 6.4 percent
below its end-of-2018 level – reflecting an
improvement in the security situation
with the signing of the peace agreement.
CAR’s economic growth is estimated at
3.9 percent in 2019, up from 3.7 percent in2018. The economic performance is lowerthan-expected and reflects the collapse by
30 percent in the production of coffee andcotton because of persistent structuralissues. On the supply side, economic activity was supported by a dynamic services sector, which grew at 4.3 percent,while the agricultural sector grew at 2.7
percent. On the demand side, private consumption drove economic activities. Public investments increased from 6.1 percent
of GDP in 2018 to 6.7 percent of GDP in
2019, while private investments reached10.6 percent of GDP compared to 9.1 percent of GDP in 2018.
The fiscal position has improved, although CAR remains at risk of debt distress. The ratio of debt-to-GDP dropped
from 69.5 percent in 2014 to 48 percent in2019 as the government continued to clear
domestic arrears. The fiscal position
turned into an overall surplus of 1.2 percent of GDP in 2019, thanks to the surge in
official grants. Tax revenues declined from
8.3 percent of GDP in 2018 to 7.4 percent
in 2019 primarily because of delays in theimplementation of tax reforms. Public
spending increased by 5.7 percent withthe redeployment of civil servants and thepeace accord. Official grants picked up at
10.3 percent of GDP in 2019 reaching its
highest level since the 2013-crisis.
The inflationary pressures that resulted
from the blockade of the Bangui-Douala
corridor in March 2019 have abated. The
consumer price index is estimated to haveincreased by 2.5 percent in 2019, compared to 1.6 percent in 2018.
The current account deficit narrowed to
7.3 percent of GDP in 2019 from 7.7 percent of GDP in 2018. Imports of goods andservices increased by 8 percent as importsof oil and food products rise, while exports declined by 3.3 percent because oflower international demand for wood
products. On the financing side, official
grants increased by about 40 percent, reflecting the support of the international
community to the peace agreement. Consequently, the country’s contribution to
the regional official reserves are estimatedto be 18.6 percent higher than their 2018
level – about 3.3 months of imports.
Poverty remains pervasive and elevated.
Projections based on GDP per capita
growth suggest that an estimated 71 percent of the population lived below theinternational poverty line (US$ 1.90 perday, 2011 PPP) in 2019. This equates tonearly 3.4 million people living in extreme poverty. Non-monetary poverty
also remains high. Access to adequate
education and health care services is limited, and CAR ranks 188th out of 189
countries on the 2019 Human Development Index. Nearly half the population

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

Percentage, percentage points
30

Poverty rate (%)
78

20

76

10

74

Real GDP per capita (constant LCU)
250000200000

72

0

70

-10

68

-20

66

-30

64

150000100000

62

-40

50000

60

-50
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Private consumption
Gross Fixed Investment
Real GDP growth
Sources: CAR Authorities and World Bank.

214 MPO / Apr 20

Government consumption
Exports

58
56

0
2008

2010

2012

2014

2016

International poverty rate

2018

2020

2022

Real GDP pc

Source: World Bank.
Notes: see table 2.
The cut-off date for information in this MPO was April 02, 2020.

requires humanitarian assistance, andacute food insecurity affects about 35
percent of the population in the 2019
post-harvest season.

OutlookGDP growth is projected to ease to 3.2
percent in 2020 following the global
slowdown that is expected to reducedemand for CAR’s exports. Government
measures to contain the spread of
COVID-19, including restriction of
movements, travel bans, lockdowns, andborder closures, will slowdown economic activities, disrupt local businesses,
reduce tax revenues collection. Withneighboring countries restricting accessto their territories and portal gateways
and disruptions in the supply chain,
CAR is likely to face inflationary pressures, especially on imported foods
products. Inflation is expected at 3.5 percent in 2020 but should fall below theregional criteria over 2021-2022. The
average current account balance is estimated at 3 percent of GDP in the medium term as the collapse in oil prices reduce the import bill. Global uncertainty
and depressed international demandcaused by COVID-19 are expected tolead to a sharp decline in the demand ofwood products and commodity prices,leading to a drop in exports.
As the economic impacts of COVID-19
hopefully fade away in 2021, the peaceagreement is likely to support economic
recovery. The peace accord is restoring
security, supporting the deployment ofpublic services in provinces. With a gradual economic recovery, poverty is projected to decrease by 1.5 percentage
points by 2022.

Risks and challenges
The main medium-term risks for CAR are
the possible escalation of violence, uncertainty in the implementation of the peaceagreement, and any lingering socioeconomic impacts of COVID-19.
Externally, CAR is vulnerable to the volatility of commodity prices and impacts of
the COVID-19. The outbreak and spreadof COVID-19 have generated a downward
revision of CAR’s economic growth by 0.7
percentage point in 2020. The pandemic islikely to slow global economic growth andlower the international demand for wood
products, especially from Asia. COVID-19
is projected to lead to a deterioration of
the fiscal position as tax revenues are

TABLE 2 Central African Republic / Macro poverty outlook baseline scenario

weaker. The impact could be even moresignificant if the Cameroonian authorities
restrict the movement of goods and people on the Bangui-Douala corridor – themain road corridor to its coastal port gateways. Also, CAR’s external position is
projected to deteriorate in the mediumterm with a combination of lower exports
and volatile commodity prices. Uncertainty on the global market could affect theexports of cotton, coffee, diamond, andtimber, which represent more than twothirds of CAR’ exports. With about one
health specialist for 20,534 people, a weak
health system and a lack of fiscal buffers,
CAR’s already precarious humanitariansituation could further deteriorate under
COVID-19, especially if international financing fails to mitigate the economic
impacts of the pandemic.
Internally, losing the momentum in tax
mobilization would affect the authorities’ability to invest in basic critical services
and mitigate conflicts. Renewed insecurity is likely to cause new episodes of theblockade of the main road corridors,
which will increase inflation and negatively affect economic activities and halt
the pace of recovery.

(annual percent change unless indicated otherwise)

2017

2018

2019 e

2020f

2021f

2022 f

4.3

3.7

3.9

3.2

4.8

5.1

Private Consumption

1.9

2.7

5.5

5.4

6.6

5.3

Government Consumption

-0.9

13.5

1.7

61.9

-0.9

-6.9

Gross Fixed Capital Investment

3.3

16.2

14.8

-1.8

1.2

3.6

Exports, Goods and Services

1.2

7.4

-3.3

-26.1

38.1

7.6

Imports, Goods and Services

-2.1

4.4

8.1

6.1

14.3

2.4

4.3

3.6

3.4

3.2

4.8

5.1

Agriculture

3.2

3.4

2.7

5.5

7.1

6.5

Industry

1.7

1.5

1.7

4.4

5.0

4.1

Services

6.0

4.4

4.3

1.4

3.1

4.4

Inflation (Consumer Price Index)

4.1

1.6

2.5

3.5

2.8

2.8

Current Account Balance (% of GDP)

-7.7

-7.7

-7.3

4.5

-1.2

-12.7

Real GDP growth, at constant market prices

Real GDP growth, at constant factor prices

Fiscal Balance (% of GDP)

-1.3

-0.3

1.2

-2.8

-3.2

-3.0

Debt (% of GDP)

49.4

48.8

48.0

42.4

41.0

39.0

Primary Balance (% of GDP)

-1.0

0.2

1.8

-2.4

-2.8

-2.6

International poverty rate ($1.9 in 2011 PPP) a,b

72.2

71.5

70.8

70.5

69.9

69.3

So urce: Wo rld B ank, P o verty & Equity and M acro eco no mics, Trade & Investment Glo bal P ractices.
No tes: e = estimate, f = fo recast.
(a) Calculatio ns based o n 2008-ECA SEB . A ctual data: 2008. No wcast: 2009-2019. Fo recast are fro m 2020 to 2022.
(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.

The cut-off date for information in this MPO was April 02, 2020.

MPO / Apr 20 215

The global outlook is very uncertain. This outlook reflects information available at the time of its preparation. As more inf ormation becomes available,
these projections will be revised. They are presented now to assist policymakers to design alternative policy responses.

CHAD

Recent developments

Table 1

2019

P o pulatio n, millio n

15.8

GDP , current US$ billio n

11.3

GDP per capita, current US$

715

Internatio nal po verty rate ($ 1.9)

a

38.4
a

66.5

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

Life expectancy at birth, years

b

53.7

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

Growth recovered to 3.2 percent in 2019,
driven by oil and agriculture. However,
the COVID-19 global economic shock,including lower oil prices, hit Chad justwhen the economy was about to movetowards a sustainable growth path. The
outlook is clouded with uncertainty andrisk related to a domestic COVID-19 outbreak and a prolonged oil price slump.

Growth recovered to 3.2 percent (0.2 percent per capita) in 2019, mainly due tohigher oil production and agricultural output (especially cotton). Although the negative output gap was closing, inflation declined from 4.0 percent in 2018 to -1.0 percent in 2019, reflecting subdued transportation and food prices. The primary sector(mainly agriculture and the oil sector) remained the main driving force contributing
about two-third of the 2019 growth rate.
Contributions of the secondary and tertiary
sectors stood at 0.1 and 0.9 percentage
points, respectively. The slight improvement in industry indicates a slow rise incapital investment while services benefit
from strong primary sector activity(including related transport services) andthe clearance of domestic arrears.
The external current account deficit widened from 4.7 percent in 2018 to 4.9 percent in 2019, due to an increase in Foreign
Direct Investment (FDI)-related imports
for several oil fields under development.
In real terms, export growth reached 6
percent, while imports accelerated to 4
percent. The deficit was financed by project grants and FDI, which increased to 6.2
percent of GDP in 2019.
Chad’s monetary and exchange rate policies are managed by the regional Bank ofCentral African States (BEAC). In 2019,
BEAC maintained tighter monetary policy
to rebuild its reserves and to ensure financial sector stability. Policy interest rate
remained at 3.50 percent while regional

reserves reached 3.3 months in 2019, up
from 2.7 months in 2018.
The overall fiscal balance (including
grants) deteriorated from a surplus of 1.5
percent of GDP in 2018 to a deficit of 0.6
percent in 2019. There was no significant
improvement in total revenues due tolesser budget support grant and lower oilrevenues. However, total expenditure,
increased by almost 2 percent of GDP owing to a 12 percent growth in the wage billand higher security spending. Also, public
debt declined from 48.3 percent in 2018 to
44.4 percent in 2019. Chad remains at highrisk of overall and external debt distress.
Poverty remains pervasive in Chad. In
2019, about 40.2 percent of Chadians were
below the national poverty line, representing an absolute number of 6.4 million individuals. Besides, Chad experience highincome inequality with a Gini Index of
43.3. While poverty remained stable between 2018 and 2019, the share of the population below the international poverty
line of US$1.9 a day increased in 2020.

Outlook
The COVID-19 global pandemic and oil
price plunge will push Chad back into a
recession in 2020 with the economy projected to contract slightly by 0.2 percent.
Border closures and growth contraction in
major economies will reduce FDI-inflows.
The current account balance will widen asexport growth contracts. Fiscal revenues
and public spending will fall, while arrears accumulation increase.

FIGURE 1 Chad / GDP growth, potential growth and output
gap

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

Percent change, percent of GDP
6

Poverty rate (%)
120

4Real GDP per capita (constant LCU)
500000100

400000

2
0

80

-2

60

300000-420000040-6-8100000

20

-10
2016

2017

Source: World Bank.

216 MPO / Apr 20

2018
2019
2020
2021
Potential real GDP growth
Real GDP growth
Output Gap (% of potential GDP)

2022

0

0
2003 2005 2007 2009 2011 2013 2015 2017 2019 2021
International poverty rate
Upper middle-income pov. rate

Lower middle-income pov. rate
Real GDP pc

Source: World Bank.
Notes: see Table 2.
The cut-off date for information in this MPO was April 02, 2020.

Nonetheless, growth is projected to average 3.2 percent over the medium term as
new oil fields accelerate production, oilprices recover, and the COVID-19 pandemic subsides. In addition, non-oil
growth would recover due to increase intransport services and strong performancefrom the cotton sub-sector. Inflation
would remain below 3 percent in line with
regional targets as GDP growth converges
towards its potential.
Driven mainly by the trade balance, thecurrent account deficit would widen to
13.9 percent of GDP in 2020 as exports
slow down due to the impact of
COVID-19, the oil price shock, and borderclosures. This impact is expected to diminish in 2021, with export growth reaching
about 9 percent. Also, import growthwould reach 4 percent due to pick up in
private consumption and investment.
Budget support from donors will provide
reliable source of financing. CEMAC regional reserves are projected to remain
below 5 months of imports by 2022
The fiscal deficit will stabilize at about 1.2
percent of GDP in 2020 before widening to
3.3 percent in 2021 due to lower oil revenues from Chad’s main oil producer(CNPC). As the government strengthens
revenue mobilization efforts, with oil revenue reaching about 6 percent of GDP, thefiscal deficit will reduce to a surplus of

0.6 percent in 2022. Public debt will increase from 44.4 percent of GDP in 2019 to45.3 percent in 2022 due to accumulationof domestic arrears.
The poverty rate (using the international
poverty line of US$1.9 a day, PPP terms)
over the medium term will increase bynearly 1 percentage points from 40.2 percent in 2019 to 41.3 in 2020. This is essentially due to the COVID-19 crisis that will
hurt economic growth and poverty reduction. Nevertheless, poverty rate is expected to decrease to 40.0 percent in 2022.
The absolute number of the poor will increase to about 6.9 million in 2022, up
from 6.2 million in 2018.

Risks and challenges
Chad’s economic situation is fragile andsubject to significant risks. First, regional
conflicts may strain government budget
as more refugees arrive from neighboring
countries. Second, legislative and presidential elections tentatively scheduled for
2020q4 and 2021q2, respectively, could
stretch public finances. Lastly, persistencein the COVID-19 outbreak and the recent
plunge in oil prices could cause a severerecession over the medium term, widening fiscal and current account deficits.

TABLE 2 Chad / Macro poverty outlook baseline scenario

It could also lead to more accumulation ofdomestic arrears which increases financial
sector vulnerability. The resulting financing gap would be difficult to close as Chadis financially constrained in the capital
market and mainly rely on multilateralfinancial institutions for its financing.
Prolonged border closures will disrupt
trade activities, especially FDI-related
imports. Besides, it could lead to decrease in the supply of essential goods
resulting in high prices that impact thepoorest and most vulnerable population.
Moreover, the disruption in private sector activities may generate destruction ofjobs that will have negative impact on
population labor-income.
Chad could mitigate these risks by improving the screening of people at its
borders and by channeling resources tothe health sector to prevent a potential
the COVID-19 outbreak. Besides, non-oil
mobilization efforts should be strengthened to offset the fall in oil revenues
from persistently low oil prices. In themedium term, the government should
implement business-friendly policies tofoster economic diversification and sustainable growth.

(annual percent change unless indicated otherwise)
2017

2018

2019 e

2020f

2021f

2022 f

-3.0

2.4

3.2

-0.2

4.7

5.2

Private Consumption

0.2

0.7

1.4

0.5

1.7

2.0

Government Consumption

9.5

-11.8

1.7

4.6

5.4

6.1

Gross Fixed Capital Investment

-24.7

5.4

6.6

-8.1

6.8

4.8

Exports, Goods and Services

1.3

4.6

6.0

3.0

8.5

9.4

Imports, Goods and Services

-1.3

1.4

4.0

2.5

4.0

4.1

-3.0

2.3

3.3

-0.2

4.7

5.2

Agriculture

3.1

4.0

4.6

5.0

7.2

7.6

Industry

-1.7

0.6

0.9

-0.2

0.8

1.6

Services

-9.7

1.0

2.5

-6.6

2.8

3.1

Inflation (Consumer Price Index)

-0.9

4.0

-1.0

2.2

2.9

3.0

Current Account Balance (% of GDP)

-6.6

-4.7

-4.9

-13.9

-12.6

-10.5

Fiscal Balance (% of GDP)

-0.8

1.5

-0.6

-1.2

-3.3

0.6

Debt (% of GDP)

49.8

48.3

44.4

47.8

47.1

45.3

Primary Balance (% of GDP)

0.8

3.0

1.0

0.7

-1.7

1.7

International poverty rate ($1.9 in 2011 PPP) a,b

40.1

40.2

40.2

41.3

40.6

40.0

Lower middle-income poverty rate ($3.2 in 2011 PPP) a,b

68.0

68.1

68.0

69.0

68.6

67.8

a,b

87.4

87.5

87.5

88.1

87.6

87.4

Real GDP growth, at constant market prices

Real GDP growth, at constant factor prices

Upper middle-income poverty rate ($5.5 in 2011 PPP)

So urce: Wo rld B ank, P o verty & Equity and M acro eco no mics, Trade & Investment Glo bal P ractices.
No tes: e = estimate, f = fo recast.
(a) Calculatio ns based o n 2011-ECOSIT-I I I. A ctual data: 2011. No wcast: 2012-2019. Fo recast are fro m 2020 to 2022.
(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.

The cut-off date for information in this MPO was April 02, 2020.

MPO / Apr 20 217

The global outlook is very uncertain. This outlook reflects information available at the time of its preparation. As more inf ormation becomes available,
these projections will be revised. They are presented now to assist policymakers to design alternative policy responses.

COMOROSRecent developments

Table 1

2019

P o pulatio n, millio n

0.9

GDP , current US$ billio n

1.2

GDP per capita, current US$

1354

Internatio nal po verty rate ($ 1.9)

a

17.6
a

36.9

a

62.3

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)
Life expectancy at birth, years

b

99.4

b

63.9

Source: WDI, M acro Poverty Outlook, and official data.
Notes:(a) M ost recent value (201 3), 201 1 PPPs.
(b) M ost recent WDI value (201 7).

Growth slowed to 1.9 percent in 2019,reflecting the impact of cyclone Kenneth
that caused damages to the agricultural
sector, with higher fiscal spending andprivate remittances attenuating adverse
effects. Growth is expected to fall to 0.6
percent in 2020 following the novel
COVID-19 global health crisis. The outlook remains subject to a further escalation of the health crisis. COVID-19 willslow down progress in poverty reduction, with over 1 out of 3 Comorians
projected to be below the $3.2 a day
poverty line in 2020.

In 2019 economic growth moderated to an
estimated 1.9 percent, from 3.4 percent in
2018, mostly due to the cyclone Kenneth
hitting the country in April. The economy
suffered from supply disruptions due todamages to the agricultural sector and to alesser extent to damages on electricity,water, education and health facilities, aswell as telecommunications. These disruptions were partially offset by higher public
and private spending (mainly external aid
and private remittances) for reconstruction and social transfers. Spending on
affected
populations,
State-OwnedEnterprises (SOEs), infrastructure andbuilding reparations Supply constraints
raised inflation, which reached 3.3 percent
in 2019, from 1.7 percent in 2018.
Budget and current account deficits increased in 2019. Government revenues
fell strongly in 2019 (8.7 percent of GDP
compared to 11.3 percent in 2018) following the slowdown in economic activity
and struggling SOEs, particularly of
Comores Telecom facing fierce competition and deteriorating profitability. The
budget deficit deteriorated slightly, toreach 1.9 percent of GDP. As development partners offered only limited budget support, liquidity was tight, and theauthorities resorted to credit from domestic commercial banks to be able tomeet payment commitments to civil servants. In 2019, the current account deficit
increased sharply to reach [3.9] percent
of GDP, as exports stagnated (due to the

FIGURE 1 Comoros / COVID-19 cases in France

Confirmed cases

New cases
4500
4000

20000

3500
3000

15000

2500

10000
5000
0
3/5

Cases (lhs)

3/9

3/13

3/17

3/21

New cases (rhs)

Sources: World Bank and John Hopkins database as of March 25, 2020.

218 MPO / Apr 20

Real GDP per capita (constant LCU)

70

50000060

4900004800005047000040460000
30

1500

20

1000

10

0
3/1

The positive impact on economic activity
from reconstruction efforts after cyclone
Kenneth are now expected to be morethan offset by the dampening effect of
COVID-19, lowering growth projectionsfor 2020 to 0.6 percent. The expected large
drop in remittances and tourism, bothheavily affected by the impact of thehealth crisis in France (Figure 1) would
have a wide negative effect on domestic
demand and exports, respectively. The
shock would affect most economic sectors,
with trade and tourism-related sectors
among the ones expected to be hit thehardest. Growth is expected to recover
relatively quickly after the end of thehealth crisis, reaching an average of 3.4
percent over 2021-22.

Poverty rate (%)

2000

500
2/26

Outlook

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

25000

2/22

damage to export crops) and importsrose due to cyclone-related needs and alarge investment in telecom infrastructure by Comoros Telecom.
The slowdown in economic growth after
cyclone Kenneth is expected to have takena moderate toll on the poverty rate. Measured at the $3.2 a day per capita threshold(2011 PPP), the poverty rate is indeed estimated to have increased marginally to
36.3 percent in 2019, from 36.2 percent in2018. The agricultural sector, which is themain source of income for most rural
Comorians, has been hardly hit. However,such negative effects were partially mitigated by higher fiscal spending and additional income from remittances.

45000044000043000004200002004 2006 2008 2010 2012 2014 2016 2018 2020 2022
International poverty rate
Upper middle-income pov. rate

Lower middle-income pov. rate
Real GDP pc

Source: World Bank.
Notes: see Table 2.
The cut-off date for information in this MPO was April 02, 2020.

This year, the expected large drop in economic activity would affect negatively
fiscal revenues. However, public expenditures are also expected to decrease,mainly because of slower public investment execution, which will limit the deterioration of the fiscal deficit (from -1.9
to -3 percent of GDP between 2019 and2020). Exports of goods and services
would struggle because of the decreasein global demand and in international
tourist arrivals. The heavy decline in remittances would further deteriorate thecurrent account balance, which is expected to reach -5.9 percent of GDP in
2020. As the health crisis is resolved, thetwin deficits would be reduced (-2.3 percent and -4.9 percent of GDP on averageover 2021-2022, for the fiscal and current
account balances, respectively).
The sizable slowdown in economic
growth in 2020 is expected to lead to anincrease in poverty to 36.9 percent(measured at $ 3.2 a day per capita),
which is equivalent to the level estimatedin 2013. The increase in poverty will belikely driven by the expected drop in
remittances on which the Comorian poor
heavily depends. Thereafter, poverty is
projected to decline to 35.9 percent by
2022 (Figure 2). Inequality, which has
been on the rise, is expected to continue
to rise due to the very rapid increase in

consumption among the rich. Reversing
this trend would require that the main
drivers of inequality be addressed, including gaps in educational attainments,
job opportunities between urban andrural areas and across islands, and accessto basic services. In addition, expectedhigh fertility rates (4.2 births per woman
in 2014) pose a significant burden on
poor households.

stock of debt and guarantee debt).
The financial sector could experience serious solvency issues in case of an outbreak,with the Société Nationale des Postes etdes Services Financiers (SNPSF), a postal
bank, currently facing severe liquidity andsolvency problems.

Risks and challenges
If Comoros experience a large COVID-19
outbreak, dramatic fiscal and financial
consequences could be expected. Although the last debt sustainability assessment classifies Comoros as being at medium risk of debt sustainability, it also
shows that it has limited fiscal space toabsorb shocks, which would limit the fiscal response in the case of an outbreak.
Government and SOEs revenues could
strongly fall due to much lower economic
activity. In particular, a further deterioration of Comores Telecom financial situation could push the State firm into debt
distress, with the State being forced to bail-out the public enterprise (the SOE’s debt
is guaranteed by the State and represents
about 40 percent of the total government’s

TABLE 2 Comoros / Macro poverty outlook baseline scenario(annual percent change unless indicated otherwise)
2017

2018

2019 e

2020f

2021f

2022 f

3.8

3.4

1.9

0.6

3.2

3.6

Private Consumption

4.2

1.8

2.0

-0.9

2.9

3.4

Government Consumption

5.9

0.0

-7.2

44.6

-18.4

4.2

Gross Fixed Capital Investment

6.9

19.0

11.9

-19.3

18.8

6.2

Exports, Goods and Services

11.8

19.2

0.5

-5.0

2.0

3.1

Imports, Goods and Services

10.8

10.9

5.2

-6.5

2.0

4.8

3.4

3.0

1.9

0.6

3.2

3.5

Agriculture

3.8

2.7

-0.9

1.0

1.8

2.0

Industry

-2.7

1.7

1.4

2.8

2.9

2.8

Services

4.5

3.3

3.3

0.0

3.9

4.3

Inflation (Consumer Price Index)

1.8

1.7

1.7

1.8

2.0

2.0

Current Account Balance (% of GDP)

-2.1

-2.4

-3.9

-5.9

-4.9

-4.9

Fiscal Balance (% of GDP)

0.4

-1.7

-1.9

-3.0

-2.5

-2.3

Debt (% of GDP)

18.4

17.4

17.6

17.6

18.0

32.2

Primary Balance (% of GDP)

0.4

-1.5

-1.7

-2.7

-2.3

-1.9

International poverty rate ($1.9 in 2011 PPP) a,b

17.4

17.0

17.0

17.4

17.2

16.9

Lower middle-income poverty rate ($3.2 in 2011 PPP) a,b

36.7

36.2

36.3

36.9

36.7

35.9

a,b

61.9

61.5

61.6

62.3

61.7

61.3

Real GDP growth, at constant market prices

Real GDP growth, at constant factor prices

Upper middle-income poverty rate ($5.5 in 2011 PPP)

So urce: Wo rld B ank, P o verty & Equity and M acro eco no mics, Trade & Investment Glo bal P ractices.
No tes: e = estimate, f = fo recast.
(a) Calculatio ns based o n 2013-EESIC. A ctual data: 2013. No wcast: 2014-2019. Fo recast are fro m 2020 to 2022.
(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.

The cut-off date for information in this MPO was April 02, 2020.

MPO / Apr 20 219

The global outlook is very uncertain. This outlook reflects information available at the time of its preparation. As more inf ormation becomes available,
these projections will be revised. They are presented now to assist policymakers to design alternative policy responses.

Recent developments
DEMOCRATIC
the decline in prices of major
REP. OF CONGO Following
commodities exported by DRC, real GDP
Table 1

2019

P o pulatio n, millio n

86.7

GDP , current US$ billio n

48.9

GDP per capita, current US$

564

Internatio nal po verty rate ($ 1.9)

a

76.6
a

91.0

a

97.7

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

42.1

Gini index

Life expectancy at birth, years

b

60.0

Source: WDI, M acro Poverty Outlook, and official data.
Notes:(a) M ost recent value (201 2), 201 1 PPPs.
(b) M ost recent WDI value (201 7).

Growth slowed in 2019 because of mining. The President’s fiscal stimulus led to
the fiscal deficit that was monetized, owing to limited access to the domestic capital market. The current account deficit
widened, but FDIs and IMF assistancecontributed to an increase in official reserves. The economic outlook is subject tosubstantial downside risks stemmingfrom the contraction in global demand
related to the COVID-19 pandemic.
Achieving inclusive growth remains amajor challenge due to high poverty
and inequality.

growth decelerated to 4.4 percent in 2019,
compared to 5.8 percent in 2018. Thisslower economic expansion was mainly
driven by the mining sector, the production of which only increased by 5.4 percent in 2019 (compared to 16.9 percent in2018). On the demand side, this slowdown
was driven by lower cobalt exports. This
weaker mining activity could not be fully
offset by a pick-up in the non-extractive
sector on the supply side, nor by the fiscal
stimulus related to the President’s 100-day
program on the demand side.
The expenditure-led fiscal stimulus, combined with stagnating domestic revenues,
led to a deterioration of the fiscal position.
The fiscal balance shifted from an almost
balance in 2018 to a deficit of 2.0 percent
of GDP in 2019. The additional public
spending supported salary increases, including for the free basic education program, and infrastructure projects.
The current account deficit widened to 4.2
percent of GDP, from 3.6 percent of GDP
in 2018, reflecting the deterioration in theterms of trade over 10 percent, and a drop
in volume of exports by 2.5 percent. Capital and financial inflows, including foreign
direct investment (FDI) and IMF financing
under the Rapid Credit Facility (RCF) of$368 million, helped to avoid an erosion of
official reserves, increasing marginally to
3.3 weeks of imports in 2019 (from 2.5
weeks in 2018). Against this backdrop, thedepreciation of the Congolese Franc wascontained to 2.3 percent by end-2019, compared to 9.7 percent in 2018, and inflation
reached 4.6 percent in 2019, down from
7.2 percent in 2018.
In 2012, when the last household survey
was last conducted, nearly 77 percent of
the population lived with less than $1.9
per day. The latest World Bank projections put poverty at around 72 percent in2019. Apart from Nigeria, DRC remains
the country with the largest number ofextreme poor in sub-Saharan Africa.
There are large geographical disparities
between provinces, with extreme poverty concentrated in the central andnorthwestern provinces. There is astrong correlation between poverty andthe collapse in mining employment, especially in artisanal mining. Despitesome improvement, social and humanindicators are weak: in 2018, the infantmortality of 68.2 per 1000 live births ishigher than the Sub- Saharan average of
52.7, while the country is ranked 146thout of 157 countries in terms of the Human Capital Index (HCI).

Outlook
DRC’s economy is expected to be severely affected by the COVID-19 outbreakand its related contraction in global demand. Accordingly, economic output is
expected to contract by 2.2 percent in2020 on the back of lower external demand due to the COVID-19 and a decline
in output due to the closure of the major

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

FIGURE 2 Democratic Republic of the Congo / Actualand projected poverty rates and real GDP per capita

Percent, percentage points
12

Poverty rate (%)
100

Real GDP per capita (constant LCU)
160000101400008086120000100000

60

4

80000

2

40

60000

0

40000

20

-2

20000

-4
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Private consumption
Government investment
Net exports

Government consumption
Private gross fixed investment
GDP

Source: World Bank based on data from national authorities.

220 MPO / Apr 20

002004 2006 2008 2010 2012 2014 2016 2018 2020 2022
International poverty rate
Upper middle-income pov. rate

Lower middle-income pov. rate
Real GDP pc

Source: World Bank.
Notes: see table 2.
The cut-off date for information in this MPO was April 02, 2020.

copper and cobalt mines in Mutanda.
Real GDP growth is projected to reboundto 4.5 percent in 2022, with the launch of
the mining production at the KamoaKakula mine and an anticipated global
economic recovery.
The fiscal deficit is projected to 1.2 percent
of GDP in 2020, following the higher
budget allocation to support free basic
education and socio-economic spending
for responses to COVID-19 impact, before
declining to less than 0.1 percent in 2022.
Support from international financial institutions (IFIs) and plans to increase theissuance of Treasury securities should
limit the monetization of the public deficit.
The current account deficit is projected todeteriorate to 5.4 percent of GDP in 2020and slightly narrow to 3.7 percent in
2022. FDI inflows in the mining sector
and public capital inflows from IFIs will
support the increase of international reserves from 4.3 weeks of imports in 2019
to around 2.0 months in 2022; providing
thus enhanced external buffers but remaining below the required level for resource-rich countries.
Extreme poverty rate is projected to increase by 1.0 percentage point by 2022, thehigh population growth being expected tooffset partially economic growth, which
would be also adversely affected by theongoing COVID-19 pandemic.

Risks and challenges
Economic prospects remain fragile andsubject to heightened external and internalrisks. Mining products accounted formore than 90 percent of total exports, ofwhich over 40 percent go to China. The
COVID-19 spread in major economies anda stronger slowdown in demand for mining products, with adverse consequenceson commodity prices, could weigh on the
country’s economic outlook. Should thedisease spread widely, the economy could
contract by 3.8 percent and the current
account deficit could reach 6.5 percent of
GDP in 2020. With limited fiscal space,
there is little scope for fiscal policy to absorb shocks, while an expenditure-led
fiscal adjustment could further jeopardize
long-term growth prospects and pro-poor
spending. There is also a risk of a monetization of the public deficit that would
increase inflationary pressures.
Strengthening the health system is an immediate challenge. While new patientsaffected by Ebola have not been reported
during the past few days, Ebola remains amajor internal risk weighing on growthprospects as outbreaks occur frequently.
Moreover, the World Health organization(WHO) listed DRC among 14 countries

TABLE 2 Democratic Rep. of Congo / Macro poverty outlook baseline scenario

being particularly vulnerable to the
COVID-19 outbreak because of strong
economic ties with China. COVID-19, like
Ebola, could result in behavioral changes
from economic actors and a contraction in
the aggregate demand.
There is also a need to reduce politicaluncertainty, and to implement reforms
that would reduce the occurrence of macroeconomic imbalances. However, structural reforms may be delayed by a weak
consensus on social and economic priorities between the coalition of political parties supporting the President and the coalition of majority political parties in parliament. Furthermore, to reduce the risk formacroeconomic imbalances, the country’s
economy should be more diversified by
improving the business environment andreducing the infrastructure gap (the country ranks 183th of 190 economies in the
Doing Business 2020).

(annual percent change unless indicated otherwise)

2017

2018

2019 e

2020f

2021f

2022 f

3.7

5.8

4.4

-2.2

3.5

4.5

2.4

2.7

1.4

0.4

2.1

2.3

Government Consumption

-16.4

8.4

20.2

8.6

16.1

6.0

Gross Fixed Capital Investment

-27.2

-29.5

14.4

-13.9

3.9

-26.4

Exports, Goods and Services

34.2

25.7

-2.5

-7.2

3.6

18.8

Imports, Goods and Services

6.3

5.9

-7.6

-5.3

2.0

10.0

4.7

5.9

4.3

-2.3

3.4

4.5

Agriculture

1.6

1.5

2.8

3.4

3.4

4.7

Industry

7.7

12.1

6.8

-3.7

3.5

4.4

Services

3.0

1.3

2.1

-2.8

3.3

4.5

Inflation (Consumer Price Index)

54.8

7.2

4.6

11.0

10.5

7.0

Current Account Balance (% of GDP)

-2.9

-3.6

-4.2

-5.4

-4.1

-3.7

Fiscal Balance (% of GDP)

1.3

0.1

-2.0

-1.2

-0.2

0.0

Debt (% of GDP)

12.2

10.4

10.2

10.8

10.3

9.6

Primary Balance (% of GDP)

1.6

0.4

-1.6

-0.8

-0.1

0.2

International poverty rate ($1.9 in 2011 PPP) a,b,c

73.0

72.2

71.9

73.5

73.3

73.0

Lower middle-income poverty rate ($3.2 in 2011 PPP) a,b,c

89.2

88.9

88.7

89.5

89.5

89.3

Upper middle-income poverty rate ($5.5 in 2011 PPP) a,b,c

97.2

97.1

97.0

97.3

97.3

97.2

Real GDP growth, at constant market prices
Private Consumption

Real GDP growth, at constant factor prices

So urce: Wo rld B ank based o n data fro m natio nal autho rities.
No tes: e = estimate, f = fo recast.
(a) Calculatio ns based o n 2012-E123.
(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.
(c) A ctual data: 2012. No wcast: 2013-2019. Fo recast are fro m 2020 to 2022.

The cut-off date for information in this MPO was April 02, 2020.

MPO / Apr 20 221

The global outlook is very uncertain. This outlook reflects information available at the time of its preparation. As more inf ormation becomes available,
these projections will be revised. They are presented now to assist policymakers to design alternative policy responses.

REPUBLIC OFCONGOTable 1

Recent developments

2019

P o pulatio n, millio n

5.1

GDP , current US$ billio n

11.2

GDP per capita, current US$

2182

Internatio nal po verty rate ($ 1.9)

a

37.0
a

61.3

a

82.4

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

48.9

Gini index

Life expectancy at birth, years

b

64.0

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

Following a slight recovery in 2018, GDP
contracted by 0.3 percent in 2019 owing
to a sluggish increase in oil production.
With the fiscal adjustment, Congo recorded fiscal and current account surpluses,
though remaining in debt distress. The
spread of COVID-19 and the sharp decline in oil prices weigh on the country’s
economic outlook. Growth should average
0.6 percent over 2020-2022 while headwinds exist and the poverty rate would
increase to 43.0 percent by 2022 (from39.3 percent in 2019).

Real GDP growth was revised downwards from 2.2 percent to -0.3 percent in2019. This contraction is explained by thecrisis in the non-oil sector which shrank
by 0.7 percent, and lower than expected
oil production. Due to technical difficulties in some oil fields, oil GDP growth
only reached 1.7 percent in 2019 against
an initially estimated 15.8 percent. On the
supply side, growth was hampered by
the decline in the construction, public
works and the communication sectors as
domestic demand contracted. On the
demand side, the decline in real consumption could not be fully offset bysluggish increases in real exports andinvestment. Inflation increased to 2.2
percent in 2019 from 1.2 percent in 2018
but remained subdued following a continued tightening of monetary policy anda compressed demand.
Despite difficult economic conditions,the country recorded both current account and fiscal surpluses. With adverse
developments in the oil sector and import compression associated with weaker growth and fiscal adjustment, the current account surplus has weakened from
6.7 percent of GDP in 2018 to 4.0 percent
of GDP in 2019. In addition, the fiscal
consolidation that relies on non-oil revenue mobilization posted an overall surplus including grants of 6.0 percent of
GDP in 2019. Yet, the authorities must
continue their efforts to curb exemptions, collect tax arrears and improve tax

administration, including the interconnection among customs, tax and treasury administrations. Despite these developments, public debt-to-GDP remained unsustainable, above the regional threshold (70 percent) though decreasing from 87.8 percent in 2018 to77.5 percent 2019.
The oil price crisis of 2014 continued toaffect the poor. In 2011, nearly 37.3 percent of the population lived below theinternational poverty line of $1.90 PPP
per day. According to the latest WorldBank projections, after a reduction to 35.6
percent in 2015, this proportion increased
to 39.3 percent in 2019 as a result of thecrisis. Compared to its peers, the socialand human capital indicators of thecountry appear weak. The Human Capital Index stood at 0.42 in 2017, ranking
the country at 120 out of 157 countries. In
2018, infant mortality was 36.2 per 1000
live births compared to 27.4 for the Middle-Income Countries.

OutlookCongo’s economic outlook remains challenging as the country is being hit by thepotential spread of COVID-19 and the
sharp decline in oil prices (from $58 perbarrel to about US30 per barrel in 2020).
Real growth is projected to range from 2.1 percent in 2020 to 3.3 percent in 2022,
because of COVID-19, developments in
the hydrocarbon sector and the recovery
in the non-oil sector over 2020-2022. Thisoutlook is based on an oil sector growth

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

FIGURE 2 Republic of Congo / Actual and projected
poverty rates and GDP per capita

Percent, percentage points
15

Poverty rate (%)
100

10

80

5

60

0

40

-5

20

Real GDP per capita (constant LCU)
400000350000300000250000200000150000100000
50000
-10
2016

2017

Net Taxes
Services

2018

2019

2020

2021

Agriculture
Real GDP

Sources: Congolese Authorities and World Bank staff estimates.

222 MPO / Apr 20

2022

Industry002005 2007 2009 2011 2013 2015 2017 2019 2021
International poverty rate
Upper middle-income pov. rate

Lower middle-income pov. rate
Real GDP pc

Source: World Bank.
Notes: see table 2.
The cut-off date for information in this MPO was April 02, 2020.

rate of 1.4 percent on average combinedwith a progressive recovery in the nonoil sector growth which is estimated torecover at 0.6 percent on average, mainly driven by success in reforms programs, a pick-up in gross investment,
and restoration of business confidence.
Implementation of the government
strategy to clear its domestic arrears forboosting the non-oil sector should, however, experience delays due to the expected drop in revenue mobilization.
Under the above-mentioned scenario, thefiscal deficit is projected to fluctuate from
10.4 percent of GDP in 2020 to 7.3 percent
of GDP in 2022. Fiscal domestic revenue
is expected to decline by half, to around16.0 percent of GDP over 2020-2022 compared to 30 percent of GDP in 2017-2019.
A strong fiscal consolidation would beneeded to ensure commercial and social
debt payments. Public debt is likely tofall to 64.0 percent of GDP in 2022 after
the debt restructuring. For managing the
COVID-19 and lower oil prices response,
donor support is urgently needed to cover the financing gap amounting to 9.4
percent of GDP over 2020-2022.
Driven by a decrease in exports and a collapse in commodities prices, the current
account deficit is projected to reach 3.1
percent of GDP over 2020-2022 from asurplus of 4.4 percent over 2017-2019. As

weaker global demand could havemarked impacts on prices, exports/
imports are expected to decrease by morethan 3 percentage of points of GDP. In thesame vein, the BEAC Monetary Policy
Committee decided on March 27, 2020 to
cut its benchmark interest rate by 25 basis
points, to 3.25 percent.
The proportion of people living below theinternational poverty line is expected toincrease from 40.0 percent to 43.0 percent
over 2020-2022, not only because the expected growth will be driven by the hydrocarbon sector, but any weak growth
will be offset by population growth.

Risks and challenges
The main risks to the country’s economic
stability stem from the persistence of
COVID-19 and a further decline in oil
prices to around USD 27 per barrel between 2020 and 2021. This second scenario
could lead GDP growth to worsen between -3.8 percent in 2020 to 1.5 percent in
2022. Its main characteristics are a decline
in oil prices, trade and supply disruptions
and slowdown in tourism and transport.
Oil GDP growth could average less than 1
percent over 2020-2022 while non-oil GDP
growth could decline by 0.4 percent on

TABLE 2 Republic of Congo / Macro poverty outlook baseline scenario

average because of low expectations fromprivate firms. Negative impacts fromexternal and domestic sectors could result in a huge fiscal deficit, deterioratingfrom 13.7 percent of GDP in 2020 to 9.2
percent of GDP in 2022 while the current
account deficit is projected to be higher
by 4 percent on average.
Greater coordination of efforts against
COVID-19, including the revised 2020
budget, is required to address the emergency needs while keeping the implementation of ongoing reforms on track. The
Government could reconsider removing
tax exemptions on non-oil imports of oilcompanies to improve domestic revenue
and issuing guaranteed treasury bills in
the CEMAC market while requesting
budget support from donors. Applying
structural measures and targeting propoor service delivery should help containrisks to poverty reduction.

(annual percent change unless indicated otherwise)

2017

2018

2019 e

2020f

2021f

2022 f

-1.8

1.6

-0.3

-2.1

0.7

3.3

Private Consumption

-27.7

-19.5

-6.9

-2.0

-0.1

2.9

Government Consumption

-5.0

3.0

-1.7

-1.7

-2.6

-3.1

Gross Fixed Capital Investment

-52.9

-10.3

1.9

9.0

12.3

14.7

Exports, Goods and Services

12.2

24.8

3.5

-5.0

-1.3

2.5

Imports, Goods and Services

-41.6

5.6

-0.7

-2.4

-1.2

1.8

-1.8

1.6

-0.3

-2.1

0.7

3.3

3.0

2.3

3.8

1.4

1.6

2.0

Real GDP growth, at constant market prices

Real GDP growth, at constant factor prices
Agriculture
Industry

4.8

8.0

2.2

-2.4

1.7

2.8

Services

-8.2

-4.2

-4.0

-2.9

-0.7

4.3

Inflation (Consumer Price Index)

0.5

1.2

2.2

1.8

2.7

2.9

Current Account Balance (% of GDP)

-5.9

6.7

4.0

-4.9

-4.5

0.2

Fiscal Balance (% of GDP)

-7.6

6.6

6.0

-10.4

-10.5

-7.3
64.0

Debt (% of GDP)

117.5

87.8

77.5

70.0

66.9

Primary Balance (% of GDP)

-5.2

8.7

7.1

-9.5

-9.6

-6.3

International poverty rate ($1.9 in 2011 PPP) a,b

38.3

38.7

39.3

41.1

41.5

43.3

Lower middle-income poverty rate ($3.2 in 2011 PPP) a,b

62.6

62.9

64.0

65.2

65.8

67.7

a,b

82.9

83.1

83.7

84.7

84.9

86.2

Upper middle-income poverty rate ($5.5 in 2011 PPP)

So urce: Wo rld B ank, P o verty & Equity and M acro eco no mics, Trade & Investment Glo bal P ractices.
No tes: e = estimate, f = fo recast.
(a) Calculatio ns based o n 2011-ECOM . A ctual data: 2011. No wcast: 2012-2019. Fo recast are fro m 2020 to 2022.
(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.

The cut-off date for information in this MPO was April 02, 2020.

MPO / Apr 20 223

The global outlook is very uncertain. This outlook reflects information available at the time of its preparation. As more inf ormation becomes available,
these projections will be revised. They are presented now to assist policymakers to design alternative policy responses.

CÔTE D’IVOIRE
Table 1

2019

P o pulatio n, millio n

25.5

GDP , current US$ billio n

43.9

GDP per capita, current US$

1721

Internatio nal po verty rate ($ 1.9)

a

28.2
a

57.4

a

82.3

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)
Life expectancy at birth, years

b

98.4

b

57.0

Source: WDI, M acro Poverty Outlook, and official data.
Notes:(a) M ost recent value (201 5), 201 1 PPPs.
(b) M ost recent WDI value (201 7).

Growth remained strong at 7.3 percent in
2019, supported by private investment
and services. In 2020, the economy will be
impacted by effects of the COVID-19
pandemic, driven primarily by domestic
containment measures that will impact
supply and demand, as well as spillovers
from global demand slowing down.
Poverty may rise in 2020 but would
gradually decrease in 2021-22. Downside
risks predominate including more
severe COVID-19 effects, a decline incocoa prices, higher borrowing cost,and fiscal risks.

Recent developments
Growth remained strong at 7.3 percent in2019 (4.7 percent in per capita terms).
Buoyant economic activity was supportedby agro-processing, construction, andservices while agriculture slowed down
reflecting lower cashew production. On
the demand side, activity has benefited
from the growth of private consumption
and investment, fueled by higher farmgate cocoa prices and private sector credit
growth. Inflation increased marginally but
remained subdued at 0.8 percent, well
below the WAEMU regional target of 3
percent, reflecting lower energy prices
and moderate food inflation.
The external current account deficit narrowed from 4.7 percent of GDP in 2018
to 4.5 percent in 2019 as the trade balance improved. The increase in exports
reflects a rebound in global cocoa prices
and increased export volumes of gold,
banana, and cotton. The deficit was financed through a combination of foreign direct investment, concessionalborrowing and bond issuances in regional markets.
The fiscal deficit declined from 4.0 percent of GDP in 2018 to 3.0 percent in2019 in line with the WAEMU target of
3.0 percent of GDP. Tax revenues improved from 16.2 percent of GDP in2018 to 16.5 percent in 2019. The improvement was supported by enhanced
digitalization through the Integrated
Tax Management System, which boosted VAT collection. Total expenditures

FIGURE 1 Côte d’Ivoire / Real GDP growth and contributions to real GDP growthdeclined by 0.5 percent of GDP to reach23.3 percent of GDP in 2019 reflecting
both lower current and capital expenditures. The government policy to limit
recruitment in the public sector (except
education and health) helped lower thewage bill while the under-execution offoreign-financed projects reduced capital expenditure. The risk of overall andexternal debt distress remained moderate, with public debt decreasing from
53.2 percent of GDP in 2018 to 51.7 percent in 2019.
Côte d’Ivoire’s monetary and exchange
rate policies are managed by the Central
Bank of West African States (BCEAO),
which maintains a fixed peg between the
CFA Franc and the Euro. BCEAO’s international reserves reached 4.9 months ofimports in 2019, up from 4.5 months in
2018, on the back of fiscal consolidationand higher net capital inflows. Despite an
unchanged tight monetary policy, regional liquidity pressures were alleviateddue to higher BCEAO supply and lower
de-mand for refinancing from banks. The
real effective exchange rate (REER) depreciated by 5 percent in 2019, due to theEuro nominal depreciation against the
US dollar combined with persistently
lower inflation of the WAEMU comparedwith trading partners.
The poverty rate has declined to an estimated 24.4 percent (international poverty
line US$1.90 PPP) in 2019, down from anestimated 25.2 percent in 2018. Notwithstanding strong overall economic growth,
the benefits have not been equally distributed as growth has been concentrated in
the services and industry sector.

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

Percent, percentage points

Poverty rate (%)

15

100

10

80

Real GDP per capita (constant LCU)
1200000
1000000

80000060

560000040
400000020200000

-5
2017

2018

Private Cons.
Exports
Inventories
Source: World Bank.

224 MPO / Apr 20

2019e

2020f

Gov. Cons.
Imports
GDP

2021f

2022f

GFCF
Statis Discr.

0

0

2008

2010

2012

2014

2016

International poverty rate
Upper middle-income pov. rate

2018

2020

2022

Lower middle-income pov. rate
Real GDP pc

Source: World Bank.
Notes: see Table 2.
The cut-off date for information in this MPO was April 02, 2020.

Outlook
The medium-term economic outlook remains uncertain due to the COVID-19 pandemic. The severe global slowdown coupled with the negative impact of domestic
containment measures will affect Coted’Ivoire’s performance. Measures restricting
social activities and interactions are likely toaffect domestic demand (closure of bars,
shops, restrictions on transport) and investment may also be affected by these restrictions and a domestic outbreak. In addition, global slowing demand may affectexports so overall growth is projected todrop to 2.6 percent in 2020. Key sectors
driving growth will include services(telecommunications and transportation),
manufacturing (agro-processing) and construction. On the demand side, though thecontribution is declining, private consumption and investment will continue to support economic activity. Government consumption is expected to compensate partly
for weak private consumption in supporting economic activity. Inflation is likely toincrease to 2.0 percent in the medium term
but remain well below WAEMU’s
3 percent target.
The external current account deficit would
deteriorate in 2020 before gradually nar-rowing to 3.5 percent by 2022 over the
medium term. Despite the impact of
COVID-19, in the longer run the tradebalance would benefit from higher exportsof transformed primary products and newmining products, and lower imports as
growth marginally slows down.
Over the medium-term, the fiscal deficit isprojected to meet the 3.0 percent of GDP
WAEMU target. However, in 2020, given
the unusual spending pressures a deficitof 3.5 percent is projected. Current expenditure is projected to slightly increase
from 16.6 percent of GDP in 2019 to 16.7
percent in 2020 as the government increases spending to mitigate the COVID-19
impact, and then decline progressively to
16.3 percent in 2022. Without substantial
tax policy reforms, tax revenue is expected
to stabilize at about 16.5 percent of GDP
by 2022 after a significant drop induced by
the crisis in 2020 (15.7 percent). This
would also be reflected in debt amounting
to 52.1 percent of GDP in 2020 followed bya gradual decline to 48.3 percent by 2022.
The poverty rate is projected to fall from25.2 percent in 2018 to 23.2 percent in
2021, based on solid GDP per capita
growth (6.2 percent in 2021). The increaseof farmgate cocoa prices is favorable topoor cocoa farmers. Likewise, the expansion of cash transfer program to support
poor households is expected to reduce the

TABLE 2 Côte d’Ivoire / Macro poverty outlook baseline scenario

number of those living in poverty. However, lower production and lower international prices of cashew and the expected
elimination of some VAT exemptions might
have negative distributional impacts.

Risks and challenges
The outlook is subject to downside risks,
mostly arising from the negative impactof a possible large-scale domestic outbreak, the uncertain extent and consequences if the local economy came to a
stand-still, and the government’s containment measures. In addition, further
worsened terms of trade could reduce
export revenues and adversely affect theincome of the poor. Depending on thedeveloping situation in international
debt markets, financing conditions could
worsen. Finally, rising election-related
fiscal pressures will challenge Coted’Ivoire’s ability to sustain robust andinclusive growth while maintaining thepace of fiscal consolidation.

(annual percent change unless indicated otherwise)

2017

2018

2019 e

2020f

2021f

2022 f

7.7

7.4

7.3

2.6

8.9

6.0

Private Consumption

3.8

7.8

6.0

1.3

8.2

5.7

Government Consumption

5.3

3.4

3.7

4.7

3.7

3.6

Gross Fixed Capital Investment

11.9

14.4

16.6

8.8

14.7

9.3

Exports, Goods and Services

17.6

0.3

7.3

6.7

8.3

8.0

Imports, Goods and Services

7.5

5.7

9.1

8.8

9.3

9.1

19.4

7.4

7.3

2.6

8.9

6.0

11.2

4.2

1.4

1.9

4.2

3.5

Industry

3.0

7.1

10.1

4.0

10.5

8.1

Services

33.2

8.9

8.4

2.2

9.9

5.9

Inflation (Consumer Price Index)

0.7

0.4

0.8

2.0

2.0

2.0

Current Account Balance (% of GDP)

-2.7

-4.7

-4.5

-5.9

-4.6

-3.5

Net Foreign Direct Investment (% of GDP)

1.9

1.6

1.7

1.6

1.8

1.6

Real GDP growth, at constant market prices

Real GDP growth, at constant factor prices
Agriculture

Fiscal Balance (% of GDP)

-4.5

-4.0

-3.0

-3.5

-3.0

-3.0

Debt (% of GDP)

49.8

53.2

51.7

52.1

49.1

48.3

Primary Balance (% of GDP)

-2.8

-2.1

-0.7

-1.4

-1.1

-1.0

International poverty rate ($1.9 in 2011 PPP) a,b

26.1

25.2

24.3

23.6

22.8

22.0

Lower middle-income poverty rate ($3.2 in 2011 PPP) a,b

55.5

54.6

53.7

53.0

52.2

51.4

a,b

79.5

78.2

77.0

75.8

74.7

73.6

Upper middle-income poverty rate ($5.5 in 2011 PPP)

So urce: Wo rld B ank, P o verty & Equity and M acro eco no mics, Trade & Investment Glo bal P ractices.
No tes: e = estimate, f = fo recast.
(a) Calculatio ns based o n 2008-ENV and 2015-ENV. A ctual data: 2015. No wcast: 2016-2019. Fo recast are fro m 2020 to 2022.
(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.

The cut-off date for information in this MPO was April 02, 2020.

MPO / Apr 20 225

The global outlook is very uncertain. This outlook reflects information available at the time of its preparation. As more inf ormation becomes available,
these projections will be revised. They are presented now to assist policymakers to design alternative policy responses.

EQUATORIALGUINEA
Table 1

Recent developments

2019

P o pulatio n, millio n

1.4

GDP , current US$ billio n

11.3

GDP per capita, current US$

8356

Life expectancy at birth, years

a

58.1

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

Equatorial Guinea experienced its fifth
consecutive year of economic contraction
as lower hydrocarbon exports and fiscal
consolidation dampened growth. Tightened
fiscal and monetary policies improved thefiscal and external positions. The economy
is expected to remain in recession in themedium term. Downside risks include
declining oil prices, COVID-19, delays in
the implementation of the structural reforms that are needed to improve competitiveness, fiscal outturns and the quality of
public spending. Such reforms would support the achievement of shared prosperity.

The economy is estimated to have contracted by 6.2 percent in 2019, after declining by
6.6 percent in 2018, as hydrocarbon output
continued to decline on the back of aging
oil wells. Lower hydrocarbon exports andpublic expenditures contributed to the contraction on the demand side. Lower oil
prices and hydrocarbon export volume
resulted in the increase of the current account deficit to 7.4 percent of GDP in 2019up from 5.6 percent of GDP in 2018. Economic activity was also negatively affectedby large government arrears (25.9 percent
of GDP at end-2019) to private construction
companies, and high non-performing bankloans (about 40 percent of total loans in2019) that weakened financial stability. The
overall fiscal surplus improved from 0.7
percent of GDP in 2018 to 1.6 percent in2019 as the government rationalized capital
expenditures and started implementing
new excise taxes on beverages, tobacco andvehicles, and raising withholding taxes for
non-resident firms. Equatorial Guinea(GNQ) pursued its expenditure-led fiscal
consolidation throughout the year, completed an IMF Staff Monitored Program in
September 2019, and will be supported forthe next three years by a US$ 282.8 million
IMF Extended Fund Facility (EFF) programapproved in December 2019.
Despite a decline in nominal GDP, thistighter fiscal policy helped to keep thelevel of public debt at about 48.2 percent
of GDP in 2019 (including domestic arrears), up from 44.6 percent in 2018.

FIGURE 1 Equatorial Guinea / GDP growth and contributions to real GDP growth

Despite the tighter monetary and fiscal
policy stances, and the strict implementation of the new foreign exchange regulation, external stability weakened becauseof lower hydrocarbon exports and capital
inflows. The proportion of the population living below the poverty line is expected to have increased as Equatorial
Guinea has very limited social safety
nets. Only formal employees, whichmake up a small share of the workforce,
have pensions or health benefits. The
situation is particularly challenging andis reflected in an increase in unemployment rate. Unemployment has steadily
been growing from 5.5 percent during
the last decade to 9.2 percent in 2019.

Outlook
GNQ will be affected by the COVID-19
outbreak and the current oil supply shock
through lower: oil prices, hydrocarbon
exports and government revenues. Output
is expected to contract by 7.2 percent in2020 as hydrocarbon output declines because oil prices will be below breakeven
prices to operate some fields and someinvestment will be delayed. With lower
hydrocarbon revenues, GNQ is expected
to record a fiscal deficit of 6.3 percent of
GDP in 2020 and public debt will increase
to about 64.2 percent of GDP. The economy will contract by an average of 2.9 percent in 2021-2022 despite the potential
increase in gas production in 2021-2022
that will result from the connection of the
Alen gas field to the main gas processing

FIGURE 2 Equatorial Guinea / Non-income poverty indicators
Mortality rate,
under-5 (per 1,000
live births)

Percent, percentage points
2
0

200%

-2

100%

-4

0%
Malnutrition
prevalence, height
for age (% ofchildren under 5)-6-8Maternal mortality
ratio (modeled
estimate, per100,000 live births)

-10
2014

2015

Agriculture

20162017 2018e 2019e 2020f 2021f 2022f

Industry

Services

Sources: World Bank staff estimates and INEGE.

226 MPO / Apr 20

Real GDP growth

EqG relative to regional average
EqG relative to MIC averageunity benchmark
Source: World Development Indicators (WDI).

The cut-off date for information in this MPO was April 02, 2020.

plant (Punta Europa). The securitizationof domestic arrears, planned in 2020,
could strengthen the banking system but
will marginally affect private sector confidence in the non-hydrocarbon sector as
outlooks remain uncertain. However, thefishing sector could expand as the country acquired fishing boats and recently
signed a project with BDEAC. The current account deficit is projected to widen
to 16.8 percent of GDP in 2020 from 7.4
percent of GDP in 2019 as hydrocarbon
exports decline.
Measures to mobilize non-resource tax
revenues and cuts in public expenditures
could help contain the fiscal deficit at 1.8
percent of GDP in 2021-2022. The EFF
program-supported revenue measures
include a full implementation of excise
taxes, tax and custom administration reforms, the amendment of the 2017 tax
amnesty law and the continued rationalization of tax exemptions. Additional cutsin capital expenditures would free fiscal
space for new pro-poor social spending.
With investment expected to decline andreal growth projected to be sluggish in theservice sector in 2020, the unemployment
rate is less likely to decline. A Living
Standard Measurement Survey (LSMS) is
planned for 2020. This survey will help
understand challenges faced by low income households and will provide inputs

to design the next National Economic andSocial Development Plan.

Risks and challenges
A further decline in oil price represents
a major external downside risk as
COVID-19 weighs on growth prospects
in major global economies. The current
oil supply shock is creating additional
downward pressures on oil prices. Bothevents would weaken the country’s fiscal and external positions. A procyclicalfiscal stance would exacerbate the negative effects of shocks on growth andpoverty outcomes. Under a downside
scenario, the economy could contract byat least 8.4 percent in 2020 if oil prices
were to decline further to $27 per barrel.
This scenario assumes that (i) there isdisagreement on oil output at the international level; (ii) the epidemic results
in a sharp economic contraction in China before it fades; and (iii) the disease
spreads in several countries with adverse consequences on health systems
and travel restrictions. In fact, lower oil
prices would trigger a substantial fiscal
adjustment, and diminish hydrocarbon
investment profitability; prompting investors to postpone some hydrocarbon

TABLE 2 Equatorial Guinea / Macro poverty outlook baseline scenario

investments. Delays in the implementation of tax and public and financial management reforms are domestic risks that
could erode the country’s capacity torebuild fiscal and external buffers andimprove human capital.
With the current debt path that assumed
external borrowing to finance the expected financing gaps, sustained politicalsupport to economic governance reforms
and a stronger fiscal adjustment would be
required to restore fiscal sustainability.
Improving human capital and the business environment remains critical to diversify the economy. Implementing therecently adopted business environment
roadmap is a major challenge as reforms
are needed across sectors; GNQ ranking
178th out of 190 in the Doing Business2020. With GNQ ranking 144th out of 189
in the 2018 Human Development Index,
the design of adequate policy actions toimprove human capital is critical and will
depend on a timely completion of the 2020
household survey. The timely organization of the LSMS type survey will be essential for the implementation of the interim national development strategy adopted
in April 2019 and design of the National
Economic and Social Development Plan.

(annual percent change unless indicated otherwise)

2017

2018

2019 e

2020f

2021f

2022 f

-5.7

-6.6

-6.2

-7.2

-3.2

-2.6

Private Consumption

3.4

3.5

4.4

1.9

2.0

2.8

Government Consumption

0.4

4.0

-0.7

2.1

-6.1

-8.2

Real GDP growth, at constant market prices

Gross Fixed Capital Investment

-11.2

-1.3

-27.8

-28.5

-20.6

-17.9

Exports, Goods and Services

-3.8

-10.6

-3.2

-9.8

-3.0

-2.7

Imports, Goods and Services

8.3

2.3

5.6

-2.0

-1.8

-1.7

-5.6

-6.6

-6.3

-7.2

-3.2

-2.5

Agriculture

-2.7

-0.6

-4.7

0.2

0.5

1.4

Industry

-6.6

-11.6

-10.2

-11.5

-5.7

-4.8

Services

-3.5

4.0

0.9

-0.4

0.4

0.3

Inflation (Consumer Price Index)

1.1

1.3

1.2

2.5

1.8

1.3

Current Account Balance (% of GDP)

-5.8

-5.6

-7.4

-16.8

-12.6

-13.0

Net Foreign Direct Investment (% of GDP)

4.4

4.2

3.8

4.3

6.2

5.8

Real GDP growth, at constant factor prices

Fiscal Balance (% of GDP)

-1.3

0.7

1.6

-6.3

-3.0

-0.6

Debt (% of GDP)

43.2

44.6

48.2

64.2

65.7

66.0

Primary Balance (% of GDP)

-0.9

1.3

2.3

-4.9

-0.7

1.9

So urce: Wo rld B ank estimates based o n data fro m natio nal autho rities.
No tes: e = estimate, f = fo recast.

The cut-off date for information in this MPO was April 02, 2020.

MPO / Apr 20 227

The global outlook is very uncertain. This outlook reflects information available at the time of its preparation. As more inf ormation becomes available,
these projections will be revised. They are presented now to assist policymakers to design alternative policy responses.

ERITREA

Recent developments

Table 1

2019

P o pulatio n, millio n

5.4

GDP , current US$ billio n

2.1

GDP per capita, current US$

393

Scho o l enro llment, primary (% gro ss)
Life expectancy at birth, years

a

a

68.5
65.5

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

Real GDP growth in 2019 is estimated at
3.7 percent after another good harvest.
Nevertheless, wage bill increases narrowed the fiscal surplus to 2.7 percent of
GDP in 2019, from 6.3 in 2018. RealGDP is expected to contract 0.7 percent
in 2020 amid the COVID-19 pandemic,
rebounding to around 5.7 percent in
2021. Downside risks persist due to thegovernment’s hiatus in re-engaging with
IFIs, preventing much needed concessional financing. Latest data from 1996/97
suggests poverty is widespread.

Real GDP growth is estimated at
3.7 percent in 2019, supported by higher
crop and mining output. Growth in 2019
follows a rebound of 13 percent in 2018,
driven by a recovery in agricultureamounting to 24 percent. In 2019, continued good weather raised agriculture output further by 3 percent.
Deflation deepened to 17 percent during
April-June 2019 (year-on-year) compared to
5.8 percent during the same period the year
before. Deflationary pressures followed theopening of borders with Ethiopia after thepeace agreement signing in July 2018. The
ensuing unchecked inflow of Ethiopian
products depressed domestic prices, withthose of food and non-alcoholic beverages
dropping to -37 percent in the Asmara region during the first half of 2019 (year-onyear), as traders stocked up before the borders closed again.
The current account surplus is estimated at
12.2 percent of GDP in 2019, while foreignexchange reserves stood at USD100 million
or 2.2 months of imports. Eritrea receives
significant remittances, mostly throughinformal channels, which together with thetrade surplus, contribute to a large current
account surplus. The latter has not led to anincrease in foreign exchange reserves due
to sizable informal imports.
In 2019, the fiscal surplus narrowed to
2.7 percent of GDP from 6.3 percent in2018. Since the inception of the new salarystructure for government employees withmore than 12 years of education, the total

wage bill approximately tripled from
5.1 percent of GDP in 2014 to an estimated 15 percent of GDP in 2019. While capital spending remains limited, public investments in dams and roads take place
off-budget, possibly representing a sizable contingent liability and contributing
to fiscal risks.
Driven by persistent primary surpluses anddebt relief, total public debt, including external arrears, shrunk to an estimated232 percent of GDP in 2019 from291 percent of GDP in 2017. External public debt declined by 10 percentage points to
52 percent of GDP (or USD1.1 billion) since
2018 mainly due to debt relief by the Abu
Dhabi Development Fund. Meanwhile,
domestic debt dropped to 179 percent of
GDP in 2019 (or USD3.8 billion) from
208 percent of GDP the year before due to
net repayments of Treasury bonds to banks
and of central bank advances used to pay
part of the public sector wages.
Poverty is widespread in Eritrea, but lackof data limits evidence. Data on poverty
are outdated and cover urban areas only.
The latest Household Income and Expenditure Survey, from 1996/1997, suggests poverty is widespread, affecting
70 percent of the urban population. Meanwhile, almost 60 percent of employed Eritreans were in vulnerable employment in
the large rain-fed agricultural base.

Outlook
The international re-integration of thecountry could provide for a promising

FIGURE 1 Eritrea / Evolution of inflation

FIGURE 2 Eritrea / Evolution of external and domestic debt

Percent change

Percent of GDP

2

300

0

250

-2

200

-4
-6

150

-8

100

-10

50

-12

-14

0
2017

-16
2017

2018

2019

Sources: Minsitry of Finance and WB staff estimates.

228 MPO / Apr 20

2020p

2018

External Debt (% of GDP)

2019

2020p

Domestic Debt (% of GDP)

Sources: Ministry of Finance and WB and IMF staff estimates.

The cut-off date for information in this MPO was April 02, 2020.

growth outlook, coupled with two large
mines expected to become operational
between 2022 and 2025; however, in the
short run, a contraction of real GDP by
0.7 percent is expected in 2020 due to the
COVID-19 pandemic. The pandemic will
not only reduce exports and remittances,
but also value added from services andindustry as a consequence of the partial
lockdown and social distancing measures
implemented in late March. Growth isexpected to rebound to around 5.7 percent
in 2021 due to a recovery in private consumption, before moderating to 3.2 percent in 2022. Once the Asmara and Colluli
mines become operational around 2023
and after, growth could reach 5½ percent.
Deflationary pressures should taper off in
2020, with inflation picking up to
2 percent by 2021. Despite initial moves
towards international re-integration, theeconomy remains isolated.
A decline in non-tax revenues together
with recurrent spending pressures, andfew opportunities for external borrowing,
imply limited resources for capital spending and welfare-enhancing programs. As
accumulated revenues at the Eritrean Petroleum Corporation are depleted, non-tax
revenues will decline sizably. The latter
will shift public finances from surpluses to
deficits. If the government re-engages
with the international community,

additional financing would boost reservesin the shorter term, providing foreign exchange for imports to build infrastructure,and enhance revenues to introduce welfare-enhancing programs to boost resilience and increase access to services. Beyond 2023, mining revenues should increase significantly, easing foreign exchange pressures. Nevertheless, resolving
the government’s domestic debt stock andresuscitating the financial sector will impose a substantial financial burden.

Risks and challenges
Significant risks cloud the outlook. In the
short term, the size of the growth contraction will depend on the domestic containment of COVID-19 and on global developments impacting Eritrean remittances andmining exports to China. Economic
growth will also depend on the authorities’ response to the locust outbreak,which does not seem to have affected agriculture yet, but could reduce yields in theupcoming harvest. Furthermore, the rainfed agriculture sector is subject to frequent
droughts as Eritrea is one of the most water-stressed African countries. A decline incrop production due to locusts, badweather or both would severely aggravate

TABLE 2 Eritrea / Macro poverty outlook baseline scenario

poverty and lead to a deterioration in fiscal balances due to emergency food imports, in addition to emergency medical
imports. Other transmission channels arelikely to have a small or no impact since
Eritrea is not fully integrated into trade or
financial systems, and tourism revenues
are insignificant.
Finally, the recent hiatus in the government’s re-engagement with IFIs risks
slowing considerably the full expected
benefits for the country. The lack of concessional financing and knowledge transfer that would support programs to improve macro management and household
livelihoods will limit opportunities forpoverty reduction. Additionally, delays inaddressing capacity constraints will adversely affect institutional development
and slow the adoption of reforms needed
for private sector takeoff and inclusive
growth-enhancing policies.

(annual percent change unless indicated otherwise)
2017

2018

2019 e

2020f

2021f

2022 f

-10.0

13.0

3.7

-0.7

5.7

3.2

-11.2

13.2

5.6

-1.0

8.6

4.7

Government Consumption

9.2

0.8

39.3

7.5

9.5

10.7

Gross Fixed Capital Investment

12.0

-62.8

67.5

-45.9

213.1

27.6

Exports, Goods and Services

29.8

8.9

-5.2

-8.8

7.8

3.0

Imports, Goods and Services

-4.6

18.7

6.8

-6.2

5.9

2.2

-10.2

12.8

3.7

-0.8

5.8

3.3

Agriculture

-18.2

24.0

27.0

12.0

-6.2

6.0

Industry

-14.4

11.1

13.0

-7.0

8.7

9.0

Services

1.6

4.9

-26.0

-14.3

27.6

-7.5

Inflation (Consumer Price Index)

-13.3

-14.4

-15.8

1.0

2.0

2.2

Current Account Balance (% of GDP)

25.6

23.6

12.2

10.2

6.4

4.8

Net Foreign Direct Investment (% of GDP)

0.0

0.0

0.0

0.0

0.0

0.0

Real GDP growth, at constant market prices
Private Consumption

Real GDP growth, at constant factor prices

Fiscal Balance (% of GDP)
Debt (% of GDP)
Primary Balance (% of GDP)

-4.0

6.3

2.7

0.7

-0.9

-0.6

290.7

269.6

231.6

242.9

215.8

212.3

-1.9

7.8

4.7

2.8

1.0

1.0

So urce: Wo rld B ank, P o verty & Equity and M acro eco no mics, Trade & Investment Glo bal P ractices.
No tes: e = estimate, f = fo recast.

The cut-off date for information in this MPO was April 02, 2020.

MPO / Apr 20 229

The global outlook is very uncertain. This outlook reflects information available at the time of its preparation. As more inf ormation becomes available,
these projections will be revised. They are presented now to assist policymakers to design alternative policy responses.

ESWATINI

Recent developments

Table 1

Economic growth slowed significantly to
1.3 percent in 2019 from 2.4 percent in2018 on the back of a deteriorated fiscal
situation and low agricultural output.
Government financing constraints led tothe accumulation of domestic expenditurearrears that severely impaired economic
activity. Nonpayment by government todifferent suppliers of goods and services
impaired companies’ ability to service
their bank loans, leading to a rise of nonperforming loans and reduced banks’lending ability to the private sector. Construction-related activities were also delayed or deferred due to fiscal challenges.
Furthermore, the growth of services sector, especially public administration and,wholesale and retail trade were constrained by fiscal challenges. The wage
freeze continued in 2019, partly contributing to reduced domestic demand. The
poor performance of the agriculture sector
emanated from lower sugarcane production, which also negatively affected thesugar manufacturing industry.
The fiscal deficit remained elevated in2019 at 5.4 percent of GDP, but declined
from 6.7 percent in 2018, supported by
improved Southern African Customs
Revenues (SACU) and deferment of capital projects. The deficit was financed byaccumulation of domestic arrears, adrawdown on reserves and domestic
borrowing. Domestic arrears rose to 6.7
percent of GDP as at end-2019, up from
5.9 percent of GDP reported in January

2019

P o pulatio n, millio n

1.4

GDP , current US$ billio n

4.5

GDP per capita, current US$

3198

Internatio nal po verty rate ($ 1.9)

a

28.4
a

51.8

a

71.4

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)
Life expectancy at birth, years

b

115.2

b

58.3

Source: WDI, M acro Poverty Outlook, and official data.
Notes:(a) M ost recent value (201 6), 201 1 PPPs.
(b) M ost recent WDI value (201 7).

Real GDP growth slowed to 1.3 percent
in 2019, partly due to a drag from a deteriorated fiscal situation. Fiscal challenges
were reflected in an accumulation of domestic expenditure arrears, depletion ofinternational reserves and rising debt
levels. Given challenges triggered by the
COVID-19 outbreak, the economy is expected to contract in 2020, contributing
to an increase in poverty. The risks to theoutlook include a further escalation of the
global pandemic, intensified fiscal pressures, and weaker-than-expected growthin South Africa.

FIGURE 1 Eswatini / Fiscal Balance and Public debt

Debt (% of GDP)

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

Fiscal balance (% of GDP)

50

10

40

8

30

6

20

4

10

2

0

0

-10

-2

-20

-4

-30

-6

-40

-8

-50

-10
2013

2014

2015

2016

Public debt (lhs)
Source: Ministry of Finance, Eswatini.

230 MPO / Apr 20

2017

2018

2019

2020

Fiscal balance (rhs)2018. The government has committed toclear these arrears and preliminary verification suggests that they fell to 3 percent
of GDP as in February 2020. Total public
debt increased by over 5 percent of GDP(y/y) to 35 of GDP in 2019 largely driven
by high primary deficit. Domestic debt
was the major driver of the rise in total
public debt as it increased (y/y) by over 3
percent of GDP, to around 20 percent of
GDP in December 2019.
The current account surplus increased toabout 4 percent of GDP in 2019 from 2
percent in 2018, driven by a trade surplus and improved SACU revenue.
However, the gross official reserves cover declined from 2.6 months in 2018 to
2.0 months in 2019, the lowest level since
2010/11 crisis, reflecting a drawdown tofinance the fiscal deficit.
Despite an elevated fiscal deficit, inflation
reached record low levels in 2019, partly
due to government’s freeze of electricity
and water tariffs. Average annual inflation declined to 2.6 percent in 2019 from
4.8 in 2018 – the lowest in the Common
Monetary Area and below its 3 percent
lower target band. Low inflation prompted the central bank to maintain an accommodative monetary policy stance.
Amid slowing growth, poverty rates are
estimated to have levelled off in 2019,with 28.3 percent of people living below
the $1.90/person/day threshold (2011
PPP). Food insecurity remained high in
2019, with the Vulnerability Assessment
Committee identifying about a quarter ofthe rural population as food insecure andin need of humanitarian assistance during
the October 2019-March 2020 period.

Poverty rate (%)

Real GDP per capita (constant LCU)

100

30500
30000

80

29500
29000

60

28500
40

28000
27500

20

27000
0

26500

2009

2011

2013

2015

International poverty rate
Upper middle-income pov. rate

2017

2019

2021

Lower middle-income pov. rate
Real GDP pc

Source: World Bank.
Notes: see table 2.
The cut-off date for information in this MPO was April 02, 2020.

Outlook
Real GDP is projected to contract by 1.1
percent in 2020, mainly due the negative
economic impacts associated with
COVID-19 on key sectors. Exports andimports are expected to contract as countries including South Africa (Eswatini’s
largest trading partner) have partiallyclosed their borders to contain the outbreak. The Government’s plan to clear all
domestic arrears in 2020 which was envisaged to support both industrial production and domestic demand might bedelayed as government responds toemerging needs arising from COVID-19.
Furthermore, the clearance plan is premised on a negotiated commercial loan,
which might worsen the debt levels
putting the country at a high risk of debt
distress in the short-to medium term.
Agriculture production is however, projected to increase, helping to boost bothagro-processing and other manufacturing
activities, but with weak export demandthe growth impacts will be minimal. The
government intends to award a cost ofliving adjustment (about 1 percent of
total expenditure) for the first time in 3
years. This would boost aggregate demand but worsen the fiscal situation.

The fiscal situation is expected to remainchallenging, as government approves
supplementary budget to deal with
COVID-19, amid declining revenues.
The fiscal deficit is projected to increase
to 7.7 percent of GDP in 2020 and remain
above 6 percent in 2021 and 2022. The 33
percent nominal increase in SACU revenues, which was anticipated in 2020, will
unlikely materialize as SACU trade andgrowth prospects dissipate due to
COVID-19. Persistent high primary fiscal
deficits are projected to increase public
debt above 35 percent of GDP government target in 2020 and over the medium term. The current account surplus isprojected to decline due to reduced demand for exports by the major trading
partners, in particular South Africa reflecting weak economic activity arisingfrom the impact of COVID-19.
Inflation is projected to remain within the
3-6 percent target band, but will increasein 2020, reflecting a gradual relaxation inadministered prices and the impact of the
COVID-19 pandemic. The economic recession is expected to increase poverty levels.
However, this will be moderated by better
agricultural output, which supports the
majority of the poor. The proportion ofpeople living below the extreme poverty
line is expected to increase to 29.3 percent
in 2020, reaching 29.6 percent in 2022.

TABLE 2 Eswatini / Macro poverty outlook baseline scenario

Risks and challenges
Delayed clearance of domestic arrears
would undermine economic recovery andstrain banks’ balance sheets and lending
to the private sector. Weaker economic
growth in South Africa (reflecting weak
structural bottlenecks and the impact of
COVID-19) would dampen SACU revenues, leading to a high fiscal deficit andfurther accumulation of domestic spending arrears. This would also weaken theexternal balance, leading to a further depletion of international reserves. Lower
than anticipated rains would lead to lower
agricultural production raising food insecurity and slowing poverty reduction,
especially in eastern Lubombo and southern Shiselweni regions where crop production continues to be threatened byerratic rains and higher maize meal prices
than in the rest of the country. Further,cushioning poor and vulnerable groups
against adverse impacts of COVID-19 on
livelihoods will be key to containing a risein poverty levels.

(annual percent change unless indicated otherwise)
2017

2018

2019 e

2020f

2021f

2022 f

2.0

2.4

1.3

-1.1

0.7

1.1

Private Consumption

5.6

2.7

2.6

-1.3

2.0

2.3

Government Consumption

2.9

-4.7

-3.5

-0.1

1.2

-0.5

Gross Fixed Capital Investment

-1.0

34.3

-2.1

-3.0

-7.6

8.7

Exports, Goods and Services

4.6

10.9

8.0

-1.5

5.9

3.7

Imports, Goods and Services

7.9

-8.7

6.0

-2.1

5.0

7.1

1.8

2.3

1.3

-1.1

0.7

1.1

Agriculture

-4.3

8.0

-4.4

5.9

2.5

5.5

Industry

1.8

-0.2

1.0

-0.1

1.0

1.3

Services

2.9

3.1

2.5

-2.9

0.2

0.2

Inflation (Consumer Price Index)

6.2

4.8

2.6

3.8

4.5

5.8

Current Account Balance (% of GDP)

6.9

1.9

4.3

2.4

5.9

7.2

Net Foreign Direct Investment (% of GDP)

-2.8

0.5

0.5

0.6

0.5

0.5

Real GDP growth, at constant market prices

Real GDP growth, at constant factor prices

Fiscal Balance (% of GDP)

-8.7

-6.7

-5.4

-7.7

-5.7

-5.7

Debt (% of GDP)

27.8

27.6

35.0

44.9

48.4

54.4

Primary Balance (% of GDP)

-7.5

-5.3

-2.4

-4.6

-3.2

-3.0

International poverty rate ($1.9 in 2011 PPP) a,b

28.4

28.2

28.3

29.3

29.5

29.6

Lower middle-income poverty rate ($3.2 in 2011 PPP) a,b

51.8

51.5

51.7

52.2

52.6

52.7

a,b

71.3

71.2

71.3

72.0

72.3

72.6

Upper middle-income poverty rate ($5.5 in 2011 PPP)

So urce: Wo rld B ank, P o verty & Equity and M acro eco no mics, Trade & Investment Glo bal P ractices.
No tes: e = estimate, f = fo recast.
(a) Calculatio ns based o n 2016-HIES. A ctual data: 2016. No wcast: 2017-2019. Fo recast are fro m 2020 to 2022.
(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.

The cut-off date for information in this MPO was April 02, 2020.

MPO / Apr 20 231

The global outlook is very uncertain. This outlook reflects information available at the time of its preparation. As more inf ormation becomes available,
these projections will be revised. They are presented now to assist policymakers to design alternative policy responses.

ETHIOPIA

Recent developments

Table 1

2019

P o pulatio n, millio n

110.1

GDP , current US$ billio n

86.6

GDP per capita, current US$

786

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

Life expectancy at birth, years

b

65.9

Source: WDI, M acro Poverty Outlook, and official data.
Notes:(a) M ost recent value (201 5), 201 1 PPPs.
(b) M ost recent WDI value (201 7).

Growth in Ethiopia remained robust in
FY19 thanks to a strong service sector
performance. A Homegrown Reform
Agenda was launched to address thebuildup in inflation and persistent foreignexchange shortages. Escalating impacts of
COVID-19 is expected to result in a significant slowdown in growth in FY20.
While poverty is expected to continue its
steady decline, the rate of reduction is
likely to slow down in the short term inlight of the high inflation and increased
unemployment.

Real GDP growth rebounded to 9 percent in FY19, according to official estimates, while intermediate indicators forthe first few months of FY20 paint amixed picture. While growth in agriculture production eased and electricity
production was affected by low waterlevels, growth picked up in FY19 thanks
to a strong service sector performance.
During the first quarter of FY20 there
was an exceptional increase in electricity
production, but a slowdown in cement
sales (-11.7 percent in Q1) and a 28 percent decline in FDI inflows point to a
slowdown in investment.
While merchandise export performance
disappointed in FY19, preliminary estimates for the first half of FY20 point to arebound. In the first half of FY20, exports
revenue increased by 10 percent compared to the same period last fiscal year,
largely owing to a strong increase in thevolume of coffee exports. The performance of the other major export commodities including oilseeds and pulses remained weak, while textile exports grewby more than 45 percent. Imports of goods
continued to contract declining by about 7
percent during the first half of FY20 as
foreign exchange shortages persist andpublic investment remains restrained.
Gross international reserves went down toabout US$ 3 billion in December 2019,
compared to US$ 3.4 billion in June.
Faster depreciation and tighter monetary
policy have been implemented, while

inflation remains high. Between midNovember and mid-December, the birr
depreciated as much as during the entire
FY19. The pace of depreciation eased in
January and February. The parallel market premium has declined from 40.5 percent in October 2019 to about 33 percent
in February 2020. The average monthly
increase in reserve money was just 8.6
percent during July – December 2019,
compared to 16 percent during the same
period last fiscal year. Inflation eased to19.5 in December and 18.7 percent inJanuary, but peaked again in February,reaching 21.8 percent, with a jump in
both food and non-food prices.
Despite continuing poor revenue performance, the fiscal deficit was reduced to
2.5 percent of GDP in FY19, as authorities
curbed expenditure. Tax revenue collection declined to 10 percent of GDP, compared to 10.7 percent in FY18. This poor
performance can be explained by weak
tax administration and a drop in foreign
trade tax revenue related to lower imports. Contained expenditures as a shareof GDP and an increase in grant receipts
compensated for the lower-than-expected
revenue collection.
While official data is not yet available,
sectors with international linkages
showed already a drop in economic activity in March due to the COVID-19
pandemic. Amid the unfolding global
pandemic, which is likely to bring theworld economy into recession, the CEOof Ethiopian Airlines estimated revenue
losses in February and March amountabout USD 190 million; on March 20 theairline suspended flights to 30 countries.

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

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

Percent, percentage points
12

120

10

100

Poverty rate (%)

8

Real GDP per capita (constant LCU)
25000
20000

80
15000

6

60

4

10000
40

2

5000

20

0
FY16
FY17
Rest of services
Wholesale and retail trade
Manufacturing
GDP growth
Source: Ethiopian authorities.

232 MPO / Apr 20

FY18
FY19
Transport & communications
Construction
Agriculture002004 2006 2008 2010 2012 2014 2016 2018 2020 2022
International poverty rate
Upper middle-income pov. rate

Lower middle-income pov. rate
Real GDP pc

Source: World Bank.
Notes: see table 2.
The cut-off date for information in this MPO was April 02, 2020.

Hotel occupancy has reportedly declined
by 80 percent. Meanwhile, Ethiopia’s cut
flower industry, the second-largest exporter to Europe (about 10 percent ofEthiopia’s merchandise export), incurredin losses amounting USD 11 million during the first weeks of March.
Increased unemployment and inflation
presumably translate into slower poverty
reduction in urban areas. Urban unemployment increased in 2018 to 19 percent
from 17 percent in 2016. Food price inflation in excess of 20 percent has also put
pressure on lower-income urban dwellers.
In rural areas, which have experienced
slow poverty reduction between 2011 and2016, agricultural production levels haverebounded from the lows of the 2015/16
drought. Rural producers have likely benefited from high food prices.

Outlook
Growth is expected to slow down significantly in FY20 due to the impacts of
COVID-19. Macroeconomic measures
under the Homegrown Reform Agenda
are expected to reduce imbalances andimprove growth over the medium term.
Growth projections have been revised
down in FY20 and FY21 to reflect thesevere impacts of the COVID-19 pandemics, which is likely to place global growth
in recession. The main transmission channel to Ethiopia will be through declines inservices exports (air transport), the lodging industry, and cut flower and othermerchandise exports. While growth isexpected to be slower in the near term,
economic measures under the Homegrown Reform Program are expected to
set the foundations for a more balanced
and stronger economy in the future. Particularly, as real exchange rate overvaluation is addressed and logistics and business environment reforms are introduced,
private sector investment is expected toaccelerate in FY21 and FY22. Inflation is
projected to remain in double digits in
FY20, prior to easing in the medium term.
Poverty is expected to continue its steadydecline in the medium run on the back ofreforms. The increasing industrial parkdevelopment and economic reforms being
under taken are expected to generate
more employment opportunities, especially for the youth.

Risks and challenges
Domestic risks include a more severe
impact of the COVID-19 virus, locust

TABLE 2 Ethiopia / Macro poverty outlook baseline scenario

infestation and political instability aheadof elections. As in other countries, thesituation in Ethiopia could quickly shift
from the current handful of COVID-19
imported cases to a scenario of widespread community transmission that
could require a lockdown. In addition to
the prolonged external demand impacts
discussed above, this would depress domestic economic activity and demand
sharply. The desert locust invasion which
Ethiopia is currently experiencing is theworst in 25 years and could have an adverse impact on crop production in FY21.
Finally, there is risk that uncertainty andtensions raise ahead of the national elections, planned for end-August, potentially hampering the prospects for FDI inflows and delaying some of the planned
privatizations.
The outlook for poverty reduction, while
positive, also faces significant downside
risks. COVID-19 will impact the livelihoods of households dependent on remittances or linked to exporting sectors. In
addition, lay-offs are expected to be disproportionally concentrated among lowincome urban households. Currency depreciation and energy price increases arealso expected to have some negative welfare effects across the distribution, especially in urban areas.

(annual percent change unless indicated otherwise)
2017

2018

2019 e

2020f

2021f

2022 f

10.0

7.9

9.0

4.0

6.0

8.0

Private Consumption

5.6

5.3

5.1

3.2

4.5

5.0

Government Consumption

8.3

3.6

6.1

4.6

4.6

6.3

Gross Fixed Capital Investment

18.5

6.5

11.7

4.2

6.2

9.8

Exports, Goods and Services

7.7

8.3

7.4

-3.5

6.0

8.0

Imports, Goods and Services

-7.5

0.2

0.5

-0.5

1.2

1.5

10.1

7.7

9.0

4.0

6.0

8.0

Agriculture

6.7

3.5

3.8

3.5

3.6

4.0

Industry

18.7

12.2

11.5

7.0

9.0

9.0

Services

8.3

8.7

12.0

2.3

5.8

10.6

Inflation (Consumer Price Index)

9.8

13.0

12.5

19.4

11.1

8.1

Current Account Balance (% of GDP)

-8.2

-6.5

-4.5

-6.3

-4.7

-4.0

Fiscal Balance (% of GDP)

-3.3

-2.8

-2.5

-3.0

-2.6

-2.2

Debt (% of GDP)

58.1

59.2

57.2

54.6

53.9

53.3

Primary Balance (% of GDP)

-2.8

-2.3

-1.9

-2.4

-1.9

-1.4

International poverty rate ($1.9 in 2011 PPP) a,b

28.2

27.4

26.6

25.8

24.9

24.0

Lower middle-income poverty rate ($3.2 in 2011 PPP) a,b

66.2

65.4

64.5

63.5

62.5

61.6

a,b

86.7

85.6

84.5

83.2

81.9

80.6

Real GDP growth, at constant market prices

Real GDP growth, at constant factor prices

Upper middle-income poverty rate ($5.5 in 2011 PPP)

So urce: Wo rld B ank, P o verty & Equity and M acro eco no mics, Trade & Investment Glo bal P ractices.
No tes: e = estimate, f = fo recast.
(a) Calculatio ns based o n 2011-, 2017-, and 2015-HICES. A ctual data: 2015. No wcast: 2016-2019. Fo recast are fro m 2020 to 2022.
(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.

The cut-off date for information in this MPO was April 02, 2020.

MPO / Apr 20 233

The global outlook is very uncertain. This outlook reflects information available at the time of its preparation. As more inf ormation becomes available,
these projections will be revised. They are presented now to assist policymakers to design alternative policy responses.

GABON

Recent developments

Table 1

2019

P o pulatio n, millio n

1.9

GDP , current US$ billio n

16.5

GDP per capita, current US$

8797

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

Life expectancy at birth, years

b

65.8

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

Gabon’s macro-fiscal situation is estimated to have consolidated further in 2019.
Growth is expected to have picked up in
2019 to an estimated 3.3 percent, whileinternal and external balances further
improved thanks to higher oil productionand exports. Growth outlook is expected
to be downgraded in 2020 because of the
COVID-19 crisis, with growth expected
to remain too slow over the medium term
to reduce poverty, projected to reach 32.3
percent by 2022, compared to
31.9 percent before the COVID-19.

According to the latest data available,
growth is expected to have accelerated to
3.3 percent in 2019 (after reaching 0.8 percent in 2018) supported by a sharp increase in oil production and dynamic mining and agribusiness sectors. Inflation isestimated to have slowed from 4.7 percent
in 2018 to 3.7 percent in 2019 owing tolower food prices. On the demand side,exports have remained the main drivers ofgrowth. While increasing from 6.2 percent
in 2018 to 9.7 percent in 2019, credit
growth has remained modest because of
low credit to Government. The fiscal balance (commitment basis) is estimated tohave shifted from a deficit of 1.3 percent
of GDP in 2018 to a surplus of 1.8 percent
of GDP in 2019 thanks to robust oil revenues stemming from higher production
and a stronger US dollar, and rising nonoil revenues from greater activity in mining and higher imports. Efforts to restrain
non-priority spending have also contributed to the fiscal surplus. The gradual clearance of all external arrears is expected tohave resulted in a decline of public debt
from 60.6 percent of GDP in 2018 to 58.0
percent of GDP in 2019.
Increased commodity exports are estimated to have narrowed the current accountdeficit from 1.8 percent of GDP in 2018 to
0.9 percent of GDP in 2019, more thanoffsetting higher investment-related imports, mainly in the extractive sectors. The
new exchange regulation in CEMAC has
increased Gabon’s imputed reserves at the

BEAC to 2.5 months of imports in 2019
(compared to 1.6 months in 2018) while
the robustness of banks improved in 2019
despite still significant non-performing
loans. Despite the gradual economic recovery, poverty and welfare disparities
remained high, with the poverty rate($5.5/day, 2011 PPP) having only slightly
decreased to 32.2 percent in 2019 (-0.1 bp
from 2018) as a result of cuts in social
spending following the 2014 oil crisis.
Inequality, measured by the Gini coefficient, is at a moderate level, but wide geographic disparities exist in living conditions and access to basic services. Gabon’s
current social protection system is inefficient, underfinanced, and covers only asmall fraction of the poor what explains
the persistent high level of poverty.

OutlookWith oil prices expected to stand at USD
30 in 2020 and contracted activity in China
and Europe as a result of the COVID-19
pandemics, growth is projected to sharply
decrease to -0.2 percent in 2020, against 3.6
percent anticipated before the pandemic.
As China and Europe are Gabon’ s main
trading partners, an economic slowdown
in these countries would translate into a
sharp drop in Gabon’s exports. In such acontext, some private investments are
expected to be postponed, further reducing growth prospects in 2020. Growthwould recover to 3.0 percent in 2022, supported by sustained private investments
in agribusiness, wood processing and

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

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

Percent, percentage points
6%6

Poverty rate (%)
60

5%5Real GDP per capita (constant LCU)
3500000
3000000

50

4%4
3%3

40

2%2

30

2500000
2000000

1500000

1%1
20

0%0
-1%
-1

1000000

10

-2%
-2

500000

0

-3
-3%

0
2005 2007 2009 2011 2013 2015 2017 2019 2021

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Agriculture

Industry

Sources: Ministry of Economy and World Bank.

234 MPO / Apr 20

Services

GDP growthInternational poverty rate
Upper middle-income pov. rate

Lower middle-income pov. rate
Real GDP pc

Source: World Bank.
Note: see table 2.
The cut-off date for information in this MPO was April 02, 2020.

mining expected to be relaunched in 2021.
Inflation would remain under 3 percent in
the medium term owing to the projected
decline in food prices.
Lower than expected oil prices would
result in a sharp decrease in fiscal revenue in 2020, oil revenues representing
about 40 percent of total fiscal revenues.
Travel restrictions, lowering customs
revenues, would further impact revenues. Combined with expected fiscal slippages in 2020 as a result of unanticipatedexpenditures, the fiscal deficit is projected to widen to 2.0 percent of GDP in
2020, against a pre-COVID-19 anticipatedsurplus of 1.3 percent of GDP. The fiscal
deficit would decline gradually to 0.8
percent of GDP in 2022 supported by the
projected pick-up in tax revenue, combined with efforts to limit tax exemptions. Expected cuts in current spending,following the fiscal slippages made in2020, would contribute to improve thefiscal balance. Because of the budget support required to face the COVID-19 crisis,
public debt would increase to 64.5 percent of GDP in 2020 and then decline
gradually to 53.7 percent of GDP in 2022.
With oil representing more than 70 percent of total exports, contracted exports
would only be partly offset by reduced
imports, resulting in a wider current account deficit at 5.2 percent of GDP.

The current account deficit would gradually narrow to 0.1 percent of GDP in 2022
supported by higher oil prices and ongoing investments in wood and agribusiness. Because of limited achievements in human development, the inefficiency of Gabon’s current social protection system combined with depressedfiscal space would further reduce thefunds available for social spending, resulting in an anticipated increase in thepoverty rate ($5.5/day, 2011 PPP) to 32.4
percent in 2020, compared to 32.1 percent
initially projected. Delays in the boost in
economic activity and job creations expected to lift more Gabonese out of poverty would keep the poverty rate at 32.3
percent in 2022 despite the expected rebound in economic growth.

Risks and challenges
Gabon will remain highly dependent on
the oil sector and vulnerable to a further
decline in oil prices. Simulation results
show that a fall in oil prices to USD 27 in2020 would reduce real growth by 1.5
percentage point because of the combined
fall in oil prices and production as many
mature fields would become unprofitablewith an oil price below USD 30. Internal

TABLE 2 Gabon / Macro poverty outlook baseline scenario

and external balances would deteriorate,and international reserves would decline.
A downward revision of public and private investments would further impact
growth prospects. Depressed fiscal space
would further reduce the funds available
for social spending and needed to lift themost vulnerable out of poverty, with thecurrent financing gap already standingaround USD 500 million. Persistent travel
restrictions could increase inflation in 2020
because of food shortages.
A significant tightening of global financial
conditions would increase investors’ risk
perception towards Gabon, making external funding more expensive. Since the endof February, Gabon’s sovereign spreads(JPSSGGA index) have widened from 493
bp on February 28, 2020 to 768 bp on
March 9, 2020.
To mitigate risks, additional financing topreserve public investment and implement the domestic arrear clearance plan
would be necessary. Structural reforms
aiming at reducing fiscal expenditure,
avoiding arrears accumulation, improving
the management of SOEs would also be
crucial as well as reforms to improve thebusiness environment and public investment management.

(annual percent change unless indicated otherwise)
2017

2018

2019 e

2020f

2021f

2022 f

0.5

0.8

3.3

-0.2

2.4

3.0

Private Consumption

0.4

-0.4

1.2

0.5

0.1

0.4

Government Consumption

-1.3

-18.2

-13.2

-6.4

1.3

-3.5

Gross Fixed Capital Investment

-11.5

8.0

4.3

5.7

0.7

9.0

Exports, Goods and Services

3.4

4.2

13.3

-0.1

8.1

2.0

Imports, Goods and Services

-7.3

-0.6

6.2

3.6

4.5

2.0

1.5

0.9

3.3

-0.2

2.4

3.0

Agriculture

12.2

9.5

7.5

7.1

7.3

7.9

Industry

-6.6

-0.7

8.6

1.4

2.9

3.9

Services

5.4

0.7

-0.2

-2.3

1.2

1.6

Inflation (Consumer Price Index)

2.7

4.7

3.7

-0.5

2.8

2.4

Current Account Balance (% of GDP)

-4.0

-1.8

-0.9

-5.2

-3.6

-0.1

Fiscal Balance (% of GDP)

-2.6

-1.3

1.8

-2.0

-1.5

-0.8

Debt (% of GDP)

62.9

60.6

58.0

64.5

61.7

53.7

Primary Balance (% of GDP)

-0.1

1.1

4.4

0.8

1.2

1.7

International poverty rate ($1.9 in 2011 PPP) a,b

3.4

3.4

3.4

3.4

3.4

3.4

Lower middle-income poverty rate ($3.2 in 2011 PPP) a,b

11.2

11.3

11.2

11.3

11.3

11.2

Upper middle-income poverty rate ($5.5 in 2011 PPP) a,b

32.2

32.3

32.2

32.4

32.4

32.3

Real GDP growth, at constant market prices

Real GDP growth, at constant factor prices

So urce: Wo rld B ank, P o verty & Equity and M acro eco no mics, Trade & Investment Glo bal P ractices.
No tes: e = estimate, f = fo recast.
(a) Calculatio ns based o n 2011- and 2017-EGEP . A ctual data: 2017. No wcast: 2018-2019. Fo recast are fro m 2020 to 2022.
(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.

The cut-off date for information in this MPO was April 02, 2020.

MPO / Apr 20 235

The global outlook is very uncertain. This outlook reflects information available at the time of its preparation. As more inf ormation becomes available,
these projections will be revised. They are presented now to assist policymakers to design alternative policy responses.

THE GAMBIA
Table 1

Recent developments
2019

P o pulatio n, millio n

2.3

GDP , current US$ billio n

1.7

GDP per capita, current US$

723

Internatio nal po verty rate ($ 1.9)

a

10.1

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

a

37.8

a

35.9

Gini index

Scho o l enro llment, primary (% gro ss)
Life expectancy at birth, years

b

95.2

b

61.4

Source: WDI, M acro Poverty Outlook, and official data.
Notes:(a) M ost recent value (201 5), 201 1 PPPs.
(b) M ost recent WDI value (201 7).

Growth continued to accelerate in 2019,supported by tourism, trade and construction, leading to poverty reduction.
Fiscal and external deficits improved.
Sound macro policies and external debt
restructuring facilitated the approval of
an IMF ECF program. The outlook isclouded by COVID-19 which is expected
to hit the tourism sector hard.

GDP grew by 6 percent in 2019 against
6.5 percent in 2018, well above the potential rate of 3.3 percent. Services grew by
10 percent, supported by wholesale andretail trade, despite the Thomas Cook UK
bankruptcy. Agriculture contracted by 10
percent due to erratic rainfall. On the
demand side, growth was driven by highpublic and private investment. Externallyfinanced projects (9.8 percent of GDP)
supported public investment while private sector credit expanded rapidly (y-oy growth of 35.8 percent).
The external current account deficit(including grants) declined substantiallyfrom 9.8 percent of GDP in 2018 to 5.4
percent in 2019, driven by remittances
rising by 34 percent. Strong tourism receipts and budget grants also helped. FDI(mainly in real estate) financed the deficit. The exchange rate remained stableand foreign reserves rose to 3.8 monthsof imports. The fiscal deficit declined
from 6.2 percent of GDP in 2018 to 2.6
percent in 2019 (primary surplus of 0.7
percent). Domestic revenues increased
from 12.1 percent of GDP in 2018 to 14.4
percent in 2019. Tax revenues contributed 0.9 percent of GDP while 1.4 percent
came from nontax sources. Strengthened
audit capacity, stepped-up enforcement
efforts and legal actions on tax arrears
bolstered tax collection.
A 50 percent increase in civil service salaries, and higher outlays for social sectors
and transitional justice initiatives raisedcurrent expenditure. Interest payments
declined from 26.1 percent of domestic
revenues in 2018 to 22.3 percent in 2019.
SOE subsidies were contained at 0.6 percent of GDP. Public debt declined from
86.7 percent of GDP in 2018 to 82.5 percent in 2019. The risk of external debt
distress improved from ‘in distress’ to‘high’ following debt service deferrals
from external creditors.
Inflation increased from 6.5 percent in2018 to 7.1 percent in 2019, reflecting
rising positive output gap. The underlying trend appears benign and core inflation remains subdued. The central bankcontinued with cautious monetary easing stance and lowered the policy ratefrom 15 percent in end-2017 to 12.5 percent by November 2019. As domestic
financial conditions tightened marginally, the central bank reduced policy rate
to 12 percent in February 2020. Broadmoney continued to grow (27 percent
by end-2019).
Poverty incidence measured at the international poverty line (US$1.9/day PPP)
has marginally decreased from 9.1 percent in 2018 to 8.4 percent in 2019.
Strong remittances supported householdincomes directly and through increased
construction activity. The continued
inflow of tourists and higher valueadded through upscaled tourism contributed to employment generation.
However, poverty reduction was spatially imbalanced as rural areas saw adrop in agricultural output. Moreover,higher food prices, including of staples
such as imported rice, negatively impacted real purchasing power.

FIGURE 1 The Gambia / Actual and projected fiscal andprimary balance

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

Percent of GDP
1

Poverty rate (%)
45

0

40

28000

-1

35

27000

Real GDP per capita (constant LCU)
29000

30

-2

26000

25

-3

25000

20

-4

24000

15

-5

10

23000

-6

5

22000

0

-7
2017

2018

2019 eFiscal balance2020 f

2021 fPrimary balance

Sources: The Gambian authorities and World Bank estimates.

236 MPO / Apr 20

2022 f

21000
2015

2016

2017

2018

International poverty rate
Real GDP pc

2019

2020

2021

2022

Lower middle-income pov. rate

Source: World Bank.
Notes: see Table 2.
The cut-off date for information in this MPO was March 30, 2020.

Outlook
As the COVID-19 outbreak deepens, andtravel restrictions persist, tourist arrivals(especially from Europe) are expected todrop by half. This will drag down tourism-related services and industries. Tradedisruptions and lower remittances will
delay project implementation and construction. Lower oil prices, however,would improve terms of trade as The
Gambia is a net oil importer.
As a result, growth is expected to temporarily decline to 3.1 percent in 2020. However,
it would rebound to 8.5 percent in 2021 asglobal economy starts to recover. Inflation
is expected to remain elevated in 2020 andwill moderate to 5.5 percent in 2022, close to
the central bank target of 5 percent.
The external current account deficit isexpected to remain high as trade balance
widens owing to lower tourism receipts
and trade disruptions despite lower oil
prices, and remittances decline. The deficit
is to be financed by slightly plummeting
FDI. Foreign exchange reserves would
hover around 4 months of import.
The macro policy framework will be anchored by the IMF ECF program approved in March 2020. Medium term fiscal
consolidation is supported by sustained

revenue as well as improved expenditure
prioritization and public financial management. For 2020, domestic revenues would
decline by 0.9 percent of GDP as tourismrelated and oil revenues weaken.
The debt service deferrals will reduce
amortization by over 1 percent of GDP peryear. Moreover, SOE subsidies are expected to reduce as they strengthen corporate governance and improve balance
sheets, aided by lower oil prices. This together with containment measures (travel
ban on public officials, cancellation of conferences/workshops, etc.) would create
space to cover part of the COVID-19 preparedness cost and for priority social
spending needed in the face of declining
household incomes. This is likely tostrengthen resilience among poor and vulnerable households. Starting 2021, revenues are projected to recover as taxable
activity reinvigorates while expenditures
would shift towards accelerated externallyfinanced project execution. Fiscal deficit isexpected to decline to 1.7 percent by 2022,
while primary surplus would averagearound 0.6 percent of GDP. Net domestic
borrowing should be curtailed from 2021.
As growth declines in 2020 and trigger job
losses, labor income will drop. Lower remittances, higher health spending and rising food prices would also impose a burden
on household welfare. The poverty rate is

TABLE 2 The Gambia / Macro poverty outlook baseline scenario

expected to remain constant at 8.4 percent
in 2020 while the number of poor will increase given rapid population growth.

Risks and challenges
The Gambia has limited fiscal and monetary
policy buffers to respond counter-cyclicallyto a downturn, given high risk of debt distress, elevated inflation levels and modest
foreign reserves. If oil prices decrease further,major economies contract sharply, and widespread epidemic hits home, a substantial
disruption in economic activity is expected
given poor quality of health services. Adverse weather could also pose risks togrowth through lower agriculture output.
This downturn would affect household incomes and raise poverty. The Gambia needs
to reprioritize expenditures toward social
services, move fast with the implementationof the preparedness plan and mobilize donor
grants to mitigate adverse economic impacts.
Great care would be needed to preserve
debt sustainability and to avoid contracting
any new non-concessional debt to address
rising financing needs. Moreover, slow implementation of critical reforms on SOEs,
PFM, security sector, and civil service could
undermine the macro framework as authorities shift to addressing the pandemic fallout.

(annual percent change unless indicated otherwise)

2017

2018

2019 e

2020f

2021f

2022 f

4.8

6.5

6.0

3.1

8.5

5.5

Private Consumption

4.0

10.0

6.5

0.5

5.0

2.6

Government Consumption

8.5

10.1

12.9

41.2

14.1

22.5

Gross Fixed Capital Investment

14.4

5.5

45.3

0.4

11.2

-6.9

Exports, Goods and Services

42.1

3.0

46.3

-22.0

29.8

5.3

Imports, Goods and Services

27.9

12.9

46.4

-6.6

15.0

1.6

4.8

6.5

6.0

3.1

8.5

5.5

-4.4

0.9

-10.0

6.4

2.7

2.8

Industry

-3.5

2.5

11.5

5.2

8.3

5.1

Services

11.7

9.9

9.9

1.6

10.3

6.3

Inflation (Consumer Price Index)

8.0

6.5

7.1

6.7

6.0

5.5

Current Account Balance (% of GDP)

-7.4

-9.8

-5.4

-9.4

-9.7

-9.2

Fiscal Balance (% of GDP)

-5.0

-6.2

-2.6

-2.3

-2.0

-1.7

Debt (% of GDP)

87.0

86.7

82.5

80.8

73.8

69.6

Primary Balance (% of GDP)

-0.2

-3.1

0.7

0.6

0.6

0.6

International poverty rate ($1.9 in 2011 PPP) a,b

10.0

9.1

8.4

8.4

7.0

6.4

Lower middle-income poverty rate ($3.2 in 2011 PPP) a,b

37.3

35.2

33.2

33.1

30.6

29.5

Real GDP growth, at constant market prices

Real GDP growth, at constant factor prices
Agriculture

So urce: Wo rld B ank, P o verty & Equity and M acro eco no mics, Trade & Investment Glo bal P ractices.
No tes: e = estimate, f = fo recast.
(a) Calculatio ns based o n 2015-IHS. A ctual data: 2015. No wcast: 2016-2019. Fo recast are fro m 2020 to 2022.
(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.

The cut-off date for information in this MPO was March 30, 2020.

MPO / Apr 20 237

The global outlook is very uncertain. This outlook reflects information available at the time of its preparation. As more inf ormation becomes available,
these projections will be revised. They are presented now to assist policymakers to design alternative policy responses.

GHANA

Recent developments

Table 1

2019

P o pulatio n, millio n

30.1

GDP , current US$ billio n

71.4

GDP per capita, current US$

2372

Internatio nal po verty rate ($ 1.9)

a

13.3
a

30.5

a

56.9

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

43.5

Gini index

Scho o l enro llment, primary (% gro ss)
Life expectancy at birth, years

b

105.5

b

63.5

Source: WDI, M acro Poverty Outlook, and official data.
Notes:(a) M ost recent value (201 6), 201 1 PPPs.
(b) M ost recent WDI value (201 7).

Ghana’s economy grew by 6.1 percent in
2019, with single digit inflation; and stable fiscal and external balances. Growth isexpected to slow to 2.5 percent in 2020
due to the COVID-19 crisis. The mediumterm outlook is favorable, despite additional maintenance-related reductions inoil production. Downside risks relate tocontingent and actual liabilities in thefinancial and energy sectors; and spending pressures in the run-up to the 2020
election. Stagnant poverty reduction
and persistent regional disparities willremain a challenge.

Real GDP growth slowed to 6.1 percent in2019 from 6.3 percent in 2018. The slowdown reflected the sluggish growth in thethird quarter, with a substantial slowdown in industry due to lower mining
and quarrying output. The uptick in agriculture, due to favorable weather andhigher farmgate prices for cocoa, could
not offset the slowdowns in other sectors.
The growth rate for January-September
2019 was 6 percent, compared to 6.7 percent in 2018.
Ghana’s inflation remained below 10
percent in 2019. A moratorium on central
bank financing of the fiscal deficit, andlower non-food prices, helped to keep
inflation in check at 7.9 percent at endDecember 2019. Lower inflation allowed
the central bank to cut its policy rate to16 percent. Commercial bank lending
rates, while declining, remained at a high23.6 percent in 2019. The large spreads
suggest ongoing inefficiencies in thebanking system.
Financial sector reforms have begun paying off, as indicators improved. The
growth of credit to the private sector
reached 18.3 percent in December 2019, up
from 10.6 percent in December 2018. Assetquality also improved significantly and
the NPL ratio declined to 13.9 percent in
December 2019 from 18.2 percent in December 2018, driven by increased loan
recoveries and write-offs.
The headline fiscal deficit was 4.7 percent
of GDP in 2019, while the overall fiscal

deficit, including financial and energy
sector costs, reached 7 percent of GDP, thesame level as in 2018. Total revenues at
14.8 percent of GDP were 0.3 percent of
GDP higher in 2019 than in 2018. The
commitment to close the financing gap for
the Energy Sector Recovery Program(ESRP), which began in May 2019, added
an estimated 1 percent of GDP to thebudget. The financial sector clean-up,
which progressed into 2019 with a broader mandate to resolve insolvent banks andreform Special Deposit-taking Institutions,
resulted in an additional cost of 1.3 percent of GDP to the budget; the overall
fiscal deficit reached 7 percent of GDP in
2019, same as 2018.
The current account deficit remained at
3.1 percent of GDP in 2019, the same as
2018. Improved export earnings for gold
and oil resulted in a trade surplus equivalent to 3.8 percent of GDP, up from 2.8
percent in 2018. The current account deficit was financed by both higher FDI and
improved portfolio inflows, which werelarge enough to compensate for outflows
on the financial account related to Government amortization and “other” private net
outflows. Net international reserves stoodat US$3.9 billion (1.9 months of importcover) at the end-2019, while gross reserves totaled US$ 5.1 billion (2.4 monthsof import cover). Reserves have improved
further with the US$3 billion Eurobonds
issued in February 2020.
The Ghanaian cedi depreciated by 16.6
percent in 2019 as the BoG discontinued
its market interventions to halt the depletion of international reserves. The depreciation path was reversed initially in early

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

Poverty rate (%)

16

100

14

Real GDP per capita (constant LCU)
6000
5000

80

12

4000

60

10

3000

8

40
2000

6
20

4
2

1000

0

0
2005 2007 2009 2011 2013 2015 2017 2019 2021

0
2016
2017
Agriculture

2018
Industry

2019
2020
Services

Sources: Ghana Statistical Service and World Bank.

238 MPO / Apr 20

2021
2022
Real GDP growthInternational poverty rate
Upper middle-income pov. rate

Lower middle-income pov. rate
Real GDP pc

Source: World Bank.
Notes: see Table 2.
The cut-off date for information in this MPO was April 02, 2020.

2020 with an appreciation of 5.3 percent
against the USD by February 2020, aided
by the successful Eurobond placement; as
the COVID-19 crisis intensified in March
2020, depreciation set in again and nullified all initial gains in 2020.
The pace of poverty reduction has
slowed since 2012 and the incidence of
extreme poverty increased to 13.36 percent in 2019 – up from 12.1 percent in2012 (using the international poverty lineof $1.9 a day-PPP). The overall increasein poverty at national level is driven byrising poverty in the poorest, predominantly agricultural regions with low
access to electricity, roads, and markets.
Wealthy regions, including Greater Accra
and Ashanti continued to experience
poverty reduction since 2012, thereby
reinforcing regional inequalities.

Outlook
Economic growth is projected at 2.5 percent in 2020 due to the COVID-19 crisis
which triggered an external demand
shock and a terms-of-trade shock througha reduction in Ghana’s trade, investment,
and tourism activities. Rapidly fallingdomestic economic activity as a consequence of social distancing measures will

add to the impact as the virus spreads
locally. Over the medium-term, non-oil
activities will continue to support overall
growth by improved agriculture and agribusiness and a rebound in the post-reformfinancial sector. Yet, growth is expected toremain subdued even after the COVID-19
crisis, as oil production slows further due
to maintenance and lower oil prices.
Inflation is expected to remain in single
digits in 2020 and over the medium
term. Ghana’s current account deficit isexpected to widen to 4.3 percent of GDP
in 2020 due to the COVID-19 and lower
prices but narrow to 4.1 percent by 2022.
The trade surplus will be offset by higher net outflows on the services and income accounts.
The overall fiscal deficit is expected toincrease to 9 percent of GDP (comparedto the pre-COVID-19 crisis projection of
6.4 percent of GDP) on account of lower
oil-related revenues (the crisis related
revenue gap is 2 percent of GDP) andhigher health-related spending in 2020
(estimated to increase expenditure by 0.6
percent of GDP). The deficit will gradually narrow to 5.9 percent of GDP by 2022
as the economy recovers from the COVID-19 crisis and financial sector-related
costs decline after 2020.
Ghana’s poverty rate is projected toremain broadly unchanged over the

TABLE 2 Ghana / Macro poverty outlook baseline scenario

medium term. In the current capitalintensive, resource-dominated economy, few job opportunities are available
for the bottom 40 percent of the population. Based on the international poverty
line ($1.9 a day-PPP), the poverty rate
will fall marginally from 13.36 percent
in 2019 to 13.39 percent in 2022.

Risks and challenges
Ghana’s economic outlook is positive but
faces several risks and challenges. Growth
could fall below 2 percent in 2020 in awidespread COVID-19 scenario (comparedto the baseline growth rate of 2.5 percent).
The risks of fiscal slippage, beyond theneed to accommodate the COVID-19 impact, are high despite the 2018 fiscal responsibility law. Fiscal performance is burdened by additional liabilities from thefinancial and energy sectors and higher
debt service as deficit financing shifts fromconcessional to non-concessional borrowing. Adverse weather and climatic shocks
could precipitate lower agricultural output
and consequently lower growth, exports
and fiscal revenues.

(annual percent change unless indicated otherwise)
2017

2018

2019 e

2020f

2021f

2022 f

8.1

6.3

6.1

2.5

3.9

4.8

Private Consumption

11.3

-0.3

6.0

5.0

5.2

5.4

Government Consumption

-35.9

73.7

4.4

8.8

-7.6

-7.7

Real GDP growth, at constant market prices

Gross Fixed Capital Investment

-1.8

-5.0

21.8

-6.6

4.7

0.2

Exports, Goods and Services

16.5

10.3

13.8

2.8

3.0

9.0

Imports, Goods and Services

7.9

4.6

3.8

3.0

3.1

3.8

8.4

6.2

6.1

2.5

3.9

4.8

Agriculture

6.1

4.8

4.9

2.6

3.8

4.0

Industry

15.7

10.6

6.7

1.6

3.4

3.5

Services

3.3

2.7

6.2

3.3

4.3

6.4

Inflation (Consumer Price Index)

12.4

9.8

7.9

7.6

7.3

6.9

Current Account Balance (% of GDP)

-3.4

-3.1

-3.1

-4.3

-4.7

-4.1

Fiscal Balance (% of GDP)

-4.7

-7.0

-7.0

-9.0

-7.1

-5.9

Debt (% of GDP)

57.3

59.0

63.1

73.3

72.4

71.0

Primary Balance (% of GDP)

0.5

-1.4

-1.4

-2.7

0.2

0.6

International poverty rate ($1.9 in 2011 PPP) a,b

13.3

13.3

13.4

13.4

13.4

13.4

Lower middle-income poverty rate ($3.2 in 2011 PPP) a,b

30.4

30.3

30.2

30.2

30.2

30.1

a,b

56.7

56.6

56.5

56.5

56.4

56.3

Real GDP growth, at constant factor prices

Upper middle-income poverty rate ($5.5 in 2011 PPP)

So urce: Wo rld B ank, P o verty & Equity and M acro eco no mics, Trade & Investment Glo bal P ractices.
No tes: e = estimate, f = fo recast.
(a) Calculatio ns based o n 2011-, 2017-, and 2016-GLSS-VI I . A ctual data: 2016. No wcast: 2017-2019. Fo recast are fro m 2020 to 2022.
(b) P ro jectio n using average elasticity (2011-2017) with pass-thro ugh = 0.07 based o n GDP per capita in co nstant LCU.

The cut-off date for information in this MPO was April 02, 2020.

MPO / Apr 20 239

The global outlook is very uncertain. This outlook reflects information available at the time of its preparation. As more inf ormation becomes available,
these projections will be revised. They are presented now to assist policymakers to design alternative policy responses.

GUINEA

Recent developments

Table 1

2019

P o pulatio n, millio n

13.6

GDP , current US$ billio n

13.6

GDP per capita, current US$

999

Internatio nal po verty rate ($ 1.9)

a

35.3
a

70.3

a

92.3

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

33.7

Gini index

Life expectancy at birth, years

b

60.7

Source: WDI, M acro Poverty Outlook, and official data.
Notes:(a) M ost recent value (201 2), 201 1 PPPs.
(b) M ost recent WDI value (201 7).

Growth slowed to 5.6 percent in 2019 as
the mining boom cooled down. The fiscal
deficit improved owing to declining public
investment. Growth is projected to decline
to 3.1 percent in 2020 due to COVID-19
outbreak impacts slowing down poverty
reduction. Downside risks include economic implications of the COVID-19
outbreak and social instability ahead ofpresidential election.

Growth slowed down in 2019 to 5.6 percent (3.0 percent in per capita terms), following a reduction of non-mining andmining growth. This is below the estimated potential growth rate of 7.5 percent.
Mining sector growth decelerated to 8
percent while non-mining growth slowed
down to 5.1 percent, due to subdued agriculture growth. Inflation is estimated at
9.5 percent in 2019, a decrease from 2018(9.8 percent), owing to tighter monetary
policy, including contained central bankfinancing of the government. The positive
output gap tightened putting upward
pressure on inflation.
The external current account deficit fell
from 17.9 percent of GDP in 2018 to 13.9
percent in 2019. Exports contracted by 0.6
percent, reflecting a relative moderate
performance of mining sector exports.
Imports growth decreased by 9.5 percent,notably due to lower imports of intermediate and capital goods. Mining- related
FDI continued to be the main source of
external financing and remained unchanged at 12.9 percent of GDP. International reserves improved to reach 4.2
months of imports in 2019.
The overall fiscal deficit (including grants)
improved from 1.1 percent of GDP in 2018
to 0.9 percent in 2019. Tax revenues were
0.6 percentage points lower than expectedin the revised budget and in the IMF program, barely increasing to 12.5 percent of
GDP in 2019. Mining fiscal revenues
decreased from 2.6 percent of GDP in 2018

to 1.9 percent in 2019 due to lower mining
production in the second half of 2019. At
the same time, subsidies to the public electricity utility increased from 0.8 percent of
GDP in 2018 to 1.7 percent in 2019 due tothe payment of the electricity from the
Kaleta project. To keep the fiscal deficit incheck, capital expenditures were under
executed (3.1 percentage points of GDP
lower than budgeted).
Public debt declined from 37.3 percent of
GDP in 2018 to 34.4 percent in 2019, owing to delayed implementation of externally financed projects. Although theshare of non-concessional borrowing
increased, it remained within the IMF
ECF ceiling to support debt sustainability. The risk of public debt distress remains moderate.
Guinea has a flexible exchange rate regime. The Real Effective Exchange Rate
(REER) appreciated by 9.5 percent in 2019,as inflation did not decline as expected.
The IMF estimates that the REER was 1631 percent over-valued at end-2018.
Projections based on GDP per capita
growth suggest that the extreme poverty
rate, the percentage of the population
living below the international poverty
line (US$1.90 per day, 2011 PPP), hasdeclined from 25.3 percent in 2018 to24.3 percent in 2019. However, given the
sharp decline in agricultural GDP
growth in 2019, the extent of poverty
reduction is likely to be muted. This
amounts to over 3.3 million people living in extreme poverty. Inflation continues to put downward pressure on household purchasing power. Non-monetary
poverty remains high.

FIGURE 1 Guinea / Composition of government expenditure

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

Percent of GDP

Poverty rate (%)

20

100

15

80

Real GDP per capita (constant LCU)
6000000
5000000
400000060
103000000

40
2000000

5
20

0
2017

2018f

Capital Expenditures
Goods and Services

2019f

2020f

Transfers
Interest Payments

2021f
Wages

Sources: Guinean Authorities and World Bank staff estimates.

240 MPO / Apr 20

2022

1000000

0

0
2012

2014

2016

International poverty rate
Upper middle-income pov. rate

2018

2020

2022

Lower middle-income pov. rate
Real GDP pc

Source: World Bank.
Notes: see Table 2.
The cut-off date for information in this MPO was April 02, 2020.

Outlook
The COVID-19 outbreak will deteriorate
growth in the short-term to an estimated
3.1 percent in 2020. China’s weaker growth
will reduce bauxite demand and investment in Guinea. The impact of lower aluminum prices will be offset by rising gold
prices and declining oil prices (Guinea is a
net importer) and terms of trade (TOT) will
increase slightly by 0.17 percent, but will
not affect much the GDP growth. On the
demand side, social distancing measures
will reduce labor supply and contract private consumption. Over the medium term,mining, particularly gold, and miningrelated infrastructure investment would
continue to drive growth. Public and private investment for infrastructure (energy
and transport) will boost construction.
Better provisioning of agriculture inputs
and infrastructure investments will improve agricultural productivity. The implementation of structural reforms on
governance and business climate, as wellas higher electricity provision thanks tothe completion of the Souapiti dam, will
support private sector development overthe medium-term.
Inflation is expected to remain high but
decline gradually to 8.0 percent in 2022 as

the output gap turns negative. The external current account deficit is projected toincrease only to 15.0 percent of GDP in
2020, due to import of capital good forinfrastructure, notably construction ofSouapiti dam, but also to favorable TOT.
The deficit is projected to decline thereafter to 12.8 percent of GDP by 2022, with
exports projected to grow faster thanimports. FDI inflows will meet over 70
percent of financing requirements between 2020 and 2022, with long-termloans meeting the rest.
The fiscal deficit (including grants) is expected to rise to 4.0 percent of GDP in
2020-2021, before declining to 3.3 percent
in 2022 to accommodate for budgetarypressures due to COVID-19. Planned implementation of revenue mobilization
measures (including rationalization of adhoc tax exonerations and tax code simplification) could compensate for a potential
decline in tax collection steaming fromlower growth. Meanwhile, efforts to reduce electricity subsidies will help keep
expenditure under control. However, capital expenditures are projected to be subdued at 5.4 percent of GDP.
The extreme poverty rate is projected toremain nearly unchanged at 24.1 percent
in 2020 in line with lower expected
growth and decrease to 21.3 percent by
2022 based on a recovery to 5.8 percent

TABLE 2 Guinea / Macro poverty outlook baseline scenario

annual real GDP growth. Agricultural
productivity improvements and structuralreforms for more inclusive growth willneed to be attained for this level of poverty reduction.

Risks and challenges
Downside risks to the economic outlook
prevail. Social unrest and political instability in the run-up to the legislative andpresidential elections could weaken nearterm growth, policy discipline, and reform
implementation. Increased spending during the upcoming election or in response
to popular protests and union activity
poses additional risks. The COVID-19
outbreak will expose people to health andeconomic shocks with significant effects
on household welfare. The informal sector
and small businesses hard hit by the outbreak may seriously undermine the livelihoods of the poor and stop earnings. Furthermore, the poor have limited savings
and access to financial services to cope. In
this context, the Government needs toaccelerate progress on domestic resource
mobilization, deepen electricity sector
reform, and implement health and social
protection measures.

(annual percent change unless indicated otherwise)
2017

2018

2019 e

2020f

2021f

2022 f

10.3

6.2

5.6

3.1

6.9

5.8

Private Consumption

2.9

3.8

5.4

2.5

3.0

3.5

Government Consumption

31.9

-7.2

5.2

4.4

7.9

5.6

Gross Fixed Capital Investment

-43.0

46.4

-16.6

3.4

10.9

5.6

Exports, Goods and Services

67.5

7.2

-0.6

8.3

9.6

3.7

Imports, Goods and Services

-6.4

19.7

-9.5

6.0

7.0

2.0

12.5

6.7

6.4

3.1

6.9

5.8

Agriculture

8.6

9.0

3.4

3.3

3.5

3.6

Industry

15.2

10.0

6.1

3.5

8.0

7.0

Services

12.2

3.8

7.7

2.7

7.3

5.7

Inflation (Consumer Price Index)

8.9

9.8

9.5

9.3

8.5

8.0

Current Account Balance (% of GDP)

-6.7

-17.9

-13.9

-14.9

-14.0

-12.8

Net Foreign Direct Investment (% of GDP)

12.6

12.9

12.9

10.0

8.8

9.5

Real GDP growth, at constant market prices

Real GDP growth, at constant factor prices

Fiscal Balance (% of GDP)

-2.1

-1.1

-0.9

-4.0

-3.9

-3.3

Debt (% of GDP)

39.5

37.3

34.3

43.7

44.8

44.7

Primary Balance (% of GDP)

-1.1

-0.3

-0.4

-3.4

-3.0

-2.4

International poverty rate ($1.9 in 2011 PPP) a,b

26.9

25.3

24.3

24.1

22.4

21.3

Lower middle-income poverty rate ($3.2 in 2011 PPP) a,b

62.0

60.1

58.9

58.5

56.6

55.2

a,b

88.7

88.0

87.2

87.1

86.3

85.7

Upper middle-income poverty rate ($5.5 in 2011 PPP)

So urce: Wo rld B ank, P o verty & Equity and M acro eco no mics, Trade & Investment Glo bal P ractices.
No tes: e = estimate, f = fo recast.
(a) Calculatio ns based o n 2012-ELEP . A ctual data: 2012. No wcast: 2013-2019. Fo recast are fro m 2020 to 2022.
(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.

The cut-off date for information in this MPO was April 02, 2020.

MPO / Apr 20 241

The global outlook is very uncertain. This outlook reflects information available at the time of its preparation. As more inf ormation becomes available,
these projections will be revised. They are presented now to assist policymakers to design alternative policy responses.

GUINEA-BISSAU Recent developments
Table 1

Growth increased from 3.8 percent in 2018
to an estimated 4.7 percent (2.2 percent inper capita terms) in 2019. The recovery
was underpinned by higher cashew output and higher electricity production due
to newly installed power generation capacity. However, growth remained below
the potential rate of 5 percent as preelection political uncertainty weighed on
economic activity. The negative output
gap exerted a downward pressure on inflation, which remained low at 0.5 percent.
The external current account deficit isestimated to have slightly increased from
4.5 percent of GDP in 2018 to 4.7 percent
in 2019, largely due to a decline in cashew
prices. While cashew export volume increased by about 30 percent, cashew prices decreased by 33 percent. The latter,
combined with higher prices for imported
food and oil products, reduced the termsof-trade by 20 percent. Donor project
grants increased, while budget support
remains suspended amid political instability and concerns over the adequacy of themacro framework. The deficit was financed through FDI, aid, and external
concessional borrowing.
The overall fiscal deficit increased from 4.8
percent of GDP in 2018 to 5.1 percent in
2019, mainly owing to higher recurrent
spending. Tax revenue increased marginallyfrom 8.8 percent of GDP in 2018 to 9.1 percent in 2019, due to the pickup in economic
activity. However, this was largely offset by
weaknesses in customs and non-tax

2019

P o pulatio n, millio n

2.0

GDP , current US$ billio n

1.6

GDP per capita, current US$

794

Internatio nal po verty rate ($ 1.9)

a

67.1
a

84.5

a

93.4

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

50.7

Gini index

Life expectancy at birth, years

b

57.7

Source: WDI, M acro Poverty Outlook, and official data.
Notes:(a) M ost recent value (201 0), 201 1 PPPs.
(b) M ost recent WDI value (201 7).

Growth recovered in 2019 supported byhigher cashew production. The externalcurrent account deficit increased slightly
owing to a deterioration in the terms-oftrade. The fiscal deficit increased, driven
by higher recurrent spending. Growth isprojected to decline to 3 percent in 2020,
due mainly to economic disruptions
caused by COVID-19 containment
measures and the ongoing political crisis.
Poverty would remain high, but gradually decrease in the medium-term. Risks to
the outlook remain significant, including
COVID-19 effects and political crisis.

revenue. On the expenditure side, total government spending increased from 19.5 percent of GDP in 2018 to 23 percent in 2019.
Recurrent spending rose substantially due tohigher wage bill following salary adjustments in 2018, transfers to the public utility
company, and interest payments. The deficit
was financed by treasury securities and foreign-currency project loans.
Public debt increased to 63.3 percent of
GDP in 2019, from 58.5 percent in 2018,
driven by external loans financing public
infrastructure projects. The risk of external
debt distress remains moderate.
Guinea-Bissau’s monetary and exchange
rate policies are managed by the Central
Bank of West African States (BCEAO).
BCEAO’s international reserves reached 4.9
months of imports in 2019, up from 4.5
months in 2018, on the back of fiscal consolidation and higher net capital inflows. Despite continued tight monetary policy, regional liquidity pressures were alleviateddue to higher BCEAO supply and lower
demand for refinancing from banks. The
real effective exchange rate depreciated by
5 percent in 2019, due to nominal depreciation of the Euro against the US dollar combined with persistently lower inflation of
the WAEMU compared to trading partners.
Estimates indicate that poverty (using the
US$1.9 international poverty line) continued its downward trend, declining from67 percent in 2010 to 61 percent in 2019.
However, over the same period, the number of poor people increased by around18,000 annually due to faster population
growth amongst the poor. Lower poverty
rate was supported by good cashew production, despite lower cashew prices.

FIGURE 1 Guinea-Bissau / GDP growth, potential growthand inflation

FIGURE 2 Guinea-Bissau / Actual and estimated poverty
rates and number of poor

Percent, percentage points

Poverty and GDP per capita rate (%)

Percent of potential

50.3

Number of poor

100

125000090

1200000

80

4
0.1
3

70

1150000

60

1100000

50

2
-0.1

40

1050000

30

1000000

20

1950000

10

0

-0.3
2017

2018

2019

2020

Potential growth
Inflation rate
Sources: Ministry of Finance and World Bank.

242 MPO / Apr 20

2021

2022

Real GDP Growth
Output Gap (rhs)0900000
2010

2012

2014

2016

Number of poor(COVID)$3.2/day PPP(COVID)

2018

2020

2022

$1.9/day PPP(COVID)$5.5/day PPP(COVID)

Source: World Bank.
Notes: see table 2.
The cut-off date for information in this MPO was March 31, 2020.

Outlook
Growth is projected to decline to 3 percent in 2020, reflecting disruptions ineconomic activity caused by strictmeasures to contain the spread of
COVID-19. The Government has closed
borders and imposed several social distancing measures, including closing
schools and banning large public gatherings. These were further reinforced by
the state of emergency that restricts
movements and market opening. These
measures will have a negative impact on
consumer spending and domestic investment, though this would be partly offset
by gains from lower oil prices as GuineaBissau is a net oil importer. Growthwould recover beginning 2021, supported by higher cashew production and amore stable business environment. Inflation would rise gradually, reflecting
higher prices for imported food products.
The external current account deficit isprojected to remain high at 5.1 percent of
GDP in 2020, reflecting lower cashew
prices and higher prices of imported foodproducts. The deficit would gradually
decline to 3.7 percent of GDP by 2022
supported by an increase in cashew export volume and donor budget support.

The fiscal deficit is expected to increase
further to 5.7 percent of GDP in 2020 andgradually decline to 3.4 percent by 2022. A
steadfast commitment to reforms would
be needed to significantly reduce the deficit. On the revenue side, it is crucial torecover tax arrears, reduce tax exemptions, and strengthen customs controls.
Strict budget discipline will also be needed, including on transfers to the stateowned utility company, EAGB, and nonwage employee compensations.
WAEMU reserves would reach about 5.1
months of imports by 2022 as member
countries continue to implement fiscal
consolidation measures and external competitiveness improves. In December 2019,
the Union announced a currency reform
involving changes to the underlying arrangements with France. Market reactions
have been muted so far, likely reflecting
expectations that the foundations of thecurrency regime would remain broadly
unchanged for the foreseeable future.
Projections including the expected effects of
COVID-19 imply high poverty rate of 60.9
percent in 2020, reflecting lower farmer income and social vulnerabilities to the spreadof the pandemic. The number of poor people
would remain largely unchanged. Poverty
would gradually decline to about 58 percent
by 2022, supported by increased cashew
income and higher economic growth.

TABLE 2 Guinea-Bissau / Macro poverty outlook baseline scenario

Risks and challenges
The outlook is subject to substantial
downside risks. Renewed political instability could cause fiscal slippages andexacerbate the already difficult businessenvironment. Substantially lower cashew prices and adverse weather would
also pose a risk given the high export
concentration in cashew. The persistenceof the COVID-19 crisis could adversely
affect household income and increases
their risk of falling into poverty. Risks
associated with banking instability also
remain a threat to macro-financial stability. Further, although Guinea-Bissau is
not highly exposed to the economic impacts of COVID-19 prolonged containment measures and a faster spread of thedisease within local communities could
cause a sharper growth deceleration.
Guinea-Bissau has very limited fiscal
space to respond counter-cyclically to an
economic downturn. The ongoing political instability would further exacerbate
the impact of external shocks. GuineaBissau needs to reprioritize expenditures
toward critical public health services
and mobilize donor grants to address
adverse economic and social impacts.

(annual percent change unless indicated otherwise)

2017

2018

2019 e

2020f

2021f

2022 f

4.8

3.8

4.7

3.0

5.0

5.3

Private Consumption

16.7

2.5

3.8

2.0

6.0

6.5

Government Consumption

4.9

-1.4

4.3

6.9

3.9

4.2

Gross Fixed Capital Investment

-9.5

17.4

11.6

-3.5

9.0

13.2

Exports, Goods and Services

-17.8

13.0

8.1

3.9

9.9

10.8

Imports, Goods and Services

18.6

-3.1

5.5

0.5

10.5

12.5

3.8

2.9

4.7

3.0

5.0

5.3

Agriculture

-0.3

0.7

3.5

4.4

4.5

4.7

Industry

11.9

5.0

4.6

4.7

4.8

4.9

Services

4.8

4.0

5.7

1.4

5.4

5.9

Inflation (Consumer Price Index)

1.1

1.4

0.5

1.5

2.3

2.5

Current Account Balance (% of GDP)

0.3

-4.5

-4.6

-5.1

-4.2

-3.7

Fiscal Balance (% of GDP)

-1.1

-4.8

-5.1

-5.7

-4.7

-3.5

Debt (% of GDP)

58.1

58.5

63.3

65.6

63.4

62.9

Primary Balance (% of GDP)

-0.6

-3.7

-3.9

-5.5

-4.2

-2.6

International poverty rate ($1.9 in 2011 PPP) a,b

63.0

62.5

61.4

60.0

58.3

56.8

Lower middle-income poverty rate ($3.2 in 2011 PPP) a,b

82.7

82.2

82.0

81.1

80.2

79.2

a,b

92.2

92.1

91.8

91.5

91.2

90.7

Real GDP growth, at constant market prices

Real GDP growth, at constant factor prices

Upper middle-income poverty rate ($5.5 in 2011 PPP)

So urce: Wo rld B ank, P o verty & Equity and M acro eco no mics, Trade & Investment Glo bal P ractices.
No tes: e = estimate, f = fo recast.
(a) Calculatio ns based o n 2010-ILA P -I I. A ctual data: 2010. No wcast: 2011-2019. Fo recast are fro m 2020 to 2022.
(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.

The cut-off date for information in this MPO was March 31, 2020.

MPO / Apr 20 243

The global outlook is very uncertain. This outlook reflects information available at the time of its preparation. As more inf ormation becomes available,
these projections will be revised. They are presented now to assist policymakers to design alternative policy responses.

KENYA

Recent developments

Table 1

2019

P o pulatio n, millio n

52.2

GDP , current US$ billio n

101.4

GDP per capita, current US$

1943

Internatio nal po verty rate ($ 1.9)

a

36.8
a

66.2

a

86.5

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

40.8

Gini index

Life expectancy at birth, years

b

65.9

Source: WDI, M acro Poverty Outlook, and official data.
Notes:(a) M ost recent value (201 5), 201 1 PPPs.
(b) M ost recent WDI value (201 7).

Kenya’s real GDP growth in 2019 decelerated to 5.6 percent due to underperformance in agriculture and weak private
sector investment. With the COVID-19
global pandemic, growth is projected toslow down to 1.5 percent in 2020 andrecover to 4.0 percent over the medium
term. Despite a drop in economic growth,
poverty is expected to decline, but only ata moderate rate. More severe economic
impacts from the COVID-19 outbreak,fiscal slippages, or adverse weather constitute key downside risks.

Kenya is facing a significant economic
slowdown owing to the COVID-19 global
pandemic. Even before being affected by
the COVID-19 shock, Kenya’s economy
had decelerated. In the first three quartersof 2019 the economy grew by 5.4 percent,a drop from 6.0 percent over the same
period in 2018. The slowdown in growth
was associated with underperformance inagriculture and weak private sector investment. As a result, the World Bank’s
GDP growth estimate for 2019 is about 5.6
percent. The COVID-19 shock is expected
to further reduce growth in 2020 withlarge impacts on services (travel, tourism,
events), agricultural exports, and slowdown in remittances.
Headline inflation has been within thegovernment target range of 5±2.5 percent,before the shock, but with disrupted
global supply chain, we expect a slight
uptick in 2020. The average headline inflation stood at 5.3 percent in 2019, up
from 4.7 percent in 2018, as food prices
increased slightly. In February 2020, inflationary pressures picked up to 6.4 percent (from 4.1 percent in February 2019)as a result of increased prices for foods.
Nonetheless, core inflation that excludes
food and energy to capture underlying
inflation trends, decreased to 1.9 percent
in February 2020, from 3.1 percent in
February 2019. Low core inflation is consistent with an economy where demandpressures are benign, and where the output gap remains negative.

The COVID-19 shock has led to urgent
balance of payment financing needs and awidened fiscal deficit. The external current
account deficit remains narrow at about
4.4 percent of GDP over the period 20202022 due to lower imports, which morethan offset a decline in goods exports.
Remittances inflows and tourism receipts
have been sizeable ( at 2.9 percent of GDP
and 1.8 percent of GDP, respectively in2019), but with the outbreak of COVID-19,
tourism arrivals have crashed while remittances will be affected by rising job
losses in advanced economies. Pressure tofinance this current account deficit ismounting because international financial
markets are virtually shut to frontier issuers such as Kenya. As a result, the BoP
financing gap is estimated at about 1.4
percent of GDP in 2020. Some of this gap
is expected to be filled through a Rapid
Credit Facility by the IMF with the balance covered through a rundown in official foreign reserves.
The government has introduced a fiscal
stimulus to address economic fallout associated with COVID-19, effectively pausing
the planned fiscal consolidation. The stimulus included on the expenditure front,
additional spending to strengthen thehealth systems to handle COVID-19 infections, measures to provide relief to households (through cash transfers) and protect
businesses ( through expediting VAT refunds and payment of pending bills). On
the revenue side a reduction in income
tax, VAT, and turnover rates has been
proposed. In addition, the general slowdown in economic activity (due to social
distancing) will affect revenue collection

FIGURE 1 Kenya / Actual fiscal balance against target

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

Percent of GDP
0

Poverty rate (%)
100

-2

80

80000

-4

60

60000

-6

40

40000

20

20000

-8

Real GDP per capita (constant LCU)
1000000-10

2014/15

2015/16

Actual fiscal balance

2016/172017/18

2018/19

Target fiscal balance

Source: National Treasury (Quarterly Economic and Budgetary Review).

244 MPO / Apr 20

02005 2007 2009 2011 2013 2015 2017 2019 2021
International poverty rate
Upper middle-income pov. rate

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

Source: World Bank.
Notes: see Table 2.
The cut-off date for information in this MPO was April 02, 2020.

in the fourth quarter of FY2019/20. As aresult, the fiscal deficit is expected to expand by about 1.7 percent of GDP from atarget of 6.3 percent in FY2019/20 to about
8.0 percent of GDP. The public debt is also
projected to increase from 62.7 percent of
GDP in 2019 to about 66.5 percent of GDP
over the medium term. Most tax cuts are
expected to be offset by removal of tax
expenditures and exemptions, once thecrisis abates and recovery in economic
activity begin.
The national poverty rate has decreased to36.1 percent in 2015/16 from 46.8 percent
in 2005/06. Most of this is due to progress
observed in rural areas, where poverty
declined to 38.8 percent from around 50
percent in 2005/06. Meanwhile, poverty
reduction stagnated in urban areas andnorth-northeastern counties. The international poverty rate is expected to havedecreased further to 33.4 percent in 2019from 34.4 percent in 2018, based on simulations using empirical relationship between real GDP growth and poverty.

magnitude. As a result, the World Bank’s
estimate for GDP growth in 2020 is about
1.5 percent, before rebounding to about
4.0 percent over the medium term, on
assumption that investor confidence will
be restored soon after the COVID-19 pandemic is contained. Growth is also predicated on normal weather that should be
supportive of agricultural output, and thata swift and well targeted policy response
to COVID-19, will support the economy’s
resilience. Inflation could pick-up slightly
on the back of supply disruptions associated with COVID-19, while the current
account deficit is expected to widen, andexternal financing needs are growing.
Despite a drop in the growth rate, the international poverty headcount ratio in
Kenya is expected to continue its decline,
but only at a moderate rate of below apercentage point per year during 2020–21.
Accelerating the pace of poverty reduction
will require policy interventions to raise
agricultural productivity, create jobs, andsustain safety net programs.

Outlook

Risks and challenges

Kenya’s medium-term growth prospects
will be impacted by the COVID-19 shockand much remains uncertain about the

The risks to the growth outlook remain on
the downside. Unanticipated large-scalecommunity transmission of COVID-19

TABLE 2 Kenya / Macro poverty outlook baseline scenario

could disrupt domestic economic activity
more severely, add excess fiscal pressuresresulting into another round of fiscal slippage, and more negative growth remains
possible. Drought and a second-round of
locust invasion (in mid-year), if they materialized, could reduce agricultural output
and rural incomes. A recession in the
global economy due to COVID-19 pose
additional downside risks.
Several policy options could be deployed
to support firms and households to navigate through the COVID-19 pandemic.
First, fiscal and monetary policies could
focus as a priority, at strengthening thehealth systems to withstand a potential
spike in the COVID-19 infections. Second,
increasing support to poor and vulnerable
households and ensuring that the funds
are effectively used to reach those mostaffected by the pandemic. Lastly, the government could further enhance support tofirms through a mix of short-term
measures such as credit guarantee schemeand payment guarantees, and liquidity
support for the hard-hit sectors (travel,
tourism, events etc.).

(annual percent change unless indicated otherwise)
2017

2018

2019 e

2020f

2021f

2022 f

4.9

6.3

5.6

1.5

3.0

4.8

Private Consumption

7.6

5.9

7.1

1.5

4.1

5.5

Government Consumption

5.1

1.0

10.9

4.0

3.5

2.9

Gross Fixed Capital Investment

6.4

4.6

10.5

0.3

2.1

7.1

Exports, Goods and Services

-6.8

4.0

4.5

0.1

1.5

4.8

Imports, Goods and Services

8.7

2.6

4.8

1.2

4.8

7.2

4.6

6.3

5.6

1.5

3.0

4.8

Agriculture

1.9

6.4

4.3

2.8

3.2

4.2

Industry

3.8

5.3

4.2

1.1

2.2

4.7

Services

6.0

6.7

6.7

1.1

3.3

5.1

Inflation (Consumer Price Index)

8.0

4.7

5.2

5.6

5.9

6.1

Current Account Balance (% of GDP)

-6.2

-5.0

-4.6

-4.5

-4.4

-4.3

Net Foreign Direct Investment (% of GDP)

1.3

1.7

1.1

0.9

1.6

1.6

Real GDP growth, at constant market prices

Real GDP growth, at constant factor prices

Fiscal Balance (% of GDP)

-8.2

-7.6

-7.9

-7.7

-6.9

-5.9

Debt (% of GDP)

55.2

60.7

62.7

64.6

66.4

66.7

Primary Balance (% of GDP)

-4.6

-3.0

-3.8

-3.5

-2.8

-1.7

International poverty rate ($1.9 in 2011 PPP) a,b

35.2

34.4

33.4

33.1

32.4

31.6

Lower middle-income poverty rate ($3.2 in 2011 PPP) a,b

65.5

65.1

64.6

64.5

64.1

63.7

a,b

86.0

85.8

85.5

85.4

85.2

85.0

Upper middle-income poverty rate ($5.5 in 2011 PPP)

So urce: Wo rld B ank, P o verty & Equity and M acro eco no mics, Trade & Investment Glo bal P ractices.
No tes: e = estimate, f = fo recast.
(a) Calculatio ns based o n 2005-IHB S and 2015-IHB S. A ctual data: 2015. No wcast: 2016-2019. Fo recast are fro m 2020 to 2022.
(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.

The cut-off date for information in this MPO was April 02, 2020.

MPO / Apr 20 245

The global outlook is very uncertain. This outlook reflects information available at the time of its preparation. As more inf ormation becomes available,
these projections will be revised. They are presented now to assist policymakers to design alternative policy responses.

LESOTHO

Recent developments

Table 1

2019

P o pulatio n, millio n

2.3

GDP , current US$ billio n

2.8

GDP per capita, current US$

1208

Internatio nal po verty rate ($ 1.9)

a

26.9

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

a

49.7

a

73.1

a

44.9

Gini index

Scho o l enro llment, primary (% gro ss)
Life expectancy at birth, years

b

120.9

b

52.9

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

Economic growth remained sluggish in2019 reflecting the impact of persistent
droughts on agricultural output, slow
mining activity and delayed investment
programs. Major infrastructure work is
expected to help support a sporadic recovery, with real economic growth projected
to reach 3.2 percent in 2022. Risks to theoutlook are on the downside, driven largely by the impact of COVID-19 Extreme
poverty is expected to increase by 0.5 percentage points in 2020 due to the adverse
impact of the global crisis.

Growth continued to be held back in 2019by weak activity in the primary and secondary sectors. The continued poor performance of the agricultural sector reflected a decline in agricultural production
following persistent droughts, as well as
depressed rough diamond prices dampening mining and exploration activity. In
addition, the industry sub-sector is estimated to have been negatively affected byweakening global demand. Economic performance was also affected by slow execution of planned construction projects associated with the Phase II of the Lesotho
Highlands Water Project (LHWP-II). Services sector performed better, supported
in part by government initiatives to reinforce financial inclusion. Overall, growthis estimated at 1.4 percent in 2019, marginally down from 1.5 percent in 2018.
Fiscal consolidation helped reduce thebudget deficit in 2019. The budget deficit
is estimated to have narrowed to 4.5 percent of GDP in 2019, from 6.9 percent in
2018, due to improved revenue mobilization as well as reduced government expenditures. The increase in government
revenue reflects improved collection ofincome tax, excise duties, higher capital
grants from foreign governments andincreased mining royalties. Decelerating
government expenditure was driven by
reduced spending on operating expenses
and slow implementation of development
projects. The deficit was financed bydrawing down government deposits inthe banking sector, issuance of new domestic debt as well as external financing. Public
debt is estimated to have reached 49.7 percent of GDP in 2019, and the overall risk ofdebt distress remained moderate in the2019 debt sustainability analysis (DSA).
The current account deficit continued todeteriorate. The current account deficit isestimated at 7.6 percent of GDP in 2019,with the trade balance deteriorating against
the backdrop of falling diamond export
revenues. The financial account balance,
excluding reserves, is expected to register asurplus of 2.1 percent of GDP in 2019,
mainly due to foreign direct investment
inflows. Reserves are projected to fall marginally to 4.1 months of import in 2019from 4.2 months of imports in 2018.
Poverty rates are estimated to have stabilized in 2019. Results of the 2018 HBS survey recently released updated poverty estimates for Lesotho. Based on the new baseline survey extreme poverty US$ 1.90 (in2011 PPP terms) was 26.9 percent in 2018slightly decreasing to 26.8 percent in 2019.

Outlook
Growth is predicted to weaken in 2020.
The slowdown will be due to the impactof the COVID-19 pandemic. The virus is
expected to affect the Lesotho’s economy
through two major channels: trade andtourism. As an open economy, the supply
chains of most textiles and apparel firms
will be affected, as these firms source raw
materials from China. Also, due to subdued global demand from Lesotho’s main

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

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

Percent, percentage points

Poverty rate (%)
100

10Real GDP per capita (constant LCU)
11500

8

11000

80

6

10500

4

60

2

40

10000
9500

0
20

-2
2019

2020

2021

Services
Industry
Agriculture
Real GDP Growth, at factor cost
Sources: WDI and staff estimates.

246 MPO / Apr 20

2022

9000

0

8500
2010

2012

2014

2016

International poverty rate
Upper middle-income pov. rate

2018

2020

2022

Lower middle-income pov. rate
Real GDP pc

Source: World Bank.
Notes: see Table 2.
The cut-off date for information in this MPO was April 02, 2020.

trading partners such as the US, EuroArea and South Africa would negatively
affect Lesotho’s exports. Although cargo
will be allowed between Lesotho andSouth Africa, supplies of goods and services are likely to decline. As there aremany people from Lesotho working inSouth Africa, the deterioration of South
Africa’s economy is likely to lead to thedecline in the remittances from South
Africa. Tourism sector, which contributes
approximately 1.2 percent of GDP is
expected to be affected detrimentally as
more countries impose international
travel bans.
Agriculture output is expected to remain
subdued, albeit recovering somewhat
from previous year’s contraction. Overall,economic growth is projected to reach 0.4
percent in 2020. However, an upturn is
expected in 2021 due to government’s
investment projects, before accelerating
further in 2022 as work on the new Polihali dam gets underway.
Public debt remains on an upward trajectory. The fiscal deficit is expected to narrow to 3.3 per cent of GDP in 2020-21.
Public debt is expected to increase to 52.7
percent and 53.1 percent in 2020 and 2021,
respectively, mainly driven by government investment projects.
The current account deficit will remain
elevated. The current account deficit isexpected to reach an average of 7.6 percent of GDP in 2020-21, as imports areboosted by the LHWP-II and energy projects. The deficit is expected to be covered by capital transfers from the South
African government as part of the
LHWP-II and World Bank’s–financed
Lesotho Renewable Energy and Energy
Access Project.
Extreme poverty is expected to increaseby 0.5 percentage points in 2020 due tothe adverse impact of the global
COVID-19 crisis. The international US$
1.90 (in 2011 PPP terms) poverty rate is
projected to increase from 26.8 percent in2019 to 27.3 percent in 2020, and subsequently fall to 25.9 in 2022.

The main risk is an increase in unemployment for the poor and the sociallyvulnerable groups. Geo-political risks,
especially in the Middle East, may also
have implications on Lesotho as most of
the grants and external debt is contracted from such countries. The high level ofgovernment arrears also poses significant risk to Lesotho’s economic prospects in the medium term. In addition,
slow implementation of capital projects
by the Government poses some risks toeconomic growth in the medium-term.
Finally, despite the anticipated recovery
in SACU revenues for 2020/21, historicalpattern of spending by the government
during episodes of windfalls suggests
risk of significant fiscal slippages.

Risks and challenges
The balance of risk remains titled to thedownside, reflecting the possibility ofescalating external and domestic headwinds. Lesotho is vulnerable to external
demand shocks. The risk of deterioratingprospects in South Africa, where policy
uncertainty remains elevated, as well as
in other major trading partners such as
the US, China and Europe amid risks ofan escalating outbreak of COVID-19,
could significantly affect the outlook.

TABLE 2 Lesotho / Macro poverty outlook baseline scenario(annual percent change unless indicated otherwise)
2017

2018

2019 e

2020f

2021f

2022 f

-0.4

1.5

1.4

0.4

2.5

3.2

Private Consumption

1.1

0.8

5.2

-1.9

4.6

4.8

Government Consumption

0.1

-1.9

7.8

8.4

4.8

5.4

Gross Fixed Capital Investment

-0.6

17.1

1.5

5.0

7.9

13.9

Exports, Goods and Services

8.2

13.1

8.8

-5.8

8.2

6.2

Imports, Goods and Services

13.5

5.9

9.8

0.2

8.7

9.4

-2.5

1.7

1.4

0.1

2.6

3.2

Agriculture

3.1

-6.1

-1.0

0.3

1.3

2.2

Industry

-3.7

3.5

2.3

0.4

2.9

4.0

Services

-2.7

1.9

1.3

-0.1

2.6

2.9

Inflation (Consumer Price Index)

5.3

4.0

5.3

4.7

4.8

4.8

Current Account Balance (% of GDP)

-4.8

-4.2

-7.6

-6.4

-8.8

-13.3

Net Foreign Direct Investment (% of GDP)

1.7

1.6

1.6

1.0

1.2

1.1

Real GDP growth, at constant market prices

Real GDP growth, at constant factor prices

Fiscal Balance (% of GDP)

-1.6

-6.9

-4.5

-1.2

-5.4

-4.8

Debt (% of GDP)

36.6

42.7

49.7

52.7

53.1

54.0

Primary Balance (% of GDP)

-0.8

-5.9

-3.9

-0.9

-4.9

-4.4

International poverty rate ($1.9 in 2011 PPP) a,b

26.9

26.9

26.8

27.3

26.8

25.9

Lower middle-income poverty rate ($3.2 in 2011 PPP) a,b

49.7

49.6

49.6

49.9

49.6

48.0

a,b

73.1

73.0

73.0

73.3

73.0

71.9

Upper middle-income poverty rate ($5.5 in 2011 PPP)

So urce: Wo rld B ank, P o verty & Equity and M acro eco no mics, Trade & Investment Glo bal P ractices.
No tes: e = estimate, f = fo recast.
(a) Calculatio ns based o n 2017-CM SHB S. A ctual data: 2017. No wcast: 2018-2019. Fo recast are fro m 2020 to 2022.
(b) 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.

The cut-off date for information in this MPO was April 02, 2020.

MPO / Apr 20 247

The global outlook is very uncertain. This outlook reflects information available at the time of its preparation. As more inf ormation becomes available,
these projections will be revised. They are presented now to assist policymakers to design alternative policy responses.

LIBERIA

Recent developments

Table 1

2019

P o pulatio n, millio n

5.0

GDP , current US$ billio n

3.1

GDP per capita, current US$

611

Internatio nal po verty rate ($ 1.9)

a

40.9
a

72.6

a

92.2

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)
Life expectancy at birth, years

b

85.1

b

63.3

Source: WDI, M acro Poverty Outlook, and official data.
Notes:(a) M ost recent value (201 6), 201 1 PPPs.
(b) M ost recent WDI value (201 7).

The economy contracted by 2.3 percent in2019 on the back of weak consumption
and output. High inflation, at 27 percent,eroded purchasing power and consequently welfare. Real GDP is projected to contract by 2.2 percent in 2020 due to the
COVID-19 outbreak before recovering to
4.1 percent in 2022. Poverty is projected
to increase from 44.5 percent in 2019 to45.4 percent in 2020. The outlook is subject to downside risks stemming fromdeteriorating global conditions and delayed policy implementation.

Following modest growth of 1.2 percent in
2018, the economy contracted by an estimated 2.3 percent in 2019, on the back offalling demand and output. On the production side, the contraction was driven by
output fall in forestry, manufacturing andservices, along with sluggish agricultural
output growth and slower mining sector
expansion. High inflation eroded real incomes with adverse impact on private consumption. Fiscal consolidation and monetary tightening weakened domestic demand further during H2’2019.
Inflation pressures remained elevated during most of 2019 but moderated towards
the end of the year. Headline inflation
reached 27 percent in 2019 from 23.4 percent in 2018, largely due to the currency
depreciation (by 29.4 percent y/y) combined with supply-side constraints, themonetization of the fiscal deficit and financing of the Central Bank of Liberia’s(CBL) large deficit. Domestic food prices
increased by 35.9 percent as a result of poor
harvest. Poverty headcount ratio, measured
as percentage of population below the international poverty line of US$1.9/day(2011 PPP), increased from 42.4 percent in2018 to 44.5 percent in 2019 on the back of
economic contraction and high inflation.
The CBL announced its transition from defacto exchange rate targeting to interestbased monetary policy framework in July
2019 and tightened its monetary policy
stance in November 2019.The Government
has committed to zero CBL deficit financing

FIGURE 1 Liberia / Sectoral contributions to real GDP
growthstarting in FY2020. The growth rate of private sector credit plunged by 11.3 percent in2019 from a modest 4.1 percent growth in2018, reflecting weakening economic activity and challenges in the banking sector. The
share of non-performing loans in total loans
increased to 17.2 percent at end-December
2019 from 13.8 percent a year earlier. With
support from the IMF, the CBL has started
implementation of an action plan to address
financial sector risks, which prioritizes
measures to strengthen banking supervision, bolster the resolution framework, improve data quality, and enforce reporting
requirements.
The fiscal deficit widened from 4.8 percent
of GDP in FY2018 to 6.1 percent in FY2019,reflecting low domestic revenue mobilization and increased spending. The deficit
was financed by external loans, borrowing
from the CBL, and the accumulation of payment arrears. To address these challenges,
the Government approved a credible budget for FY2020 that consolidates the publicfinances, rationalizes the wage bill, andimproves domestic revenue mobilization
while protecting social spending. The Government has also started to implement its
domestic arrears clearance strategy. Revenues underperformed in the first half of
FY2020 due to the higher than anticipatedcontraction, but the government has maintained expenditures within the available
resources to avoid a widening of fiscal deficit or a further buildup of arrears.
The current account deficit narrowed to22.1 percent from 23.5 percent of GDP in
2018, supported by improved trade balance, buoyed by rising exports (particularly
gold and iron ore) and declining imports

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

Percentage points
5
4

3
2
1
0
-1
-2
-3
-4
-5

2017
Agriculture

2018
Forestry

2019eMining

2020f

2021f

2022f

Manufacturing

Services

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

248 MPO / Apr 20

Source: World Bank.
Notes: see Table 2.
The cut-off date for information in this MPO was April 02, 2020.

due to weak economic activity and currency depreciation. Gross international reserves fell to US$293 million at endDecember 2019, equivalent to 2.2 months ofimports from US$297 million (2.3 monthsof import coverage) a year earlier.

OutlookReal GDP is projected to contract by 2.2 percent in 2020 due to the adverse effects of
COVID-19 on output in various sectors
amid falling global demand and travel disruptions. A sharp rebound is expected overthe medium-term, supported by improved
performance of the non-mining sectors, underpinned by post-COVID-19 recovery andstructural reforms designed to alleviate constraints on productivity growth and enhance
economic diversification. Growth is projected to recover to 4.0 percent on average during 2021-22. The inflation rate is expected tomoderate to 11 percent by 2022, as CBL
maintains its tight monetary policy stance,
under the new monetary policy framework,and fiscal consolidation continues.
The overall fiscal deficit is expected tonarrow to 3.5 percent of GDP in FY2022,
supported by fiscal consolidation as government continues to implement public
sector pay reform and other public financial management reforms aimed atrevenue mobilization and expenditure
management. As a result, the primary deficit is projected to narrow from 5.4 percent
of GDP in FY2019 to 1.1 percent in FY2022.
The current account deficit is projected tonarrow to 19.7 percent of GDP by 2022, due
to the anticipated increase in mining andagricultural exports. The current accountdeficit will be primarily financed by capital
inflows, especially FDI in agriculture, mining, and infrastructure.
The proportion of poor households living
below the international poverty line of
US$1.9/day (2011 PPP) is projected to increase further to 45.4 percent in 2020 in linewith continued negative per capita income
growth before marginally decreasing to 44.4
percent in 2022. While it is difficult to gauge
precisely the welfare impact of the COVID19 pandemic, households are expected to beaffected negatively due to potential impact
on employment, particularly the non-farmself-employed in urban areas, high prices ofimported goods, restrictions on trade, andlosses either in terms of the sale of productive assets or consumption of working capital as they try to cope.

Risks and challenges
Risks are tilted to the downside. The deteriorating global conditions (including

TABLE 2 Liberia / Macro poverty outlook baseline scenario

Real GDP growth, at constant market prices

global supply, demand, and terms-oftrade shocks) resulting from the pandemic
could further weaken Liberia’s fiscal andexternal balances while inhibiting growthand poverty reduction. Given the country’s strong trade links with affected regions, the continued spread of COVID-19
will adversely impact Liberia’s trade, hospitality and investment activities, posing
substantial risks to the outlook. As COVID-19 spreads locally, stringent containment
measures would disrupt economic activity
further and lead to sharper contraction in
2020, followed by slower recovery in 2021.
An erosion of fiscal and monetary discipline would negatively affect the mediumterm growth outlook. Failure to executeclear recovery plan, backed by crediblebudget and stringent fiscal measures,
could lead to a return to monetary financing, with negative consequences for inflation, reserves and debt sustainability. Low
confidence in financial sector and financial
sector vulnerabilities could undermine theefficiency of the newly adopted monetary
policy framework, jeopardize macroeconomic stability, and worsen growth prospects. Insufficient progress on structuralreforms— including improvements indomestic revenue mobilization, the business climate, and public investment efficiency—could undermine medium-term
growth and slow economic diversification.

(annual percent change unless indicated otherwise)
2017

2018

2019 e

2020f

2021f

2022 f

2.5

1.2

-2.3

-2.2

3.8

4.1

Private Consumption

-1.7

6.0

-2.8

-1.9

1.1

8.6

Government Consumption

1.9

-4.3

4.0

-12.0

-1.3

-4.1

Gross Fixed Capital Investment

-4.1

-13.6

-4.3

2.2

9.8

1.0

Exports, Goods and Services

6.4

-0.3

1.6

-10.2

1.0

1.6

Imports, Goods and Services

-10.9

-13.8

0.4

-7.4

1.3

3.1

Real GDP growth, at constant factor prices

2.5

1.2

-2.3

-2.2

3.8

4.1

Agriculture

-1.1

-0.2

0.4

6.2

3.1

2.8

Industry

16.4

20.0

5.2

1.6

5.6

5.4

Services

1.1

-4.6

-7.9

-11.8

3.6

4.8

Inflation (Consumer Price Index)

13.2

20.4

27.0

21.3

13.5

11.0

Current Account Balance (% of GDP)

-23.4

-23.5

-22.1

-19.4

-20.3

-19.7

Fiscal Balance (% of GDP)

-4.8

-4.8

-6.1

-4.6

-4.5

-3.5

Debt (% of GDP)

34.9

40.3

52.5

60.9

68.3

68.0

Primary Balance (% of GDP)

-4.5

-4.2

-5.4

-3.2

-3.2

-1.1

40.8

42.4

44.5

45.4

45.0

44.4

Lower middle-income poverty rate ($3.2 in 2011 PPP) a,b

72.5

74.2

75.6

76.2

76.1

75.6

Upper middle-income poverty rate ($5.5 in 2011 PPP) a,b

92.2

92.6

93.2

93.5

93.4

93.2

International poverty rate ($1.9 in 2011 PPP)a,b

So urce: Wo rld B ank, P o verty & Equity and M acro eco no mics, Trade & Investment Glo bal P ractices.
No tes: e = estimate, f = fo recast.
(a) Calculatio ns based o n 2016-HIES. A ctual data: 2016. No wcast: 2017-2019. Fo recast are fro m 2020 to 2022.
(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.

The cut-off date for information in this MPO was April 02, 2020.

MPO / Apr 20 249

The global outlook is very uncertain. This outlook reflects information available at the time of its preparation. As more inf ormation becomes available,
these projections will be revised. They are presented now to assist policymakers to design alternative policy responses.

MADAGASCAR
Table 1

Recent developments

2019

P o pulatio n, millio n

26.4

GDP , current US$ billio n

14.3

GDP per capita, current US$

543

Internatio nal po verty rate ($ 1.9)

a

77.6
a

91.0

a

97.3

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

42.6

Gini index

Life expectancy at birth, years

b

66.3

Source: WDI, M acro Poverty Outlook, and official data.
Notes:(a) M ost recent value (201 2), 201 1 PPPs.
(b) M ost recent WDI value (201 7).

Madagascar is severely impacted by the
COVID-19 pandemic. Projected growthfor 2020 has been downgraded to 1.2 percent, reflecting a sharp drop in tourism
arrivals, contracting external demand,and disruptions to activity associatedwith domestic containment measures.
Growth is predicted to rebound to 5.6
percent in 2021, which should help
deliver a slight decline in the poverty rate,
following a significant increase in 2020.
Downside risks predominate, including
the possibility of a more prolonged
pandemic, severe cyclones or othernatural disasters.

After a weak start of the year, economic
activity regained momentum during
2019. The improvement was supported
by an acceleration in public investment,
renewed private-sector confidence, andmoderating inflation. However, subdued
global demand and weakening prices ofkey export products, including vanillaand cloves, led to decelerating export
revenues. A good rice harvest contributed to rising income for farmers, while
also moderating inflation and rice imports relative to 2018. On balance,
growth is estimated at 4.8 percent in
2019, broadly unchanged from 2018.
Job creation accelerated in 2019. Rising
activity in industry and services led tosignificant gains in formal employment,with newly registered employees at themain social security fund, CNaPs, reaching 61,000 in 2019, about 50 percent above
the average over the last five years. The
percentage of the population living below
the international poverty line of US$1.90(2011 purchasing power parity) per day isestimated to have fallen to 74.5 percent in2019 but remains significantly higher than
the regional average of 41 percent.
Fiscal and current account deficits remained low. The budget deficit is estimated at 1.4 percent of GDP in 2019, only
slightly up from 1.3 percent in 2018, while
public debt crept marginally up to 40.6
percent of GDP. Public spending wasdampened by low budget execution,
reaching only 77.1 percent for capital

expenditures. In contrast, tax revenues
were on par with government’s target,
albeit remaining low by international andregional standards, at an estimated 10.8
percent of GDP. As investment-related
imports increased and export revenues
declined following the drop in vanilla
prices, the current account deficit shiftedfrom a positive balance in 2018 to a deficitof 2.4 percent of GDP in 2019.

Outlook
Growth projections for 2020 have beensignificantly downgraded due to disruptions associated with the coronavirus outbreak. Global trade and travel disruptions
are expected to result in a sharp slowdown in Madagascar this year, withgrowth predicted to average 1.2 percent in
2020, compared to an estimate of 5.3 percent just prior to the coronavirus outbreak. The baseline scenario assumes thatthe suspension of all international flights
extends until May, resulting in a drop in
tourism activity by 50 percent on averagein 2020, whereas collapsing demand fromtrading partners like the Euro Area andthe United States will lead to a sharp
downturn in manufacturing activity. Domestic containment measures are also
expected to have a dampening effect inthe short term. Under the baseline scenario, conditions stabilize in the second halfof the year, with exports and investment
bouncing back in 2021. Growth would
recover to 5.6 percent in 2021, which is
0.3 ppt above previous projections.

FIGURE 1 Madagascar / Real GDP growth and investment
rates

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

Percent, percentage points

Poverty rate (%)
120

Percent of GDP

11

45

9

40

7

35
30

5

Real GDP per capita (constant LCU)
900000880000100

86000080

840000

25

3

20

1

15

-1

10

-3

5

-5

0
2005

2007

2009

2011

2013

2015

2017

2019

2021

60

82000080000040

78000020

7600000

7400002005 2007 2009 2011 2013 2015 2017 2019 2021

Government Investment (rhs)
GDP growth

Private Investment (rhs)

Sources: National Institute of Statistics and World Bank staff calculation.

250 MPO / Apr 20

International poverty rate
Upper middle-income pov. rate

Lower middle-income pov. rate
Real GDP pc

Source: World Bank.
Notes: see Table 2.
The cut-off date for information in this MPO was April 02, 2020.

However, this would leave a cumulative
effect of the coronavirus outbreak after 2
years of about -3.7 ppt of GDP.
Lower tax revenues are projected to widen
the budget deficit, but a sharp drop in oil
prices will help to slightly improve thecurrent account balance. Tax revenues will
be severely hampered this year by the
impact of weakening activity and tax relief measures for companies and households. In this context, the fiscal deficit isprojected to widen to 3.9 percent of GDP
in 2020 and 4.6 percent in 2021, with public debt increasing to an estimated 46.9
percent in 2021, a level still below the risk
threshold for a medium debt-carrying
capacity country like Madagascar. Sharply
lower oil prices and import volumes in2020 is expected to broadly offset weaker
export revenues, leading to a broadly stable current account deficit, at 2.5 percent
of GDP in 2020. The external deficit is projected to rise to 3.3 percent in 2021 as oil
prices and investment-related imports
recover some of their lost ground.
Job losses in manufacturing and services
sectors will likely push vulnerable workers into poverty, while incomes in key
agricultural export sectors decline. As aresult, poverty rates are projected to tickup in 2020 to 76.5 percent and then return
to a declining trend with the resumptionof moderate growth in 2021 and 2022,

reaching 75.2 percent at the end of the
projection period. Madagascar’s progressin alleviating extreme poverty after thecrisis will largely be determined by the
speed and strength of the global recovery,
the ability to maintain export market andemployer-employee relationships, essential infrastructure, and productive assets.
On an ongoing basis, the keys to more
rapid poverty reduction will be the speedof the structural transformation into offfarm employment, improved access tomarkets and productivity increases inagriculture, as well as resilience to climaticand further economic shocks.

Risks and challenges
The balance of risks to the outlook remains on the downside. Under a scenario
of further
COVID-19 escalation, outbreaks in advanced economies linger sothat containment measures can only be
lifted after four months and the number ofcases in Madagascar increases at a fasterpace than is assumed in the baseline, leading to stricter confinement measures. In
this context, activity in Madagascar would
contract by an estimated -0.9 percent in
2020, about -6.1 ppt below the preoutbreak projections. Growth would still

TABLE 2 Madagascar / Macro poverty outlook baseline scenario

bounce back to 6 percent in 2021, driven
by a significant recovery in exports andinvestment, but the cumulative effect on
GDP levels would amount to -5.4 ppt after
two years, which would be larger than theimpact of the 2009 crisis. In addition,
Madagascar’s poor remain highly vulnerable to the risks of cyclones and floods
due to the dependence on rain-fed agriculture, poor infrastructure and the absenceof affordable insurance mechanisms.
Fiscal sustainability risks remain undercontrol so far. Although external debt distress risks are currently assessed to be low
and public debt distress risks moderate,
maintaining debt sustainability in current
circumstances will require that (i) borrowing remains sufficiently concessional in its
financing terms, (ii) spending and investment projects be selected on the basis ofan objective prioritization framework; (iii)
contingent liabilities be kept under control, and (iv) the country preserve its debtcarrying capacity and implement key public finance reforms.
Other risks include severe natural disasters and large terms of trade shocks. Rural
communities are highly vulnerable to therisks of cyclones and floods due to thedependence on rain-fed agriculture, poor
infrastructure and the absence of affordable insurance mechanisms.

(annual percent change unless indicated otherwise)

2017

2018

2019 e

2020f

2021f

2022 f

3.9

4.6

4.8

1.2

5.6

5.6

Private Consumption

1.2

3.0

3.6

3.0

3.2

3.4

Government Consumption

13.9

-6.2

5.2

2.9

4.8

4.9

Gross Fixed Capital Investment

-1.8

-2.3

10.3

1.7

14.2

13.2

Exports, Goods and Services

45.4

4.6

4.2

-7.3

5.6

5.8

Imports, Goods and Services

23.7

-4.1

5.3

-3.2

6.4

6.8

3.9

3.7

4.7

1.1

5.6

5.7

Agriculture

1.3

3.7

2.8

2.4

3.2

3.4

Industry

5.8

8.1

7.2

2.2

6.4

6.6

Services

4.6

2.4

4.8

0.2

6.5

6.4

Inflation (Consumer Price Index)

8.3

7.3

5.6

4.4

5.9

6.0

Current Account Balance (% of GDP)

-0.4

0.7

-2.4

-2.5

-3.3

-3.8

Fiscal Balance (% of GDP)

-2.1

-1.3

-1.4

-3.9

-4.6

-4.5

Debt (% of GDP)

40.0

39.9

40.6

44.1

46.9

49.3

Primary Balance (% of GDP)

-1.4

-0.6

-0.7

-3.1

-3.6

-3.5

International poverty rate ($1.9 in 2011 PPP) a,b

76.3

75.5

74.5

76.5

75.7

75.2

Lower middle-income poverty rate ($3.2 in 2011 PPP) a,b

90.3

89.8

89.3

89.7

88.9

88.2

a,b

96.6

96.1

95.5

95.9

95.1

94.3

Real GDP growth, at constant market prices

Real GDP growth, at constant factor prices

Upper middle-income poverty rate ($5.5 in 2011 PPP)

So urce: Wo rld B ank, P o verty & Equity and M acro eco no mics, Trade & Investment Glo bal P ractices.
No tes: e = estimate, f = fo recast.
(a) Calculatio ns based o n 2005-EP M and 2012-ENSOM D. A ctual data: 2012. No wcast: 2013-2019. Fo recast are fro m 2020 to 2022.
(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.
P o verty pro jectio ns fo r 2020-2022 are adjusted upward to reflect the asymmetric impacts o f crises o n the po o r, as demo nstrated in the po st 2009 perio d.

The cut-off date for information in this MPO was April 02, 2020.

MPO / Apr 20 251

The global outlook is very uncertain. This outlook reflects information available at the time of its preparation. As more inf ormation becomes available,
these projections will be revised. They are presented now to assist policymakers to design alternative policy responses.

MALAWI

Recent developments

Table 1

2019

P o pulatio n, millio n

18.6

GDP , current US$ billio n

7.7

GDP per capita, current US$

412

Internatio nal po verty rate ($ 1.9)

a

70.3
a

89.4

a

96.7

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

44.7

Gini index

Scho o l enro llment, primary (% gro ss)
Life expectancy at birth, years

b

145.5

b

63.3

Source: WDI, M acro Poverty Outlook, and official data.
Notes:(a) M ost recent value (201 6), 201 1 PPPs.
(b) M ost recent WDI value (201 7).

Economic growth is estimated at 4.4 percent in 2019, due to a rebound in agricultural output offset by a slowdown in business activity due to political uncertainty.
Growth is projected to decline to about
3.2 percent in 2020 due to the COVID-19
outbreak, before picking up to around 5.0
to 5.5 percent in the medium term, as
consumption and investment rebound.
Considerable downside risks to growth
include a widespread domestic outbreak of
COVID-19, political uncertainty, weather
shocks, and fiscal slippages.

Real GDP is estimated to have grown by
4.4 percent in 2019, an increase from 3.5
percent in 2018, supported by a reboundin agricultural output, despite the adverse
effects of Cyclone Idai. Increased electricity generation in the first half of the year
also supported higher industrial sector
growth. However, the political impasseand related demonstrations following the
May 2019 elections weighed on businessactivity and investment.
The share of the population below theinternational poverty line of $1.90 per day
has decreased only slightly from 69.6 percent in 2017 to 68.3 percent in 2019. Rural
poverty remains elevated and actually
increased between 2011 and 2017, even as
national poverty stagnated. This was
mostly due to frequent natural disasters
that hindered agriculture production,
while post-drought food security response
and social safety nets helped reduce inequality. However, Cyclone Idai’s damage
to crops and physical infrastructure in
early 2019 has likely contributed to elevated food insecurity during 2020’s lean season in affected districts.
Headline inflation increased to 11.5 percent y.o.y. in December 2019, due to a
rapid increase in food prices. Food priceinflation reached 19.3 percent, largely
due to the highest maize prices in five
years due to scarcity in some areas, tightregional supplies, and trader speculation.
Non-food inflation declined to 4.9 percent. High food price inflation likely

exacerbates poverty among buyers ofmaize, which includes urban residents
and rural smallholder farmers.
Despite volatility of the Malawi Kwacha(MK) relative to United States Dollar(US$) in mid-2019, it has remained roughly stable thereafter, depreciating by only
0.7 percent by December 2019 y-o-y. The
volatility could be partly attributed tolimited foreign exchange earnings, importers frontloading orders ahead of elections, and slow disbursement of donor
projects. RBM has subsequently tightened
foreign exchange bureau trading regulations since mid-2019. Gross official foreign
reserves have remained largely over threemonths import cover through 2019, although the private sector reports somedelays in accessing foreign exchange. Malawi’s real exchange rate appreciation of
about 19 percent in 2019 poses a serious
risk to competitiveness.
The fiscal deficit declined to 6.5 percent of
GDP in FY2018/19, down from 7.8 percent
in FY2017/18. The improvement waslargely due to a reduction in recurrent
expenditure following several one-off
expenditures in FY2017/18 including thesecuritization of arrears (of 1.6 percent ofGDP) and the bailout of the Agricultural
Development and Marketing Corporation(of 1 percent of GDP). However, the deficit continued to be largely financed bydomestic borrowing, which further contributed to high cost domestic debt.
The current account deficit is estimated tohave narrowed to 17.8 percent of GDP in
2019, due to improvements in the tradebalance. Import growth was low in lightof weak demand and low project-related

FIGURE 1 Malawi / Fiscal deficit and public debt

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

Percent of GDP

Poverty rate (%)
120

Percent of GDP

8

70

7

Real GDP per capita (constant LCU)
100000

100

80000

60

6

80

5

60000

50
60

4
3
2

40000

40

40

30

20

20000

1

0

20
2011

2012

2013

2014

2015

Fiscal Deficit (lhs)

2016

2017

2018

2019

Public Debt (rhs)

Sources: Ministry of Finance, Economic Planning and Development and WorldBank.
252 MPO / Apr 20

002004 2006 2008 2010 2012 2014 2016 2018 2020 2022
International poverty rate
Upper middle-income pov. rate

Lower middle-income pov. rate
Real GDP pc

Source: World Bank.
Notes: see table 2.
The cut-off date for information in this MPO was March 20, 2020.

inflows associated with political uncertainty. A continuing trend of lower tobacco exports were partially offset by sugar
and non-traditional exports. Externalfunding supported the uptick in recoveryrelated imports.

OutlookReal GDP growth is projected to decline toabout 3.2 percent in 2020 due to the
COVID-19 outbreak, as better harvests are
expected to be offset by lower exports,
private consumption and investment due
to an increase in risk aversion. This projection is subject to considerable uncertainty
and assumes a contained spread of thevirus in Malawi and limited social distancing policies. In the medium term,
growth is expected to pick up to around
5.0 to 5.5 percent due to a rebound in private consumption and investment, combined with improving energy supply andimproved certainty following elections in
mid-2020. A slowdown in economic activity and labor mobility due to COVID-19
risk aversion would also affect the livelihoods and poverty status of most Malawians who depend on daily incomes fromself-employment and wages. As a result,the share of the population below thepoverty line in 2020 is projected at its 2019
level of 68.1 percent. The prospect of faster
growth, after economic uncertainties subside, will likely decrease poverty to 67.2
percent by 2021, although this will depend
on favorable weather conditions to support agricultural production.
The FY2019/20 fiscal deficit is expected toremain around 6.5 percent of GDP, almost
double the approved budget. Revenues
are expected to perform below optimistic
targets, while expenditures will come under pressure due to COVID-19 response,
higher wage payments, and election andsecurity costs. In the medium term, thefiscal outlook envisages a modest level ofconsolidation, as a comprehensive tax
review increases the efficiency and equityof tax collection, while the government
reduces unbudgeted expenditures andlimits wage increases to inflation.
The current account deficit is projected totighten to around 16 to 17 percent of GDP
in the medium term. Tobacco export
growth could slow due to the COVID-19
outbreak and the suspension of Malawian
tobacco exports to the U.S. A pickup inother cash crops, including sugar, could
support exports. Imports are expected toincrease at a lower rate due to supply
chain disruptions associated with the
COVID-19 outbreak as well as lower international oil prices.

TABLE 2 Malawi / Macro poverty outlook baseline scenario

Risks and challenges
Malawi’s economic outlook faces considerable downside risks: the potential for a widespread domestic outbreak of COVID-19,
political uncertainty, weather shocks, andfiscal slippages. The COVID-19 outbreakposes considerable downside risks for the
economy and, in an adverse scenario, could
lead to a recession in 2020. It could further
slow and reduce demand for Malawi’s exports, slow imports and raise their cost, andreduce public and private investment. Additionally, if the virus spreads extensively, it
could severely disrupt the labor force thereby increasing poverty. This is combinedwith political uncertainty due to a newround of elections expected in mid-2020,
which can further weigh on investment andreduce reform momentum. Weather shocks
can derail growth and increase food inflation, while increasing the vulnerability ofrural households to poverty. Unless social
safety-net programs are scaled-up, poverty
will increase during natural disaster years.
Finally, Malawi faces considerable risks offiscal slippages, potentially from a substantial incurrence of arrears, overly optimistic
revenue projections, and parastatal-related
contingent liabilities.

(annual percent change unless indicated otherwise)
2017

2018

2019 e

2020f

2021f

2022 f

4.0

3.5

4.4

3.2

4.8

5.3

Private Consumption

11.4

7.3

3.9

2.7

4.2

4.5

Government Consumption

-2.3

-14.3

3.5

6.1

5.4

3.7

Gross Fixed Capital Investment

-6.0

-2.9

6.0

1.8

3.6

7.6

Exports, Goods and Services

3.7

6.9

3.8

3.1

4.6

5.1

Imports, Goods and Services

-1.5

6.4

3.6

2.8

4.1

4.7

4.0

2.9

4.4

3.1

4.7

5.3

Agriculture

5.0

2.4

4.3

3.7

4.3

4.1

Industry

2.2

2.2

3.8

2.9

4.6

5.3

Services

4.0

3.4

4.5

2.9

5.0

5.8

Inflation (Consumer Price Index)

11.5

9.2

9.3

8.7

8.2

7.5

Current Account Balance (% of GDP)

-22.4

-20.5

-17.8

-16.9

-16.4

-16.1

Fiscal Balance (% of GDP)

-4.8

-7.8

-6.5

-6.5

-5.3

-4.7

Debt (% of GDP)

56.4

59.4

59.4

62.7

62.1

60.8

Primary Balance (% of GDP)

-0.5

-3.9

-2.4

-2.5

-1.1

-0.6

International poverty rate ($1.9 in 2011 PPP) a,b

69.6

69.2

68.3

68.1

67.2

66.2

Lower middle-income poverty rate ($3.2 in 2011 PPP) a,b

89.2

89.0

88.6

88.5

87.9

87.4

a,b

96.6

96.6

96.5

96.4

96.3

96.1

Real GDP growth, at constant market prices

Real GDP growth, at constant factor prices

Upper middle-income poverty rate ($5.5 in 2011 PPP)

So urce: Wo rld B ank, P o verty & Equity and M acro eco no mics, Trade & Investment Glo bal P ractices.
No tes: e = estimate, f = fo recast.
(a) Calculatio ns based o n 2016-IHS-IV. A ctual data: 2016. No wcast: 2017-2019. Fo recast are fro m 2020 to 2022.
(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.

The cut-off date for information in this MPO was March 20, 2020.

MPO / Apr 20 253

The global outlook is very uncertain. This outlook reflects information available at the time of its preparation. As more inf ormation becomes available,
these projections will be revised. They are presented now to assist policymakers to design alternative policy responses.

MALI

Recent developments

Table 1

2019

P o pulatio n, millio n

19.7

GDP , current US$ billio n

17.0

GDP per capita, current US$

863

Internatio nal po verty rate ($ 1.9)

a

49.7
a

79.3

a

94.9

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)
Life expectancy at birth, years

b

b

80.2
58.5

Source: WDI, M acro Poverty Outlook, and official data.
Notes:(a) M ost recent value (2009), 201 1 PPPs.
(b) M ost recent WDI value (201 7).

Growth reached 5.1 percent in 2019 on
the back of agriculture and services andpoverty declined. The fiscal deficit improved as revenues recovered. The outlook
is clouded by downside risks related toinsecurity, COVID-19, energy sector
fiscal risks, deteriorating terms of trade,adverse weather conditions.

Growth increased from 4.7 percent in 2018
to 5.1 percent (1.9 percent per capita) in
2019. This is about equal to the potential
growth rate (5.0 percent). On the supply
side, economic activities were driven byservices, agriculture, construction, andmining, which made up to 85 percent of the
GDP growth. On the demand side, government investment accelerated and contributed to 2.8 percentage points of growth.
Inflation turned negative in 2019 at -0.4 percent with a continued downward trend. It
was much lower compared with WAEMU
average (0.1 percent), which is mainly driven by Senegal (1 percent) and Côte d’Ivoire(0.8 percent). Despite common inflation factors in WAEMU including lower food prices
due to excess regional supply and imported
euro area low inflation, Mali’s price movement reflected a more pronounced foodprice collapse, while other sectors performed
even worse (clothing, health, communication, restaurants and hotels).
The external current account deficit remained unchanged at 4.9 percent of GDP
with the rise in import volumes offset by
an improvement in the terms of trade.
Exports were driven by gold production.
The current account deficit was largely
financed by project grants in the capital
account and official credits. Non-debt creating financing in the form of project
grants funded one-third of the current
account shortfall (1.5 percent of GDP).
The fiscal deficit decreased from 4.7 percent of GDP in 2018 to 2.9 in 2019.

Tax revenues recovered from 11.9 percent
of GDP in 2018 to 14.6 percent in 2019,
thanks to improvements in tax and customs administrations as well as increased
audit coverage. Meanwhile, total expenditure increased by 4.5 percent of GDP to
24.8 percent, due to a public investment
surge. The deficit was financed throughregional and external loans. Public debt
rose from 37.5 percent of GDP to 38.3 percent in 2019. Mali remains at moderaterisk of overall and external debt distress.
Mali’s monetary and exchange rate policies are managed by the Central Bank ofWest African States (BCEAO), which
maintains a fixed peg between the CFA
Franc and the Euro. Its reserves reached
4.9 months of imports in 2019, on the backof fiscal consolidation and higher net capital inflows. Despite an unchanged tightmonetary policy, regional liquidity pressures were alleviated due to higher
BCEAO supply and lower demand forrefinancing from banks.
The extreme poverty rate is estimated tohave declined from 42.2 percent in 2018 to
41.2percent in 2019. Strong agricultural
production including cotton and the tertiary sector expansion led to increase in
consumption of rural households andinduced a decline in poverty.

OutlookThe negative economic and social implications of COVID-19 are materializing withthe global downturn and domestic preventive measures. The government has set

FIGURE 1 Mali / Growth of real GDP at factor cost and sectoral contribution to real GDP growth

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

Percent, percentage points

Poverty rate (%)
100

6Real GDP per capita (constant LCU)
350000530000080
42500003260200000401500001

100000
20

0
2019

2020

2021

Services
Industry
Agriculture
Real GDP Growth, at factor cost
Source: World Bank.

254 MPO / Apr 20

2022

50000

0

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

Lower middle-income pov. rate
Real GDP pc

Source: World Bank.
Notes: see table 2.
The cut-off date for information in this MPO was March 30, 2020.

travel restrictions, closed schools, nightclubs and bars, and prohibited publicgatherings of more than fifty people.
Growth is projected to decelerate to 2.9
percent in 2020, and to an average 4.6
percent over the medium-term. Agriculture and industry will be relatively less
impacted, while the tertiary sector will
get the hardest hit due to social distancing measures. On the expenditure side,
private investment and private consumption will plunge.
The external current account deficit will
decrease to 4.1 percent in 2020. Mali’s external position is subject to two opposing
forces: improved terms of trade and subdued global demand. Mali is a net oil importer and gold exporter. Lower oil prices
and higher gold price would improve its
terms of trade. On the other hand, Mali’s
exports will be affected by contracting global demand and the country might sufferfrom disrupted global value chain, as its
imports depend substantially from China.
Considerable efforts are being deployedby the authorities to increase tax revenues
so that fiscal deficit will return to or below
3.0 percent in 2022 to be in line with the
WAEMU convergence criterion, although
the deficit will widen and go beyond the
3.5 percent target in 2020 .
WAEMU reserves would reach 5.1 monthsof imports by 2022 as member countries

continue to implement fiscal consolidation
measures and external competitiveness
improves. In December 2019, the WAEMU
authorities announced a currency reform
involving changes to the underlying arrangements with France. Market reactions
have been muted so far, reflecting expectations that the foundations of the currency regime would remain broadly unchanged for the foreseeable future.
The poverty reduction is projected to stalland remain unchanged at 41.3 percent in2020.The negative impact of COVID-19
will materialize in two ways: (i) A global
reduction in cotton prices due to a decline
in cotton demand will directly reduce
farm income for cotton growers particularly in the country’s poorest region ofSikasso; (ii) reduction in remittances, especially from France will disproportionately
affect households in the second poorest
region of Kayes.

Risks and challenges
The fragile security situation remains aneminent risk. The spread of insecurity
will disturb agricultural and mining
sectors. Mali remains vulnerable to adverse weather shocks and commodity
price volatilities.

TABLE 2 Mali / Macro poverty outlook baseline scenario

The impact of the spread of COVID-19 canbe substantial. In a downside scenario(outbreak within the country, and the
pandemic generates stronger reactions
within individual countries), economic
activities would be further disrupted given the poor quality of health services andnecessary social distancing. Growthwould subsequently decline to 2.0 percent
in 2020. Should the global uncertainty andgrowing risk aversion sentiment in financial markets continue, Mali might encounter difficulty in raising funds in the regional market. Disruption in trade activities might lead to decrease in the supplyof essential goods resulting in high pricesthat impact the poorest and most vulnerable population. Contraction in imports,
will likely disrupt tertiary sector activities(trade, transport, hotel and restaurant)
and hence affect households dependingon these activities, especially those in theinformal sector.
The looming insolvent situation of thestate-owned electricity company (EDM)
constitutes a major fiscal risk while thesurge of domestic debt could weigh on
public finances. Concrete measures indomestic revenue mobilization, as well as
efforts in restructuring EDM with participation from the private sector are therefore of vital importance.

(annual percent change unless indicated otherwise)
2017

2018

2019 e

2020f

2021f

2022 f

5.3

4.7

5.1

2.9

5.7

5.2

Private Consumption

3.4

3.0

3.5

2.5

4.5

4.9

Government Consumption

4.9

2.0

13.2

14.0

3.1

4.5

Gross Fixed Capital Investment

-3.7

-0.9

9.6

-1.5

5.6

5.5

Exports, Goods and Services

11.4

-0.1

2.3

1.9

6.5

2.4

Imports, Goods and Services

-14.2

-12.1

5.9

3.6

1.8

2.6

5.5

5.3

5.1

3.0

5.5

5.3

Agriculture

5.2

5.9

5.1

4.2

5.2

5.0

Industry

6.8

5.5

4.4

4.3

5.2

5.0

Services

5.2

4.8

5.4

1.4

5.8

5.6

Inflation (Consumer Price Index)

1.8

1.7

-0.4

0.6

2.0

2.3

Current Account Balance (% of GDP)

-7.3

-4.9

-4.9

-4.1

-3.6

-3.7

Net Foreign Direct Investment (% of GDP)

3.6

2.7

1.9

2.6

2.2

2.1

Real GDP growth, at constant market prices

Real GDP growth, at constant factor prices

Fiscal Balance (% of GDP)

-2.9

-4.7

-2.9

-3.7

-3.1

-2.8

Debt (% of GDP)

36.0

37.5

38.0

40.0

39.1

39.0

Primary Balance (% of GDP)

-2.0

-3.8

-2.2

-2.8

-2.1

-1.7

International poverty rate ($1.9 in 2011 PPP) a,b

43.3

42.2

41.2

41.3

39.3

38.2

Lower middle-income poverty rate ($3.2 in 2011 PPP) a,b

75.4

74.6

73.7

74.0

72.5

71.5

a,b

93.5

93.3

92.8

92.9

92.5

92.1

Upper middle-income poverty rate ($5.5 in 2011 PPP)

So urce: Wo rld B ank, P o verty & Equity and M acro eco no mics, Trade & Investment Glo bal P ractices.
No tes: e = estimate, f = fo recast.
(a) Calculatio ns based o n 2009-ELIM . A ctual data: 2009. No wcast: 2010-2019. Fo recast are fro m 2020 to 2022.
(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.

The cut-off date for information in this MPO was March 30 2020.

MPO / Apr 20 255

The global outlook is very uncertain. This outlook reflects information available at the time of its preparation. As more inf ormation becomes available,
these projections will be revised. They are presented now to assist policymakers to design alternative policy responses.

MAURITANIA
Table 1

Recent developments

2019

P o pulatio n, millio n

4.3

GDP , current US$ billio n

5.7

GDP per capita, current US$

1314

Internatio nal po verty rate ($ 1.9)

a

6.0

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

a

24.1

a

32.6

Gini index

Scho o l enro llment, primary (% gro ss)
Life expectancy at birth, years

b

96.7

b

64.5

Source: WDI, M acro Poverty Outlook, and official data.
Notes:(a) M ost recent value (201 4), 201 1 PPPs.
(b) M ost recent WDI value (201 7).

Growth accelerated in 2019 due to amining boom. External pressures eased
as terms of trade improved and mining
exports increased. Fiscal discipline created budgetary space for social spending
and supported a reduction in debt.
Growth and poverty reduction are expected to sharply decelerate in 2020 due
COVID-19 but recover over the medium
term. The outlook is subject to significant downside risks stemming from asustained the COVID-19 outbreak, climatic hazards, delayed structural reforms, and regional insecurity.

Growth accelerated from 3.6 percent in2018 to 6.3 percent (3.3 percent per capita terms) in 2019. This was driven by amining boom that stemmed from a recovery in iron production and a pick-up
in gold production due to past expansions of gold mines. Meanwhile, nonextractive growth remains robust (at 4.7
percent in 2019) supported by telecomand transport, despite a deceleration infish and irrigated rice production.
The external current account deficit
narrowed from 18.6 percent of GDP in2018 to 13.5 percent in 2019, fueled byhigher iron and gold export prices andlower oil and wheat import prices. The
improved terms of trade were coupledwith increased mining production. The
current account deficit was financed
mostly by extractive related FDI tobuild the first phase of the GTA gas
project and external public borrowing.
International reserves rose from 3.6
months of imports in 2018 to 4.0 in
2019, above the adequate level of 3.6
estimated by the IMF.
The Government has maintained a primary fiscal surplus (excluding grants)
for a second consecutive year, reaching
0.6 percent of GDP in 2019. The strong
fiscal position was driven by continuous
spending restraint. Current expenditures dropped from 17.4 percent of GDP
in 2018 to an estimated 15.1 percent in
2019, driven by a rationalized salaryscale, reduced interest payments, andlower subsidies. In parallel, domestically financed capital expenditures declined by 1 percent of GDP due to under-execution of public investments. The
decline in expenditures offsets the drop
in fiscal revenues (excluding grants)from the fade-off of the gas exploration
fees in 2018 and the decrease in imported-related taxes. The strong fiscal position and accelerated growth reduced thedebt-to-GDP ratio from 101.8 percent of
GDP in 2018 to 93.6 percent in 2019.
While public debt is sustainable, theoverall and external risk of debt
distress remain high.
Despite a narrowing negative nonextractive output gap, inflation decreased from 3 percent in 2018 to 2.2
percent in 2019, owing to lower imported inflation as international wheat prices
decelerated. The ouguiya depreciated by
2.8 percent against the US dollar, but thereal effective exchange rate remains
overvalued by about 4-14 percent. The
banking sector continues to suffer fromstructural weaknesses and strong liquidity constraints as the ratio of liquid-tototal assets fell from 24.6 percent in 2017
to 19.6 percent in 2018. Although NonPerforming Loans (NPLs) declined from
22.6 percent in 2018, they remained highat 21.7 percent of total loans in 2019.
Poverty measured at the international
poverty line (US$ 1.9/day PPP) is estimated to have marginally decreased from 6.4
percent in 2018 to 5.9 percent in 2019,
mainly because growth was driven by
extractives with low labor intensity. Rising household incomes reflect a continued, yet slower expansion, of agriculture.

FIGURE 1 Mauritania / Evolution of main macroeconomic
indicators

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

Percent

Poverty rate (%)
80

Percent of GDP

8

0

6

-5

Real GDP per capita (constant LCU)
25000

70
20000

60

4

-10

2

-15

0

-20

30

-2

-25

20

-4

-30

10

50

2010

2012

2014

2016

2018

2020p

GDP growth (%)
Primary fiscal balance (% of GDP)
Current account balance (% of GDP, rhs)
Sources: Mauritanian authorities and World Bank staff calculations.

256 MPO / Apr 20

2022p

15000

40
10000
5000

0

0
2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
International poverty rate
Real GDP pc

Lower middle-income pov. rate

Source: World Bank.
Notes: see table 2.
The cut-off date for information in this MPO was April 02, 2020.

Moreover, subdued wheat prices reduced
inflationary pressures.

Outlook
The COVID-19 global economic crisis is
expected to heavily weigh down on
Mauritania’s economy in 2020. Whileterms of trade improve, the economic
slowdown in Europe and China(Mauritania’s main trading partners)
will suppress export demand. Moreover,private demand will be hit by socialdistancing measures imposed by theauthorities. Mauritania will experience alarge growth deceleration from 6.3 percent in 2019 to –0.8 percent in 2020. Economic activity will rebound in 2021-2022
due to a pick-up in extractive related
FDI, a recovery in private consumption,and the onset of gas exports in 2022. As
the output gap turns positive, inflation
will increase to 4 percent in 2022.
The current account deficit is projected
to narrow gradually to 13.8 percent of
GDP in 2022 as terms of trade improve,gas exports start, and mining production picks up. External financing would
be met by extractive related FDI andlong-term disbursements. As the external position improves, international

reserves would increase to 4.2 months ofimports by 2022.
The fiscal balance is expected to deteriorate and register a deficit of 2.6 percent
of GDP in 2020. Domestic revenues will
decline and health expenditures andsocial transfers will be increased to respond to the outbreak. In 2021-2022,
economic recovery will be associatedwith a pick-up in taxes and higher extractive revenues that would be used tofinance an increase in social spending
and capital expenditures. As a result,the fiscal position will improve and reduce the debt-to-GDP ratio to 86 percent
of GDP by 2022.
With support from the IMF, the authorities aim to strengthen the monetary policy and render the exchange rate more
flexible. In that context, the central bankplans to introduce a system to foreigncurrency auctions and establish a technical platform to create an interbank foreign exchange market in 2020.
As growth declines in 2020, lower economic activity and social distancing will
trigger job losses, especially for informal
workers in the service and manufacturing sectors. Moreover, rising food prices
will impose a burden on all households.
Poverty is expected to rise to 6.5 percent,and the number of extreme poor will
increase by almost 30 thousand people.

TABLE 2 Mauritania / Macro poverty outlook baseline scenario

Risks and challenges
The macroeconomic outlook is subject tovarious risks. The biggest risk is a protracted COVID-19 pandemic with additional negative real, fiscal and external
sector effects. Sustained low oil prices andtechnical issues are risks that could affectthe profitability and development of the
GTA gas project. Regional insecurity in
the Sahel is another source of risk. Mauritania is also exposed to recurring cycles ofdroughts that impact agricultural output
and household income. On the domestic
front, failures of reform implementation
would undermine growth prospects. In
addition, fiscal risks could arise from contingent liabilities associated with StateOwned Enterprises.
Future poverty reduction will depend on
rising labor productivity and strengthening inclusion into labor markets. Highlevels of child mortality and low education levels undermine human capital accumulation. In addition, low labor force participation and low employment rates impede social inclusion.

(annual percent change unless indicated otherwise)
2017

2018

2019 e

2020f

2021f

2022 f

3.1

3.6

6.3

-0.8

4.9

5.4

Private Consumption

4.5

5.2

4.4

-1.6

4.2

4.2

Government Consumption

2.9

3.8

5.5

8.9

1.7

3.8

Gross Fixed Capital Investment

0.8

1.8

-1.2

0.9

9.8

5.5

Exports, Goods and Services

1.6

-4.0

10.8

-3.0

6.0

11.7

Imports, Goods and Services

1.9

0.5

-0.2

2.2

7.2

6.5

2.8

3.2

6.3

-0.8

4.7

5.1

Agriculture

4.1

7.2

4.9

1.7

5.6

6.0

Industry

1.1

-5.1

10.1

4.0

9.5

10.8

Services

3.0

6.1

4.9

-6.4

0.1

-0.7

2.3

3.0

2.2

3.4

3.7

4.0

Current Account Balance (% of GDP)

-13.9

-18.6

-13.5

-18.2

-15.8

-13.8

Net Foreign Direct Investment (% of GDP)

12.0

14.7

10.3

9.5

14.2

13.1

Real GDP growth, at constant market prices

Real GDP growth, at constant factor prices

Inflation (Consumer Price Index)

Fiscal Balance (% of GDP)

-0.3

3.4

2.7

-2.6

-0.4

0.1

Debt (% of GDP)

95.9

101.8

93.6

98.9

97.0

93.6

Primary Balance (% of GDP)

1.2

5.0

3.9

-1.6

0.6

1.0

International poverty rate ($1.9 in 2011 PPP) a,b

6.5

6.4

5.9

6.5

6.2

5.9

a,b

25.7

25.2

23.8

25.7

24.7

23.7

Upper middle-income poverty rate ($5.5 in 2011 PPP) a,b

60.6

60.3

58.5

60.6

59.5

58.3

Lower middle-income poverty rate ($3.2 in 2011 PPP)

So urce: Wo rld B ank, P o verty & Equity and M acro eco no mics, Trade & Investment Glo bal P ractices.
No tes: e = estimate, f = fo recast.
(a) Calculatio ns based o n 2014-EP CV. A ctual data: 2014. No wcast: 2015-2019. Fo recast are fro m 2020 to 2022.
(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.

The cut-off date for information in this MPO was April 02, 2020.

MPO / Apr 20 257

The global outlook is very uncertain. This outlook reflects information available at the time of its preparation. As more inf ormation becomes available,
these projections will be revised. They are presented now to assist policymakers to design alternative policy responses.

MAURITIUS
Table 1

Recent developments
2019

P o pulatio n, millio n

1.3

GDP , current US$ billio n

14.4

GDP per capita, current US$

11348

Internatio nal po verty rate ($ 1.9)

a

0.2
a

2.1

a

12.1

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)
Life expectancy at birth, years

b

101.5

b

74.5

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

Mauritius is experiencing a strong economic impact of COVID-19, especiallythrough tourism earnings, which is expected to lead to a steep recession in 2020and drive up government debt. There are
additional BoP vulnerabilities due to thelarge offshore sector. Progress in terms ofpoverty reduction will slow down due tothe negative impacts of COVID-19, andwage inequality remains substantial due
to mounting skills shortages and lack ofinclusiveness in the labor market.

GDP in 2019 grew 3.6 percent, driven by
construction and services sectors (banking,ICT) as well as a rebound in agriculture.
Manufacturing growth remained on asluggish trend and was negatively impacted by decelerating global demand during
2019. This continues a pattern of structuraltransformation, with more knowledge
intensive services sectors expanding whilesome of the sectors that have traditionallyprovided low-skilled employment stagnating or even contracting.
Inflation was 1.4 percent in 2019, despite
an accommodative monetary policy, withthe key repo rate lowered to 3.35 in August
2019 and further to 2.85 in March 2020.
Except for short-term fluctuations for locally produced vegetables and fruits, pricelevels are mostly determined by imports.
Substantial bilateral external grants enabled the government to ramp up public
investment while keeping the fiscal deficit
around 3 percent (after grants) in recent
years. However, increases in public transfers following the November 2019 election,
most notably a 50 percent increase in thegeneral pension, are putting additionalstrain on public expenditure. Public debt
levels are estimated to have decreased
from 68 percent of GDP to 65 percent in2019 due to a transfer of reserve valuation
gains from the Bank of Mauritius used to
repay external debt. The debt structure isfavorable in terms of long maturities.
Mauritius continues to run significant
trade deficits (~-15 percent of GDP in2019). Surpluses in the income and financial accounts are mostly linked to theoffshore sector and have in past years
more than offset the trade deficit, with
the Bank of Mauritius accumulating reserves to keep the exchange rate broadly
stable to the Euro.
Absolute poverty levels in Mauritius remain low. Measured at USD 5.5 per day
2011 PPP line, 17.2 percent of the population was poor in 2012 and the share declined to 12.1 percent in 2017. The Gini
index for household disposable income
increased from 33.3 to 36.0 between 2006
and 2012 and declined to 34.6 in 2017.
Public transfers contributed to mitigate
the rise in total income inequality thatwould have otherwise been higher. The
recent increase in the general pension will
likely further reduce inequality, but at ahigh cost due to its universality.

OutlookWith tourism coming to an effective
standstill in March 2020 due to COVID-19
and the country on lockdown, GDP is
expected to shrink -6.9 percent under thebaseline scenario, which assumes a recovery of global tourism starting in Q3 2020.
This is driven by a steep decline in export
revenue (tourism, but also manufacturing
and financial service) and consumption as
domestic services are inhibited by the
lockdown. The sharp drop of export revenue is mitigated by a decline in imports as
consumption and investment slow down
and oil prices decline, and reductions in

FIGURE 1 Mauritius / Fiscal balance and public sector debt

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

Percent of GDP

Poverty rate (%)

Percent of GDP

2

80

25

0

75

20

-2

70

-4

65

-6

60

Real GDP per capita (constant LCU)
350000300000250000

-8

55

-10

50
2011

2013

2015

General gov. balance (lhs)
General gov. debt (rhs)
Sources: World Bank staff estimates.

258 MPO / Apr 20

2017

2019e

2021f

Primary balance (lhs)1520000010150000100000

5

50000

0

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

Lower middle-income pov. rate
Real GDP pc

Source: World Bank.
Notes: see Table 2.
The cut-off date for information in this MPO was April 02, 2020.

repatriated earnings of foreign owned
businesses, leading to only a moderate
expansion of the current account deficit.
Dynamics in the financial account, which
is dominated by conduit investment related to the global business sector, areexpected to deteriorate as global investment slows, but there is significant uncertainty in both the magnitude and direction of resulting effects. With reserves
at 13 months of imports, BoM is well
positioned to temporarily defend thecurrency if needed.
The government has put in place a support package to help the private sector
cope with the shock, which is expected tomitigate its impact on private sector performance while in combination with declining revenue leading to a large fiscal
deficit in 2020.
The medium-term outlook remains favorable with a strong recovery in 2021
and a gradual shift from consumptionbased growth to more private sector investment and export driven growth. This
assumes that the government will takeadvantage of its strong new mandate toimplement growth and competitivenessenhancing structural reforms under the
2020/21 budget.
The government has pledged to further
increase the basic pension, beyond the 50
percent granted in December 2019, by anadditional 50 percent by 2024. The baseline scenario considers the December 2019
increase, but assumes reform measuresand increases in taxes on the wealthiest
Mauritians to accompany further increases in the medium term.
Because of the sizeable contraction ofGDP, poverty is projected to increase in2020 to 12 percent and decline more
slowly to 9.5 percent by 2022 when measured against the USD 5.5 per day 2011
PPP line. Although about 1 in 2 poor in
Mauritius are inactive and live off public
transfers, some of those who work intourism, manufacturing and household
services are likely to lose their job orwork shorter hours as these sectors arebeing hit severely by the global pandemic and the country lockdown.

Risks and challenges
Mauritius is highly vulnerable to a more
prolonged COVID-19 pandemic thatwould continue to disrupt global traveland demand in key markets for the export sector. Another important risk factor is the offshore financial sector, that insuch a scenario would likely suffer fromdelays and cancellation of investment
projects routed through Mauritius.

TABLE 2 Mauritius / Macro poverty outlook baseline scenario‘Flight to safety’ effects, on the other
hand, could go in either direction, as international holdings based in Mauritius
may decide to delay projects overseas
and keep funds in Mauritius until thesituation improves. Under a downside
scenario, growth projections for 2020
would decline further, and 2021 growthwould also be impacted negatively.
In February 2020, Mauritius was grey
listed by the Financial Action Task Forcefor insufficient progress in AML/CFT.
This could have negative effects on thefinancial and global business sector if
improvements are not quickly achieved,
and thus further aggravate the above
discussed BoP dynamics.
Future inclusive growth is intrinsicallylinked to the challenge of overcoming
constraints to a more inclusive labor market. This includes activating more youth
and women, particularly those with low
educational attainments. Over 50,000
youth aged 16 to 29 are neither in education nor in employment, and about 1 outof 3 has obtained at most a certificate ofprimary education. Similarly, only 1 in 2
women participates in the labor market,
and only 1 in 3 among women with low
education. This illustrates the urgent needto address gender gaps in order to makegrowth more inclusive.

(annual percent change unless indicated otherwise)
2017

2018

2019 e

2020f

2021f

2022 f

3.9

3.8

3.6

-6.9

8.7

4.6

4.5

4.6

4.6

-5.9

4.9

4.1

Government Consumption

10.1

0.0

6.4

7.2

2.1

6.2

Gross Fixed Capital Investment

9.1

9.5

6.1

-17.3

4.6

8.6

Exports, Goods and Services

2.0

0.5

1.2

-12.5

14.9

3.4

Imports, Goods and Services

10.4

1.3

2.8

-8.2

3.5

2.9

3.6

3.6

3.6

-6.9

8.7

4.6

Agriculture

-0.2

-1.3

3.9

0.8

0.7

0.7

Industry

2.8

2.6

2.5

2.0

2.6

3.1

Services

4.1

4.1

3.9

-9.6

11.0

5.2

Inflation (Consumer Price Index)

3.7

3.2

1.4

2.0

2.0

3.1

Current Account Balance (% of GDP)

-5.8

-6.2

-6.5

-9.1

-4.9

-3.6

Fiscal Balance (% of GDP)

-2.1

-3.3

-3.2

-8.4

-5.0

-5.0

Debt (% of GDP)

68.9

67.8

64.5

75.5

73.9

74.2

Primary Balance (% of GDP)

0.5

-0.7

-1.0

-5.9

-2.4

-2.4

International poverty rate ($1.9 in 2011 PPP) a,b

0.2

0.2

0.2

0.2

0.1

0.1

Lower middle-income poverty rate ($3.2 in 2011 PPP) a,b

2.1

1.9

1.8

2.1

1.7

1.6

a,b

12.1

11.3

10.7

12.0

10.2

9.5

Real GDP growth, at constant market prices a
Private Consumption

Real GDP growth, at constant factor prices

Upper middle-income poverty rate ($5.5 in 2011 PPP)

So urce: Wo rld B ank, P o verty & Equity and M acro eco no mics, Trade & Investment Glo bal P ractices.
No tes: e = estimate, f = fo recast.
(a) Histo rical demand-side data is being revised due to a co nsistency pro blem.
(b) Calculatio ns based o n 2012-HB S and 2017-HB S. A ctual data: 2017. No wcast: 2018-2019. Fo recast are fro m 2020 to 2022.

The cut-off date for information in this MPO was April 02, 2020.

MPO / Apr 20 259

The global outlook is very uncertain. This outlook reflects information available at the time of its preparation. As more inf ormation becomes available,
these projections will be revised. They are presented now to assist policymakers to design alternative policy responses.

MOZAMBIQUE
Table 1

Recent developments

2019

P o pulatio n, millio n

29.5

GDP , current US$ billio n

14.9

GDP per capita, current US$

506

Internatio nal po verty rate ($ 1.9)

a

62.9

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

a

81.9

a

54.0

Gini index

Scho o l enro llment, primary (% gro ss)
Life expectancy at birth, years

b

107.8

b

59.3

Source: WDI, M acro Poverty Outlook, and official data.
Notes:(a) M ost recent value (201 4), 201 1 PPPs.
(b) M ost recent WDI value (201 7).

After falling to 2.2 percent in 2019, theimminent drop in global demand andchallenging financing conditions are
expected to push growth down to 1.1
percent in 2020 as extractives and private services become most affected. Thesedevelopments will increase Mozambique’s poverty rate to 62.4 percent(from 61.8 percent in 2019) and add over
690 thousand people to the pool of poor.
In the medium-term, growth is set torecover to 4.5 percent as investments in
the LNG sector materialize.

Growth slowed to a 19-year low of 2.2
percent in 2019 as weak performance inthe coal industry and the tropical cyclones
dented activity. Operational difficulties
affecting coal production, along with ailing coal prices, led to a contraction in theextractive sector’s contribution to growth.
Agricultural output, which represents a
fifth of GDP, also narrowed as the cyclones hit just before Mozambique’s largest harvest season, resulting in a 0.4 percentage-point reduction in the sector’s
contribution to growth. Manufacturing
and service sectors’ performance has remained stable as easing interest rates andcontinued currency stability supported
the gradual recovery in private demand.
Whilst inflation fell below the targeted 6
percent to 2.8 percent, food price inflation,
which disproportionately affects the poor(a higher share of income is allocated tofood when compared to the rich), wasslightly higher at 3.3 percent. With population growing at 2.8 percent, these developments contributed to increase the number of poor by over 540,000 people, despite the minimal impact on poverty headcount, which reached 61.8 percent in 2019(from 61.6 percent in 2018).
One-off capital gains receipts (CGR) from
LNG operations provided space for the
fiscal adjustment initiated in 2016 to continue. Despite significant costs from general elections, cyclone relief efforts and astill heavy wage-bill, the primary andoverall deficits are estimated at 3.5 andFIGURE 1 Mozambique / Real GDP growth and sectoral
contributions to real GDP growth

0.3 percent of GDP in 2019 (from 1.5 and
5.1 percent in 2018). Excluding CGRshows an interruption in fiscal consolidation with the primary and overall fiscal
deficits estimated at 2.2 and 5.3 percent of
GDP. Spending on socio-economic sectors
remained broadly stable at 14.5 percent ofGDP, but improved expenditure composition and efficiency is needed given growing recurrent expenditures. Despite progress in restructuring the MOZAM-bond,Mozambique remains in debt distresswith external and public debt stocks at 99
and 118 percent of GDP at end 2019.
Budget financing pressures, including
supplier arrears clearance and support to
SOEs, have kept domestic debt on the rise,
although CGR have helped to slow thegrowth in domestic debt.
Mozambique’s external position improved in 2019. A 35 percent drop in service imports, due to reduced LNG related technical services, put the current account deficit (CAD) at 20.7 percent of
GDP (26.6 percent excluding CGR), downfrom 30.6 percent in 2018. Foreign direct
investment (FDI) remains the main
source of financing along with private
external debt linked to LNG investments.
CGR have bolstered international reserves, which reached 7 months of import cover at the end 2019.

Outlook
Growth will slow to 1.1 percent this year,
amid declining global demand for Mozambique’s key exports (coal and aluminum).

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

Percent, percentage points
5%5
4%4
3%3

2%2
1%1
0%0
-1
-1%
2016

2017

Agriculture
Private Services
GDP

2018

2019e
Extractives
Tax

2020f

2021f

Sources: Mozambique Statistical Office and World Bank Staff Estimates.

260 MPO / Apr 20

2022f

Manufacturing
Public Services
Source: World Bank.
Notes: see Table 2.
The cut-off date for information in this MPO was April 02, 2020.

Having propped the economy through therecent downturn, Mozambique’s extractives sector’s contribution to growth willturn negative as delays to operational investments, low prices and muted demand,
reduce coal production by half. Trade restrictions will revert the recovery in private services (wholesale and retail trade,
hospitality and transport), whilst deteriorating global financial conditions delay
key LNG investments. Social distancing
measures and reduced economic activity
will also affect labor incomes, especiallyamong informal service sector workers inurban areas. This loss in earnings will increase Mozambique’s poverty rate to 62
percent in 2020. Disruption in food supplies due to trade restrictions may increase
food prices, with implications for the poor.
A domestic outbreak could pull vulnerable
households into poverty, especially in cases of a direct health impact on the household breadwinner. Long-term disruptionof health and education services may affectchildren in poor households, their humancapital development and future earnings
potential in the labor market. Growth will
climb towards 4.5 percent by 2022 as LNGled investments provide added stimulus,
including a boost to construction and services. Despite this, Mozambique’s growth
structure is expected to remain unchanged: megaprojects-led growth, highimport-dependence, underdevelopment of
the domestic productive base and minimal
linkages with rural areas where most of
the population and the poor reside. Thispattern will not allow poverty to subdue,
with poverty rates expected to remainunchanged in 2022.
The near-term fiscal outlook is challenging: lower tax collection and increased
health and transfer expenditures will add
to existing pressures on the budget fromhigh debt service and a still growing wage
bill. A growth recovery could ease fiscalpressures and support progress towards
the zero primary balance target set for2022/3, whilst an IMF program could
strengthen the fiscal framework. Mozambique is entering a period of widening
CADs as the early stages of the LNG investment cycle begin. As in previous
years, this will be funded through FDI
and, increasingly, by LNG project financing. Mozambique enters this cycle with astrengthened external reserve position
bolstered by investment and CGT inflows.

Risks and challenges
Mozambique’s growth outlook is subject toadditional risks, including a prolonged fallin demand and commodity prices and

TABLE 2 Mozambique / Macro poverty outlook baseline scenario

muted growth expectations for key trade
partners (South Africa, China and Europe).
An improved growth outlook could be
expected, however, if LNG investment
advances as initially planned in 2020 and
agricultural production is robust. Military
insurgencies in the centre and north of thecountry, where most of the poor live, posea challenge with poverty levels likely toincrease as people get displaced. The authorities’ ability to rapidly compensate low-income households for earnings losses
associated with COVID-19, through targeted one-off payments to affected workers
and/or increased coverage of existing social-protection programs, is key to alleviate theimpact on the poor and vulnerable households. Higher food prices and food shortages could be mitigated through public
procurement and distribution of basic fooditems, or through targeted meal programs.
In the medium-term, the challenge is ensuring that gains from the LNG industry
boost growth and job creation. This includes, strengthening institutions to prevent any adverse effects from the upcoming large inflows of foreign currency, as
well as strengthening the business environment to enable the local economy toabsorb the demand effects from the LNG
sector. Improved fiscal management, aclear debt strategy and greater spending
efficiency are also key.

(annual percent change unless indicated otherwise)

2017

2018

2019 e

2020f

2021f

2022 f

3.7

3.4

2.2

1.1

3.6

4.5

Private Consumption

0.6

3.7

4.0

1.3

3.4

4.2

Government Consumption

3.2

-5.7

6.1

2.7

1.5

2.0

Gross Fixed Capital Investment

-5.8

12.4

-8.1

-10.3

104.0

68.0

Exports, Goods and Services

3.9

36.5

-5.5

-11.8

18.0

22.0

Imports, Goods and Services

-12.9

43.7

-2.5

-7.8

40.5

39.0

3.8

3.2

1.6

1.1

3.6

4.5

Agriculture

4.0

3.0

1.2

2.8

3.1

3.1

Industry

9.6

3.9

-0.2

-1.2

4.4

5.7

Services

1.6

3.0

2.5

1.2

3.5

4.7

Inflation (Consumer Price Index)

15.1

3.9

2.8

5.0

5.0

5.0

Current Account Balance (% of GDP)

-19.9

-30.6

-20.6

-27.0

-47.7

-73.1

Net Foreign Direct Investment (% of GDP)

17.4

18.3

13.3

11.3

21.2

32.1

-3.6

-5.1

0.5

-8.4

-7.1

-3.3
121.3

Real GDP growth, at constant market prices

Real GDP growth, at constant factor prices

Fiscal Balance (% of GDP)

a

b

105.6

108.9

118.7

121.7

121.5

Primary Balance (% of GDP) a

-0.3

-1.5

3.6

-4.9

-4.0

-0.6

International poverty rate ($1.9 in 2011 PPP) c,d

61.8

61.6

61.8

62.4

62.1

61.5

Lower middle-income poverty rate ($3.2 in 2011 PPP) c,d

81.1

81.0

81.1

81.5

81.3

80.9

Debt (% of GDP)So urce: Wo rld B ank, P o verty & Equity and M acro eco no mics, Trade & Investment Glo bal P ractices.
No tes: e = estimate, f = fo recast.
(a) Figure includes o nce-o ff capital gains revenues in 2017, estimated at 2.7 percent o f GDP .
(b) No minal debt figures based o n DSA (A pril 2019), including SOE debt, using Wo rld B ank no minal GDP fo recast as a base.
(c) Calculatio ns based o n 2014-IOF. A ctual data: 2014. No wcast: 2015-2019. Fo recast are fro m 2020 to 2022.
(d) 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.

The cut-off date for information in this MPO was April 02, 2020.

MPO / Apr 20 261

The global outlook is very uncertain. This outlook reflects information available at the time of its preparation. As more inf ormation becomes available,
these projections will be revised. They are presented now to assist policymakers to design alternative policy responses.

NAMIBIA

Recent developments

Table 1

2019

P o pulatio n, millio n

2.6

GDP , current US$ billio n

12.4

GDP per capita, current US$

4681

Internatio nal po verty rate ($ 1.9)

a

13.4
a

29.6

a

50.1

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)
Life expectancy at birth, years

b

n.a.

b

63.0

Source: WDI, M acro Poverty Outlook, and official data.
Notes:(a) M ost recent value (201 5), 201 1 PPPs.
(b) M ost recent WDI value (201 7).

Output contracted in 2019 due to severe
drought conditions and subdued mining
activity, leading to a decelerating GDPper-capita and rising poverty. Slumped
global demand, and the subsequent economic impact on the Namibian economy
will accentuate the recession and increase
unemployment and poverty levels.
Growth is set to turn positive in 2021 but
structural reforms to boost productivity,
competitiveness, and resilience to spur asustainable long-term growth recovery
remain crucial.

The Namibian economy struggled in 2019,
experiencing the sharpest contraction in
activity since the economic downturn began
in 2016. Severe drought conditions constrained agricultural output, with harvests
falling 42 percent below the annual averagefor the last 20 years and a significant reduction in livestock due to high droughtinduced sales. Reduced precipitation also
affected the broader economy through lower electricity and water generation, withrepercussions on industrial production.
Reduced global demand and falling prices
also affected severely diamond and mineralproduction - two vital industries in Namibia. As a result, GDP-per-capita fell by 3.7
percent in 2019. This contributed to a slowdown in poverty reduction, with the extreme poverty rate raising slightly from 15.8
to 17.2 percent between 2018 and 2019. At
least 390,000 Namibians are estimated tolive under the international poverty line of
US$1.9/day in 2019 and the overall unemployment rate is high, at approximately 33.4
percent as per 2018 estimates.
The fiscal position is a concern as debt remains on an upward path. Despite thecommitment to fiscal consolidation, subdued economic activity has constrained tax
collection whilst the government has struggled to prioritize spending in favour ofgrowth friendly investments. As a result,
the FY19/20 fiscal outturn is set to fareworse than initially budgeted and come inat 6 percent of GDP. At approximately 53
percent of GDP, central government debt

continues to rise, reflecting declining revenues and disbursements for infrastructuredevelopment projects. This trend is set tocontinue over the next three years amidst
elevated refinancing requirements and thesubdued growth outlook.
Namibia’s external position is still fragile
despite the slight improvement in the current account balance (CAB). Weakened
import levels, caused by an across-theboard reduction in imports for vehicles,industry inputs and capital goods, which
together account for a third of imports,
have not been enough to offset slower
growth in exports which contributed towidening the current account deficit to 3
percent of GDP in 2019. A significant reduction in diamond exports, which typically account for over a fifth of export
earnings, has compromised the rebuildingof international reserves. Despite this, atthe start of 2020, reserves were enough tocover 4.4 months of import.

OutlookNamibia faces yet another challenging
year: the global slowdown caused by the
COVID-19 outbreak results in a growth
contraction of 3.9 percent. With tradelargely concentrated to a few countries
and commodities, real export growth will
narrow by 12 percent this year as demandfalters in key export markets including
China, South Africa, Botswana and Spain(together accounting for 58 percent of
2019’s exports). Demand for luxury commodities such as diamonds will likely

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

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

Percent, percentage points

Poverty rate (%)
80

6Real GDP per capita (constant LCU)
70000

70
4

60000

60

50000

50

2

40000

40
30000

30

0

20000

20
-2

10000

10
0

-4

2014

2015

Agriculture

2016

2017

2018 2019e 2020f 2021f 2022f

Industry

Services

Sources: Namibia Statistics Agency and World Bank staff estimates.

262 MPO / Apr 20

GDP02003 2005 2007 2009 2011 2013 2015 2017 2019 2021
International poverty rate
Upper middle-income pov. rate

Lower middle-income pov. rate
Real GDP pc

Source: World Bank.
Notes: see Table 2.
The cut-off date for information in this MPO was April 02, 2020.

come under further pressure, along withuranium. Gross domestic expenditure will
also narrow as investment remains muted
and the contraction in private consumption witnessed since the growth slowdown began in 2016 continues. On the
production side, apart from the blow tomining activity, the demand slump is set
have adverse effects on tourism, retailers
and service sectors – which could result inrising unemployment levels. Growth is set
to rebound in 2021, as the demand recovery adds to planned investments in mining, and near 3 percent by 2022. Risks ofincreased inequality and poverty are substantial as crisis hits the poor and middleclass the hardest. The fall in GDP per capita and deterioration in the labour market
will have an adverse impact on poverty:
extreme poverty set to rise from 17.2 percent in 2019 to 19.9 percent by in 2020.
The fiscal outlook is fragile as negative
growth and slowing trade constrain revenue collection, and pose a challenge forfiscal adjustment programme this year.
Added expenditure pressures linked tostrengthening the health system and increased social transfers could push thefiscal deficit to 10 percent of GDP thisyear. Consequently, public debt levels are
expected to increase to 54 percent of GDP
this year as the authorities resort to addi-

tional domestic borrowing to cover thebudget financing gap. A revenue collection recovery could alleviate the pressurein the medium-term, although further
diversification of revenue sources andadditional expenditure control measures
will be needed to meet the targeted 2 percentage points reduction in the overall
deficit between 2019 and 2021.
Namibia’s current account deficit is expected to widen as dampened external
demand lowers export levels. Challenging
global financial conditions could result ina depletion in reserve levels as the authorities look to cover the external gap. In themedium-term, and as the economy begins
to recover, higher import growth will create additional pressures, although financing for large diamond and infrastructure
projects will already be secured.

Risks and challenges
Downside risks to the outlook predominate, with both domestic and external
factors weighing in. The Namibian economy remains vulnerable to climate change,and erratic rainfall may further constrain
the recovery in agricultural production
and slow the pace of poverty reduction.

TABLE 2 Namibia / Macro poverty outlook baseline scenario(annual percent change unless indicated otherwise)
2017

Real GDP growth, at constant market prices

Whilst monetary easing measures havebeen implemented to dilute the impact of
COVID-19 on the local economy, a more
severe global downturn, with a longerlasting slump in global demand, would
further worsen the outlook. Regional developments, including a slowdown in
activity in South Africa, would further
constrain the growth outlook and pose athreat to Namibia’s SACU receipts.
The reform agenda is large. Recent developments have highlighted the importanceof diversified sources of growth and improved resilience in key productive sectors (such as agriculture). The authorities’ability to move away from state centric
growth model and create conditions forfurther private sector contribution to
growth will dictate the pace of this diversification agenda. Reforms include interventions to support PPPs and private sector investments to promote growth andgenerate job opportunities. On the fiscalside, measures to increase revenue mobilization and public sector efficiency are key
to create fiscal space to finance priority
public expenditures that support growth.
Improved revenue collection is also crucial to the authorities’ aim to stabilize debt
levels as exceptionally elevated inequality
and high unemployment pose a challenge
to cutting spending.

20182019 e

2020f

2021f

2022 f

-0.3

0.7

-1.1

-3.9

3.2

2.7

Private Consumption

-5.5

-1.3

4.3

-3.6

1.0

1.0

Government Consumption

-2.1

-0.1

0.4

4.6

6.1

8.8

Gross Fixed Capital Investment

-10.6

3.0

-0.2

-5.9

0.9

1.6

Exports, Goods and Services

2.2

16.4

-2.2

-12.2

4.2

5.9

Imports, Goods and Services

-8.6

3.9

3.2

-6.0

2.0

5.8

0.1

0.7

-0.9

-3.9

3.2

2.7

Agriculture

7.0

-1.9

-2.6

1.4

1.3

1.3

Industry

-0.4

6.2

-3.7

-10.0

2.0

3.0

Services

-0.5

-1.4

0.6

-1.7

3.9

2.8

Inflation (Consumer Price Index)

6.1

4.3

2.9

4.0

3.5

3.5

Current Account Balance (% of GDP)

-3.3

-1.7

-3.0

-4.3

-1.8

1.0

Net Foreign Direct Investment (% of GDP)

3.4

0.4

3.1

2.6

3.2

2.9

Fiscal Balance (% of GDP)a
Debt (% of GDP)

-3.7

-5.9

-6.4

-10.7

-4.1

-3.8

43.7

49.2

53.3

55.6

55.9

55.1

-0.5

-2.4

-3.1

-7.3

-1.6

-1.3

Real GDP growth, at constant factor prices

Primary Balance (% of GDP)

a

15.1

15.8

17.2

19.9

19.3

18.9

Lower middle-income poverty rate ($3.2 in 2011 PPP) b,c

33.0

34.3

37.1

42.2

41.0

40.2

Upper middle-income poverty rate ($5.5 in 2011 PPP) b,c

53.7

55.1

58.0

63.2

62.1

61.2

International poverty rate ($1.9 in 2011 PPP)b,c

So urce: Wo rld B ank, P o verty & Equity and M acro eco no mics, Trade & Investment Glo bal P ractices.
No tes: e = estimate, f = fo recast.
(a) Fiscal year starts fro m A pril 1st.
(b) Calculatio ns based o n 2009-NHIES and 2015-NHIES. A ctual data: 2015. No wcast: 2016-2019. Fo recast are fro m 2020 to 2022.
(c) P ro jectio n using annualized elasticity (2009-2015) with pass-thro ugh = 1based o n GDP per capita in co nstant LCU.

The cut-off date for information in this MPO was April 02, 2020.

MPO / Apr 20 263

The global outlook is very uncertain. This outlook reflects information available at the time of its preparation. As more inf ormation becomes available,
these projections will be revised. They are presented now to assist policymakers to design alternative policy responses.

NIGER

Recent developments

Table 1

2019

P o pulatio n, millio n

23.2

GDP , current US$ billio n

9.5

GDP per capita, current US$

409

Internatio nal po verty rate ($ 1.9)

a

44.5
a

76.9

a

93.4

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)
Life expectancy at birth, years

b

74.7

b

61.6

Source: WDI, M acro Poverty Outlook, and official data.
Notes:(a) M ost recent value (201 4), 201 1 PPPs.
(b) M ost recent WDI value (201 7).

Growth remained solid at around 6.3 percent in 2019, supported by agriculture,services and domestic demand, thereby
bringing poverty down. The external current account deficit widened reflecting
higher imports to finance on going imports-intensive projects. The fiscal deficit
declined on account of higher non-tax
revenues. The outlook is clouded by
COVID-19 which will temporarily bring
down per capita growth close to zero in2020 and increase poverty by around 1
percentage point. Downside risks include
COVID-19 and insecurity.

Growth declined slightly from 6.5 percent
in 2018 to 6.3 percent in 2019 (2.4 percent inper capita terms), above the potential
growth rate. Agricultural production continued to be the main driver of economic
activity thanks to favorable weather. Several large-scale projects in construction andservices boosted total investment, while thegood harvest supported private consumption. Despite a positive output gap, inflation was negative (-1.8 percent) due togood harvests that led to decline in foodprices, compounded by low global foodprices and low inflation in the Euro. area.
The external current account deficit(including grants) widened from 17.4 percent in 2018 to 19.4 percent in 2019 due tohigh imports, mainly capital goods to finance ongoing import-intensive projects.
Exports were also negatively affected by
the closure of the border with Nigeria
since August 2019. Concessional loans andforeign direct investment financed a large
share of the current account deficit.
The fiscal deficit declined from 4.1 percent
of GDP in 2018 to an estimated 3.9 percent
of GDP in 2019. This was due to a one-off
increase in grants by 1.4 percentage points
of GDP, offsetting an increase in expenditures and a domestic revenue shortfall.
Tax revenue performed poorly partly due
to the closure of the border with Nigeria
which suppressed import duties. A strong
decline in domestically-financed capitalspending and an enhanced control of recurrent expenditures helped contain partof the expenditure in 2019. Public debt
increased from 53.7 percent of GDP in2018 to 55.2 percent in 2019. The risk ofexternal and overall debt distress remains moderate.
Niger’s monetary and exchange rate policies are managed by the Central Bank ofWest African States (BCEAO), which maintains a fixed peg between the CFA Francand the Euro. BCEAO’s international reserves reached 4.9 months of imports in
2019, up from 4.5 months in 2018, on theback of fiscal consolidation and higher net
capital inflows. Despite an unchanged tightmonetary policy, regional liquidity pressures were alleviated due to higher BCEAO
supply and lower demand for refinancing
from banks. The real effective exchange
rate (REER) depreciated by 5 percent in
2019, due to the Euro nominal depreciation
against the US dollar combined with persistently lower inflation of the WAEMU
compared with trading partners.
Between 2018 and 2019, the share of the
population living on less than $1.90 a day
in 2011 Purchasing Power Parity (PPP) isestimated to have declined from 42.4 percent to 41.5 percent, thanks to economic
growth. The period 2005 and 2014, where
we have actual poverty measures, marks asubstantial progress in poverty reduction
for Niger, with the share of the population
living on less than $1.90 a day in 2011 Purchasing Power Parity (PPP) declining
from about 50.3 percent to 44.5 percent.
However, there is an indication that extreme poverty might have worsened overthe same period to the extent that thebottom 10 percent of the population experienced negative growth in consumption.

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

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

Percent, percentage point
20

Poverty rate (%)
120

15

100

Real GDP per capita (constant LCU)
200000150000
80

10

60

5

100000

40

0

50000
20

-5
2017

2018

Private consumption
Investment
Real GDP
Source: World Bank.

264 MPO / Apr 20

2019

2020

2021

2022

Government consumption
Net Exports002005 2007 2009 2011 2013 2015 2017 2019 2021
International poverty rate
Upper middle-income pov. rate

Lower middle-income pov. rate
Real GDP pc

Source: World Bank.
Notes: see table 2.
The cut-off date for information in this MPO was April 02, 2020.

Outlook
The outlook is clouded by COVID-19
which will temporarily bring down percapita growth close to zero in 2020. This
will be possible due firstly to containment
and mitigation measures such as closureof borders and other social distancing
measures which will weigh on economic
activity. Secondly, reduction of global
demand will weigh on trade with adverse
impact on domestic production. Thirdly,
tighter global financial conditions will
limit access to finance and delays ingetting investment or development projects off the ground. In addition, thesenegative shocks are amplified by the
6-months border closure with Nigeria. As
a result, growth would slow down to
4.0 percent in 2020.
The economy is expected to recover in
2021 with crude oil exports confirmed tocome on stream. Growth is projected toaverage 5.7 percent in the next two years
with a strong oil-related pickup of 13.0
percent in 2022. Continued prudent fiscal
and monetary policies should keep inflation comfortably below the 3 percent
WAEMU target as the output gap closes.
The continued implementation of large
import-intensive projects should widen

the current account deficit in the nearterm, but the trend should revert sharply
when oil exports begin, and several import intensive projects phase out.
WAEMU reserves would reach about 5.1
months of imports by 2022 as member
countries continue to implement fiscal
consolidation measures and external competitiveness improves. In December 2019,
the WAEMU authorities announced acurrency reform involving changes to theunderlying arrangements with France.
Market reactions have been muted so far,likely reflecting expectations that thefoundations of the currency regime would
remain broadly unchanged for theforeseeable future.
Niger will not meet WAEMU convergencecriterion of 3 percent of GDP for the overall fiscal deficit in 2020 due partly to increased health spending to attenuate theimpact of COVID-19 as well as to accommodate security spending. However, thecountry is committed to consolidation
relying on primarily on revenue mobilization, but also on raising the quality of
public expenditure.
Due to social and economic impacts of
COVID-19 outbreak, poverty projection
for 2020 is revised upward by nearly 1
percentage point to 41.4 percent, anequivalence of an addition of about
220,000 people falling into poverty.

TABLE 2 Niger / Macro poverty outlook baseline scenario

However, poverty is expected to decline
to 36.6 percent by 2022 as the country
recovers from the pandemic and is expected to start exporting crude oil.

Risks and challenges
Risks to the outlook are tilted downwards.
The country has adequate fiscal and monetary policy buffers to respond countercyclically to a potential downturn. Otherrisks stem from adverse weather conditions, deterioration in the security situation,and uncertainty ahead of Presidential elections in 2021. In addition, although Niger
has reported a limited number of cases atthis moment, COVID-19 outbreak presents
a downside risk to poverty due to a decline
in income and remittances. In the shortterm the government needs to reprioritize
expenditures towards additional healthspending and continue implementing revenue mobilization measures, including donor grants, to address adverse economic
impacts. In the medium and long run, thepoor will be increasingly vulnerable because of limited access to coping mechanism such as savings and insurance.

(annual percent change unless indicated otherwise)
2017

2018

2019 e

2020f

2021f

2022 f

4.9

6.5

6.3

4.0

7.4

13.0

Private Consumption

4.5

4.4

9.2

3.5

9.6

5.2

Government Consumption

2.5

5.2

1.6

15.7

-8.3

6.1

Gross Fixed Capital Investment

4.0

14.3

11.7

6.9

9.4

-5.9

Exports, Goods and Services

7.1

2.6

6.5

-0.7

14.2

63.0

Imports, Goods and Services

2.1

7.8

15.0

8.0

9.5

3.2

5.2

6.4

6.3

3.9

7.5

13.1

Agriculture

5.7

7.5

7.5

5.9

6.4

6.0

Industry

5.6

3.2

6.7

3.0

7.0

38.0

Services

4.4

6.4

4.6

1.8

9.2

12.0

2.8

2.8

-1.8

2.0

2.0

2.0

-15.6

-17.4

-19.4

-21.5

-22.6

-13.0

3.7

4.6

6.1

8.9

10.2

4.0

Real GDP growth, at constant market prices

Real GDP growth, at constant factor prices

Inflation (Consumer Price Index)
Current Account Balance (% of GDP)Net Foreign Direct Investment (% of GDP)
Fiscal Balance (% of GDP)

-5.7

-4.1

-3.9

-4.4

-3.7

-2.8

Debt (% of GDP)

54.4

54.3

55.2

56.1

54.4

49.5

Primary Balance (% of GDP)

-4.7

-2.8

-2.5

-2.9

-2.3

-1.6

International poverty rate ($1.9 in 2011 PPP) a,b

43.5

42.4

41.5

41.4

40.0

36.6

Lower middle-income poverty rate ($3.2 in 2011 PPP) a,b

75.8

74.6

73.5

73.4

71.8

67.8

a,b

93.0

92.5

92.1

92.1

91.5

89.9

Upper middle-income poverty rate ($5.5 in 2011 PPP)

So urce: Wo rld B ank, P o verty & Equity and M acro eco no mics, Trade & Investment Glo bal P ractices.
No tes: e = estimate, f = fo recast.
(a) Calculatio ns based o n 2011-ECVM A and 2014-ECVM A . A ctual data: 2014. No wcast: 2015-2019. Fo recast are fro m 2020 to 2022.
(b) P ro jectio n using annualized elasticity (2011-2014) with pass-thro ugh = 1based o n GDP per capita in co nstant LCU.

The cut-off date for information in this MPO was April 02, 2020.

MPO / Apr 20 265

The global outlook is very uncertain. This outlook reflects information available at the time of its preparation. As more inf ormation becomes available,
these projections will be revised. They are presented now to assist policymakers to design alternative policy responses.

NIGERIA

Recent developments

Table 1

2019

P o pulatio n, millio n

202.0

GDP , current US$ billio n

447.8

GDP per capita, current US$

2216

Internatio nal po verty rate ($ 1.9)

a

53.5

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

a

a

a

77.6
92.1
43.0

Gini index

Life expectancy at birth, years

b

54.0

Source: WDI, M acro Poverty Outlook, and official data.
Notes:(a) M ost recent value (2009), 201 1 PPPs.
(b) M ost recent WDI value (201 7).

Nigeria faces an unenviable challenge ofmanaging the COVID-19 pandemic andlower oil prices with weak health systems
and limited monetary and fiscal buffers,
while the urgency for structural reforms
to build a competitive, diversified economy, create jobs and accelerate poverty
reduction remains. Urgent, coordinatedpolicy measures are needed from fiscal,monetary, financial and health authorities
to mitigate the potential health effects ofthe pandemic on the population, and its
economic impacts on the poor andvulnerable groups.

Nigeria’s recovery strengthened marginally,
with annual 2019 growth averaging 2.2 percent. Growth remained constrained byshrinking real incomes and restrained private investment amidst regulatory and policy uncertainty. Since the 2016 recession,
economic growth stayed below the population growth, leading to a decline in per capita incomes and rising poverty and unemployment.
Growth remained primarily
driven by services (especially telecoms),
with positive contributions from agriculture. Weak demand, high financing costs,
and unreliable power supply constrained
the non-oil industry growth, limiting new
employment opportunities. Oil productionleveled, constrained by OPEC caps, andpersistent ambiguity in petroleum legislation limiting investment. Trade – second
largest employer after agriculture – contracted in late-2019, partly in response to
Nigeria’s land border closure. Introduced inAugust 2019, it intended to reduce smuggling, protect domestic producers and address security concerns. Border closure iscontributing to rising inflation (12 percent in
December) and welfare losses concentrated
in border regions and neighboring countries. The current account reverted into deficit, with moderating oil exports and a pickup in formal imports.
The central bank (CBN) continued to prioritize exchange rate stability (by attracting
high cost foreign portfolio inflows to help
stabilize external reserves) – and growth(subsidized loans to targeted sectors) – over

FIGURE 1 Nigeria / Real GDP growth and contributions toreal GDP growth
Percent of GDP, percent of growth20

US$/bbl
135

15

115

10

95

5

75

0

55

-5

35

-10

15

-15

-5

-20

-25

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Real GDP growth
Goods and services exports
General Government Revenue
Oil price - Bonny Light (US$ bbl) - (rhs)

Sources: Nigeria Authorities and World Bank.

266 MPO / Apr 20

price stability, and remained involved inquasi-fiscal activities (financing subsidies
and monetizing fiscal deficit).
Fiscal deficits remained wide (5 percent ofGDP), with sustained oil and non-oil revenue
shortfalls, and accelerated spending. With
low domestic borrowing limits and no eurobond issuances, fiscal deficits were largely
monetized in 2019. Despite higher capital
investment (on and off-budget), public
spending remains dominated by the recurrent component, with increased personnel
cost from higher minimum wage, rising interest attributable to growing debt, and unproductive subsidies, particularly fuel andelectricity. Federal government has initiatedsome much-needed reforms in non-oil revenue policies outlined in the Finance Act andre-aligned the budget with the calendar year.

Outlook
Nigeria is highly vulnerable to the global
economic disruption caused by COVID-19,
particularly to the pronounced decline in oil
prices and spikes in risk aversion in global
capital markets. The magnitude of the impact is sensitive to the duration and thedomestic spread of the outbreak. The primary transmission channel to the Nigerian
economy is the oil price: oil accounts forover 90 percent of exports, a third of banking sector credit, and half of government
revenues; non-oil industry and services’
growth is highly elastic to oil prices, withadditional pressures arising from foreign
portfolio investors’ reassessment of risks
and domestic liquidity management.

FIGURE 2 Nigeria / Actual and projected poverty rates andreal GDP per capita
Poverty rate (%)
100

Real GDP per capita (constant LCU)
5000008040000060

30000040

20000020

100000002003 2005 2007 2009 2011 2013 2015 2017 2019 2021
International poverty rate
Upper middle-income pov. rate

Lower middle-income pov. rate
Real GDP pc

Source: World Bank.
Notes: see table 2.
The cut-off date for information in this MPO was April 02, 2020.

Under a scenario of oil prices averaging$30/bbl in 2020, a relatively-contained
COVID-19 spread in Nigeria and continuation of current policies, Nigerian economy
is projected to contract by 3 percent in 2020.
Government oil revenues would fall byover 70 percent and cut general government
revenue towards 5 percent of GDP. Withalready large fiscal deficits, coupled withconstrained – particularly external – borrowing, and additional health expenditurepressures, this may result in public spending cuts, thinning already low investment
and limiting service delivery, including at
the subnational level. This will also reflect
on the health of the financial sector given
the sector’s exposure to the oil sector. Federal government liquidity may be challenged
with interest-payments-to-revenue increasing from the current 60 percent.
Falling domestic demand (sensitive to oildollar liquidity) will contract the non-oil
economy, despite CBN’s attempts to scale-up
targeted interventions; only agriculture
would positively contribute to growth in2020. With current trade policies, contracting
imports could limit the widening of the current account deficit despite rapidly contracting exports, softening the negative impact
from the capital account on the external reserves. Unemployment and underemployment are expected to increase, affecting poor
households and increasing the share of the
population vulnerable to falling into poverty.

Macroeconomic situation is more challenging than in 2015-2016, when oil prices
fell sharply, and Nigeria experienced its
first recession in 25 years. This time Nigeria has fewer buffers and policy instruments to cushion the adverse effects: Excess Crude Account is depleted; external
reserves highly reliant on short-term
flows, and investor confidence affected bypolicy uncertainty. In addition to public
and private healthcare costs, the necessary
COVID-19 containment measures willfurther reduce aggregate demand. With
(particularly youth) unemployment risingeven during the post-2016 recovery, thehuman cost of the recession will be high.
In response to the oil shock and the COVID19 health risks, the federal government hasannounced a supplementary budget to reassess funding and reprioritize expenditures.
Central bank partially devalued and narrowed the spread between key exchange
rates and announced a package (more subsidized loans to targeted sectors, including
healthcare and households, relaxed regulatory requirements, and prudential forbearance) to help lending to the real sector.

Risks and challenges

domestic spread of COVID-19. Further or
protracted falls in oil price could lower oil
production over the medium term, deepen
and prolong the recession and pose deeper
macroeconomic management challenges;
even agriculture growth could slow downin times of (already weak) social cohesion
further challenged by a rise in unemployment, poverty, and vulnerability. Fiscal
and debt management could be challenged
by further contracting oil (and non-oil)revenues and rising financing costs. International reserves would come under pressure. Inflationary (particularly food) pressures rise, disproportionately affecting thepoor. With rising NPLs, the banking system could face potential capital erosion
and funding pressures.
The government instituted movement
restrictions to stem the spread of COVID19, but has limited means to enforce them.
Weak national health systems further
mask high regional variation in capacity tocope with the potential outbreak. COVID19 economic implications and health risks
may disproportionately affect the poor,
especially those working in the informal
sector, who may be unable to comply withthe restrictions due to financial pressures,
nor afford the associated healthcare costs.

Two key risks may aggravate Nigeria’s
outlook: further fall in oil prices and

TABLE 2 Nigeria / Macro poverty outlook baseline scenario

Real GDP growth, at constant market prices(annual percent change unless indicated otherwise)
2017

2018

2019 e

2020f

2021f

2022 f

0.8

1.9

2.2

-3.2

-0.2

1.1
0.4

Private Consumption

-1.0

5.2

-2.7

-1.1

-0.3

Government Consumption

-8.0

33.2

0.8

-21.3

1.5

6.3

Gross Fixed Capital Investment

-3.0

9.7

-31.3

-24.0

-6.4

-7.9

Exports, Goods and Services

8.7

-1.4

44.9

-14.4

1.8

3.6

Imports, Goods and Services

4.8

49.2

38.6

-47.5

2.5

1.6

Real GDP growth, at constant factor prices

0.8

1.9

2.3

-3.2

-0.2

1.1

Agriculture

3.4

2.1

2.4

2.4

2.5

2.6

Industry

2.1

1.9

2.3

-10.1

-0.8

0.7

Services

-0.9

1.8

2.2

-2.9

-1.3

0.5

16.5

12.1

11.4

14.3

12.9

12.1
-1.1

Inflation (Consumer Price Index)
Current Account Balance (% of GDP)

2.8

1.3

-3.8

-3.7

-1.7

Fiscal Balance (% of GDP)

-3.9

-4.2

-5.1

-5.1

-4.7

-4.4

Debt (% of GDP)

19.0

21.2

24.1

28.6

31.2

32.9

Primary Balance (% of GDP)

-2.2

-2.2

-3.2

-2.7

-1.9

-1.4

49.7

49.9

50.1

52.0

52.9

53.4

Lower middle-income poverty rate ($3.2 in 2011 PPP) a,b

75.7

75.8

75.9

76.9

77.4

77.6

Upper middle-income poverty rate ($5.5 in 2011 PPP) a,b

90.8

90.9

90.9

91.6

92.0

92.1

International poverty rate ($1.9 in 2011 PPP)a,b

So urce: Wo rld B ank, P o verty & Equity and M acro eco no mics, Trade & Investment Glo bal P ractices.
No tes: e = estimate, f = fo recast.
(a) Calculatio ns based o n 2011-, 2017-, and 2009-LSS. A ctual data: 2009. No wcast: 2010-2019. Fo recast are fro m 2020 to 2022.
(b) P ro jectio n using annualized elasticity (2011-2017) with pass-thro ugh = 0.7 based o n GDP per capita in co nstant LCU.

The cut-off date for information in this MPO was April 02, 2020.

MPO / Apr 20 267

The global outlook is very uncertain. This outlook reflects information available at the time of its preparation. As more inf ormation becomes available,
these projections will be revised. They are presented now to assist policymakers to design alternative policy responses.

RWANDA

Recent developments

Table 1

2019

P o pulatio n, millio n

12.8

GDP , current US$ billio n

10.1

GDP per capita, current US$

789

Internatio nal po verty rate ($ 1.9)

a

55.5
a

79.7

a

91.6

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)
Life expectancy at birth, years

b

137.7

b

68.3

Source: WDI, M acro Poverty Outlook, and official data.
Notes:(a) M ost recent value (201 6), 201 1 PPPs.
(b) M ost recent WDI value (201 8).

Rwanda’s booming economy is projected
to slow substantially in 2020 as a resultof the COVID-19 pandemic. Rwanda’s
priority sectors are especially vulnerable
to a protracted global crisis. The country’s
elevated public debt and widening external imbalances may limit its ability toincrease spending on priority mitigation
measures. Given the likely impacts on
employment in off-farm sectors,
headcount poverty is expected to rise in2020 and only recover slightly by 2022
as growth resumes.

GDP grew by 9.4 percent in 2019, driven
by a larger than expected fiscal expansion
and public investment pursuant to the
National Strategy for Transformation. Thiswas higher than the 8.6 percent growthposted in 2018 and average annual growthof 6.9 percent in over the period 20102018. Construction grew more than 25
percent, pushing overall industrial growth
to 16.5 percent. On the demand side, government consumption and investment
were the main drivers, growing at 17.4
and 30.5 percent of GDP, in both cases thehighest shares in over a decade.
The current account deficit widened toapproximately 10 percent of GDP in 2019(from 7.9 percent in 2018), driven by
weaker than expected exports and strong
demand for imports, including for capital and intermediate goods, driven inpart by the sizeable fiscal expansion.
Export performance was adversely
affected for the second year in a row by
low prices for Rwanda’s traditional exports such as coffee, tea, and minerals,
although non-traditional exports continued their strong expansion from a low
base. The current account deficit was
financed mostly by increased borrowing
by the public sector. Net FDI inflows
totaled 3.3 percent of GDP.
Inflation continued to accelerate, driven
largely by food price inflation, andreached 6.7 percent in December 2019and 8.9 percent in February 2020, whereas core inflation remains in the low single

digits. Monetary policy has been expansionary in recent years against the background of low inflation but the room forfurther policy easing has narrowed.
Helped by low policy rates and very low
ratio of non-performing loans (4.9 percent as of end-2019), bank lending has
been gradually accelerating. Rwanda’s
central bank continued to adhere to theflexible exchange rate regime, with the
Rwandan Franc depreciating by 4.6 percent nominally. The pressures on foreign
reserves intensified recently with an
emerging balance of payment financing
gap as a result of the global crisis.
The fiscal expansion that started in 2018
has continued. The overall fiscal deficit
reached 8.0 percent in 2019. Capitalspending and net lending reached 15
percent of GDP and comprised the main
drivers of increased fiscal spending.
Government revenues performed relatively strongly, reaching 23.6 percent of
GDP in 2019, supported by continuing
administrative measures. In 2019, public and publicly guaranteed debt
reached about 58.5 percent of GDP. The
joint World Bank/IMF Debt Sustainability Analysis as of June 2019 concluded
that Rwanda’s risk of debt distress remained low.
Based on the latest household survey in2016/17, 55.5 percent of the population
lived under the international poverty lineof US$1.90 – in 2011 PPP terms. Given
Rwanda’s GDP growth over the period
averaging just under 8 percent, this represents a small reduction from 62.3 percent in 2010/11. Although growth wasbroadly shared and inequality fell,

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

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

Percent, percentage points
20

Poverty rate (%)
100

Real private consumption per capita (constant LCU)
60000050000080

1040000060
030000040
200000-1020100000

0

-20
2012

2014

2016

Consumption
Net exports
Sources: World Bank and official data.

268 MPO / Apr 20

2018

2020f

2022f

Gross Capital Formation
GDP growth02005 2007 2009 2011 2013 2015 2017 2019 2021
International poverty rate
Upper middle-income pov. rate

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

Source: World Bank.
Notes: see Table 2.
The cut-off date for information in this MPO was April 02, 2020.

growth in household consumption wasmodest. Adjusting for household composition, growth in median household consumption between 2010/11 and 2016/17
was 12 percent and 8 percent in rural
areas, as private consumption compriseda decreasing share of aggregate demand.
Economic growth in recent years has
been more concentrated in Kigali. Whilepoor people have benefited disproportionately by working more off-farm andin urban areas, labor demand has slackened at times of waning public investment and has not kept pace with growthin the working age population. Absent
more robust productivity growth, thishas resulted in real wage decreases andgreater under-employment.. Meanwhile,
distortions in agriculture, the lack ofregional integration of markets, and highfood price inflation have put a brake onpoverty reduction.

Outlook
Rwanda’s growth outlook has deteriorated significantly due to the global
pandemic. In the near term, economic
activity will be suppressed due tomeasures put in place to contain the
spread of COVID-19. The disruption ininternational travel and trade will severely
affect Rwanda’s outwardoriented priority sectors such as business travel (meetings and international
conferences), eco-tourism, and air transportation. There could be delays in FDIfunded strategic projects, such as the
new airport. Overall, growth is expected to slow to 5.1 percent in 2020
with a gradual recovery to a highgrowth trajectory by 2022.
The fiscal deficit is expected to widen to
9.4 percent of GDP in 2020 and remain
elevated in the medium-term because of
the impact of the slowdown on tax revenues and increased spending needs for
public health and social mitigation. This
scenario assumes that in addition tohigher financing requirements the Government will reallocate fiscal resources
to priority needs. As a result, public andpublicly guaranteed debt is expected toreach 65 percent of GDP in 2020, andfurther to 69 percent in 2022.
The current account deficit is also expected to widen to 16 percent of GDP.
Exports of goods and services will experience a severe decline of 30.6 percent in2020 in US dollar terms, with services
exports hit the hardest. Despite BNR’s
flexible exchange rate policy, foreignexchange reserves are expected to comeunder pressure.

TABLE 2 Rwanda / Macro poverty outlook baseline scenario

Risks and challenges
There are downside risks to the baseline
scenario stemming from a more protracted global crisis and the pandemic’s possible long-term impact on the strategic sectors that were expected to drive long-term
growth. In the absence of a fiscal reallocation, the deficit could exceed projections,further driving up Rwanda’s public debt.
In addition, weather shocks are a perennial risk and could adversely affect agricultural output. Disruptions to cross-border
trade could ensue as countries take steps
to mitigate the impacts of supply chain
disruptions on food markets, further impoverishing agricultural producers, traders, and consumers.
The key challenge Rwanda faces is to mitigate the pandemic’s economic impact on
Rwandan off-farm workers, impacted
farmers, and the poor. In addition to a
rapid scale-up of health services, socialtransfers to those impacted will need to be
stepped up dramatically in the short run,
while firms and banks are also protectedfrom the most severe repercussion effects.

(annual percent change unless indicated otherwise)
2017

2018

2019 e

2020f

2021f

2022 f

4.0

8.6

9.4

5.1

6.8

8.0

Private Consumption

11.4

8.6

9.0

1.2

4.1

7.2

Government Consumption

7.5

4.5

17.4

6.3

7.7

7.9

Gross Fixed Capital Investment

-9.9

5.4

30.5

19.7

8.0

11.4

Exports, Goods and Services

29.2

6.8

4.9

-29.7

32.4

11.6

Imports, Goods and Services

35.1

3.0

20.2

-10.4

12.9

11.4

4.0

8.6

9.4

5.1

6.8

8.0

Agriculture

4.7

6.1

5.9

5.0

5.3

5.5

Industry

1.5

8.7

16.5

3.0

8.1

8.8

Services

4.6

9.9

8.7

6.0

7.0

9.0

Inflation (Consumer Price Index)

4.9

1.4

2.4

6.9

5.4

5.0

Current Account Balance (% of GDP)

-7.6

-7.9

-9.6

-16.0

-9.6

-9.5

Net Foreign Direct Investment (% of GDP)

2.7

2.9

3.3

1.5

2.0

2.5

Real GDP growth, at constant market prices

Real GDP growth, at constant factor prices

Fiscal Balance (% of GDP)

-4.6

-4.5

-8.0

-9.4

-8.1

-7.6

Debt (% of GDP)

48.7

52.4

58.5

65.0

68.0

69.4

Primary Balance (% of GDP)

-3.6

-3.3

-6.9

-7.8

-6.4

-6.0

International poverty rate ($1.9 in 2011 PPP) a,b

51.9

49.5

47.1

48.7

48.5

47.5

Lower middle-income poverty rate ($3.2 in 2011 PPP) a,b

77.8

76.6

75.2

77.5

77.2

77.1

a,b

94.5

94.0

93.5

93.6

93.5

93.1

Upper middle-income poverty rate ($5.5 in 2011 PPP)

So urce: Wo rld B ank, P o verty & Equity and M acro eco no mics, Trade & Investment Glo bal P ractices.
No tes: e = estimate, f = fo recast.
(a) Calculatio ns based o n 2010-EICV-III and 2016-EICV-V. A ctual data: 2016. No wcast: 2017-2019. Fo recast are fro m 2020 to 2022.
(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.

The cut-off date for information in this MPO was April 02, 2020.

MPO / Apr 20 269

The global outlook is very uncertain. This outlook reflects information available at the time of its preparation. As more inf ormation becomes available,
these projections will be revised. They are presented now to assist policymakers to design alternative policy responses.

SÃO TOMÉAND PRÍNCIPE
Table 1

2019

P o pulatio n, millio n

0.2

GDP , current US$ billio n

0.4

GDP per capita, current US$

2031

Internatio nal po verty rate ($ 1.9)

a

34.5
a

63.8

a

85.5

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)
Life expectancy at birth, years

b

106.8

b

69.9

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

São Tomé and Príncipe (STP) already faced
an adverse macroeconomic situation, whichis aggravated by the COVID-19 pandemic.
Fiscal vulnerabilities, fuel and power shortages, and capacity constraints hampered
economic activity in 2019. To unlock its
economic potential and reduce poverty, STP
needs to move toward a private sector led
growth model, addressing macroeconomic
imbalances and garnering support for structural reforms. Besides the COVID-19 crisis,
fuel shortages and slow implementation of
externally financed projects pose downside
risks to the outlook.

Recent developments
Economic growthin 2018 and 2019suffered from fuel and power shortages,
government arrears to local suppliers, andcrowding out of domestic financing. RealGDP growth is estimated to have slowed
to 2.4 percent in 2019 from 2.7 percent in2018.
Agriculture and fisheries wereaffected by weather shocks, agricultural
pests, and fuel and power shortages. Inflation declined to 7.8 percent in 2019, despite weather shocks and fuel shortages.
Net international reserves are estimated at
US$32.2 million in 2019 (equivalent to 2
months of imports) compared to US$28.6
million in 2018.
The trade deficit narrowed from 28.0
percent of GDP in 2018 to 27.0 percent
of GDP in 2019. The improvement was
driven by a reduction of imports(mostly of imported capital goods),
while exports declined over the same
period due to a decline by 15.9 percent
in exports of cocoa, which is STP's main
export product.
The fiscal situation deteriorated in 2019
driven by a reduction in grants from 8.2
percent of GDP in 2018 to 6.4 percent of
GDP in 2019 and increases in payroll
spending approved by the previous government. The fiscal deficit widened to 6
percent of GDP in 2019 (from 3.2 percent
in 2018). The domestic primary balance(excluding oil revenues and grantfinanced investments) is estimated at -4.0
percent of GDP in 2019, and public debt
has increased to 113.7 percent of GDP.

STP is in debt distress due to prolonged
outstanding external arrears.
Poverty incidence has remained unchanged
between 2018 and 2019 at 34.4 percent,when using the US$ 1.9 per person per day(PPP 2011) international poverty line.

Outlook
STP is expected to suffer from a severe
economic downturn as a result of the
COVID-19 pandemic. GDP is projected to
decline by 4.1 percent in 2020 in the baseline scenario in which global GDP contracts by 2.2 percent in 2020. The tourism
sector will be the main transmission channel as it produces important spillovers.
Hotels and restaurants closing decreases
employment and results in loss of earnings especially among less affluent services workers. In addition, a global slowdown is expected to impact the agriculture sector through a decline in the demand for cocoa, which will also affect
employment and incomes, including forthe poor and vulnerable households. The
industrial sector will also be affected
through delays and disruptions to importsof capital goods and likely delays to theimplementation of externally financed
projects. The fiscal balance is expected todeteriorate further given the loss in fiscal
revenues due to reduced economic activity and higher health spending to copewith the COVID-19 crisis. The current
account deficit is expected to improveslightly in the medium term given the
expected lower import bill.

FIGURE 1 São Tomé and Príncipe / Twin Deficits

FIGURE 2 São Tomé and Príncipe / Actual and projected
poverty rates and real private consumption per capita

Percent-25

Poverty rate (%)
100

-20

80

-15

60

Real GDP per capita (constant LCU)
21000
20000
19000
18000

40

-10

17000
20

-5

16000

0

0
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Domestic primary balance, excl. oil
Current account balance (incl. official transfer)
Source: Government authorities.

270 MPO / Apr 20

15000
2010

2012

2014

2016

International poverty rate
Upper middle-income pov. rate

2018

2020

2022

Lower middle-income pov. rate
Real GDP pc

Source: World Bank.
Notes: see Table 2.
The cut-off date for information in this MPO was April 02, 2020.

Inflation is expected to increase due tohigher prices of imported goods and lower FX availability. The growth of monetary
aggregates is expected to remain undercontrol, which will help contain inflationin the medium term.
The expected economic downturn
means that poverty is projected to increase. Current growth assumptions
suggest that poverty will affect around35 percent of the population throughout
the next three years but given the uncertainty of duration of the current pandemic and its effect on the economy,
poverty may reach over 40 percent of
the population by 2020.
To mitigate the impact of the COVD-19
crisis in the short-term, STP will need tosecure additional financial support fromofficial creditors at concessional terms to
make up for lost revenue.
Beyond that however, the priority for STP
remains to promote a private sector led
growth model through reforms that address key challenges, including its twin
fiscal and current account deficits, weaktrade connectivity, poor infrastructure,credit constraints caused by a high level ofnonperforming loans and difficulties enforcing commercial contracts. These reforms may take more time in the current
context but remain fundamental for thecountry’s development.

Risks and challenges
The main risks to the outlook stem fromthe outbreak of COVID-19 and a deeper
global recession. In a downside scenario,
with global growth at -3.6 percent in 2020,
STP’s GDP is expected to contract by 8.5
percent. A domestic outbreak would havefurther human and economic impact. Asof early April, the COVID-19 pandemic
has already affected the tourism sector.
However, the duration of this shock remains uncertain. If tourist arrivals do notresume in the second half of 2020, therecession in STP would be even deeper,
more prolonged and wide-spread. Activity in the agriculture and industry sectors
could also slow down further given theincreasing fear of contagion and a potential domestic outbreak. STP could also be
impacted through much lower global
demand for its commodities such as cocoa and through higher prices of imported products such as food. This could result in food shortages or a depletion of
already low international reserves, which
are of critical importance under thepegged currency regime.
Lower oil prices represent an upside risk
for STP, however the country is exposed
to potential supply disruptions fromTABLE 2 São Tomé and Príncipe / Macro poverty outlook baseline scenario

Angola. Subsequently, power shortages
could intensify. The COVID-19 pandemic
could also delay work on some major projects financed by external sources such as
the China-supported airport project. Given STP’s fragile fiscal situation, the country will not be able to adopt a countercyclical fiscal policy stance. Its lack ofmonetary policy flexibility due to the currency peg to the Euro and its small size
also limit policy options.
As a small-island state, STP finds itself
overly dependent on the public sector,
faces vulnerabilities to balance its current
account, is exposed to terms of trade
shocks that can introduce volatility into
macroeconomic management and affectits fiscal accounts and ultimately growthand social development. Though serious,
these features are not insurmountable
constraints for STP’s development. The
reforms proposed in the recently completed Country Economic Memorandum take
into consideration these characteristics
and propose a pathway to turn STP’s
smallness into a promising uniqueness.
The challenge for STP is to muster the
support for structural reforms and create
the capacity to speed up their implementation. This will allow the country to create a more private sector-led growth model that generates the jobs needed to sustainably reduce poverty.

(annual percent change unless indicated otherwise)

2017

2018

2019 e

2020f

2021f

2022 fReal GDP growth, at constant market prices

3.9

2.7

2.4

-4.1

1.7

2.6

Real GDP growth, at constant factor prices

4.0

2.0

2.4

-4.1

1.7

2.6

Agriculture

2.7

-1.2

2.1

0.7

2.1

2.8

Industry

4.6

1.2

2.7

0.4

1.8

2.7

Services

4.1

2.5

2.4

-5.7

1.6

2.5

5.7

7.9

7.8

11.4

11.8

10.3

Current Account Balance (% of GDP)

-13.4

-10.6

-11.7

-10.1

-11.3

-12.2

Fiscal Balance (% of GDP)

-5.3

-3.2

-6.0

-7.4

-7.0

-6.8
127.2

Inflation (Consumer Price Index)

Debt (% of GDP)

111.5

108.9

113.7

121.9

125.0

Primary Balance (% of GDP)

-4.8

-2.8

-5.2

-6.8

-6.3

-6.2

International poverty rate ($1.9 in 2011 PPP) a,b,c

34.5

34.4

34.4

35.2

35.2

35.1

Lower middle-income poverty rate ($3.2 in 2011 PPP) a,b,c

63.8

63.7

63.7

64.3

64.4

64.3

a,b,c

85.5

85.5

85.4

86.3

86.4

86.3

Upper middle-income poverty rate ($5.5 in 2011 PPP)

So urce: Wo rld B ank, P o verty & Equity and M acro eco no mics, Trade & Investment Glo bal P ractices.
No tes: e = estimate, f = fo recast.
(a) Calculatio ns based o n 2010-IOF and 2017-IOF.
(b) P ro jectio n using po int to po int elasticity at regio nal level with pass-thro ugh = 0.5 based o n GDP per capita in co nstant LCU.
(c) A ctual data: 2017. No wcast: 2018-2019. Fo recast are fro m 2020 to 2022.

The cut-off date for information in this MPO was April 02, 2020.

MPO / Apr 20 271

The global outlook is very uncertain. This outlook reflects information available at the time of its preparation. As more inf ormation becomes available,
these projections will be revised. They are presented now to assist policymakers to design alternative policy responses.

SENEGAL

Recent developments

Table 1

2019

P o pulatio n, millio n

16.7

GDP , current US$ billio n

23.6

GDP per capita, current US$

1407

Internatio nal po verty rate ($ 1.9)

a

38.0

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

a

67.5

a

88.1

a

40.3

Gini index

Scho o l enro llment, primary (% gro ss)
Life expectancy at birth, years

b

85.6

b

67.4

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

Growth remained solid at 5.3 percent in2019. Strong exports were unable to offset
investment driven imports. The fiscal
deficit stayed above target. COVID-19
will slow 2020 growth significantly. The
current account deficit will widen despite
favorable terms of trade, as exports andremittances slow. The 2020 fiscal deficit
will increase significantly to accommodate
the shock. A financing gap will open. The
key risk is a protracted crisis. Poverty
may increase in response to employment,
price and remittance shocks.

Growth slowed from 6.4 percent in 2018 to
5.3 percent (2.5 percent in per capita
terms) in 2019, below its potential of 6.2
percent. Services are the largest contributor to growth (3.1 percentage points, ppt),
followed by industry (1.2 ppt) and agriculture (1.1 ppt). On the demand side, consumption contributed 3.5 ppt to thegrowth rate, with investment as close second (3.0 ppt). Net exports remain a drag at-1.1 ppt despite strong export growth.
Overall, hydrocarbon development translated into investment, favorable weather
helped agriculture while external demand
supported export growth. Inflation was
subdued at 1 percent, consistent with an
output gap close to zero.
The external current account deficit remained constant around 9.1 percent in 2019
due to large imports reflecting strong investment and high oil prices. Strong performance of export growth led by groundnut,
fish, gold and phosphoric acid was unable
to offset imports. The external deficit was
mostly financed by external borrowing.
The fiscal deficit persisted above target at
3.9 percent of GDP in 2019, including a one-off debt-financed central governmenttransfer to SENELEC. Limited adjustmentof domestic energy prices against high international oil prices translated into substantial subsidies. Public debt increased
from 62 percent of GDP in 2018 to 64 percent in 2019, driven by financing progrowth (oil and gas) investment, below theline operations and including SOE debt.

Debt composition has shifted toward external borrowing while the risk of debt distress increased from low to moderate.
Senegal’s monetary and exchange rate
policies are managed by the Central Bankof West African States (BCEAO), maintaining a fixed peg between the CFA Francand the Euro. BCEAO’s international reserves reached 4.9 months of imports in
2019, up from 4.5 months in 2018, on theback of fiscal consolidation and higher net
capital inflows. Despite an unchanged
tight monetary policy, regional liquidity
pressures were alleviated due to higher
BCEAO supply and lower demand forrefinancing from banks. The real effective
exchange rate (REER) depreciated by 5
percent in 2019, due to the Euro nominal
depreciation against the US dollar combined with persistently lower inflation in
WAEMU compared with trading partners.
The financial sector remains sound. The
introduction of Basel II/III principles is
expected to further increase the system’s
resilience. Gross non-Performing Loans(NPLs) as a share of total loans haveslightly increased from 13.1 percent at end-2018 to 13.7 percent in June-2019. Credit
growth slumped in 2018 but is gradually
picking up in 2019. Access to credit for
SMEs remains constrained.
Poverty using the international poverty
line (US$1.9 PPP) is projected to havedeclined from 36 percent to 32.9 percent
between 2015 and 2019. This progressive
improvement of living conditions is
attributable to growth in agriculture,
increasing employment rates (including
formal jobs), access to basic services
and low inflation.

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

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

Percent, percent points
10

Poverty rate (%)

Real GDP per capita (constant LCU)

100

100000080

80000060

60000040

40000020200000

8
6
4
2
0
-2

-4
-6
2017

2018

2019

2020

Consumption
Net exports
Potential GDP growth
Sources: ANSD and World Bank staff estimates.

272 MPO / Apr 20

2021

2022

Investment
Change in inventories
Real GDP growth002005 2007 2009 2011 2013 2015 2017 2019 2021
International poverty rate
Upper middle-income pov. rate

Lower middle-income pov. rate
Real GDP pc

Source: World Bank.
Notes: see Table 2.
The cut-off date for information in this MPO was April 02, 2020.

Outlook
Growth will decline to 2.8 percent in 2020,
curbed by COVID-19. (Services) export
growth would slow as tourism andtransport suffer a standstill and key demand markets shut down. This, together
with lower remittances would subdue
private consumption. As uncertainty
affects investors and governments reallocate resources to manage the crisis, investment is set to slow in 2020 but will increasingly drive growth in the medium
term. Assuming the pandemic recedes
during end-2020, growth would bounceback over the medium term to 8 percent in
2022. The current shock would open anegative output gap . Despite short termpressures and unexpected financing
needs, fiscal vulnerabilities will be contained while reform and investment implementation would increasingly crowd in
the private sector over the medium term.
Oil and gas production are expected tosupport economic performance from 2022.
Productivity growth together with prudent
monetary policy and exchange rate stability
should keep the economy from overheating
and keep inflation around 2 percent.
The external current account deficit will
temporarily widen to 11.3 percent of GDP in2020 before declining to 8.5 percent of GDP

by 2022. Favorable Terms of Trade and increasing export performance over the medium term would begin to offset continued
investment-related import growth. Increasing financing needs due to COVID-19 ofaround 2.5 percent of GDP will be difficult
to satisfy in face of tightening regional markets and subdued FDI. External support
from donors will be needed in 2020.
WAEMU reserves would reach about 5.1
months of imports by 2022 as member countries continue to implement fiscal consolidation measures and external competitiveness
improves. In December 2019, the WAEMU
authorities announced a currency reform
involving changes to the underlying arrangements with France. Market reactions
have been muted so far, likely reflecting
expectations that the foundations of the currency regime would remain broadly unchanged for the foreseeable future.
The fiscal deficit is expected to temporarily spike to 5.5 percent of GDP in 2020 but
stabilize at the WAEMU target of 3 percent of GDP by 2022. After revenue shortfalls in 2020, continued tax revenue mobilization efforts – supported by a mediumterm revenue strategy and coupled withprudent current spending - would create
fiscal space to increase productive investment and social expenditures in the medium-term. Total public debt would initiallystagnate around 68 percent of GDP but
start to gradually decrease from 2022.

TABLE 2 Senegal / Macro poverty outlook baseline scenario

Real GDP growth, at constant market prices

COVID19 impacts on household welfare
are expected to be significant. Preliminary
simulations assume zero per capita GDP
growth and suggest poverty may stagnate
or increase in 2020, before decreasing toreach 30.3% by 2022.

Risks and challenges
Downside risks are high. A protracted
COVID-19 outbreak would aggravatefiscal pressures and economic losses,
widening the short-term financing gap.
This could induce a significant increasein poverty in the short term. Low oil prices and increasing gold prices represent a
continued upside risk. In the medium
term, weaker than expected revenue mobilization could undermine fiscal space.
Delays and uncertainty around hydrocarbon production could negatively weighon exports, growth and the current account balance. Slower progress on investment climate reforms or constrained public investment may subdue crowding inprivate investment. Weather shocks may
curb agricultural growth (including in
the groundnut sector, employing manypoor) and lower social spending could
affect households’ capacity to invest andprotect human capital.

(annual percent change unless indicated otherwise)
2017

2018

2019 e

2020f

2021f

2022 f

7.4

6.4

5.3

2.8

5.5

8.0

Private Consumption

4.9

4.3

4.8

1.2

4.8

5.0

Government Consumption

4.0

3.8

8.1

4.8

3.0

3.0

Gross Fixed Capital Investment

15.4

8.4

10.0

4.8

9.1

12.5

Exports, Goods and Services

8.2

9.6

9.9

4.6

10.1

15.1

Imports, Goods and Services

16.7

7.6

1.8

3.3

8.8

9.0

7.0

6.3

5.0

2.8

5.5

8.0

Agriculture

11.5

7.9

2.9

3.0

8.0

8.8

Industry

7.1

7.5

5.8

3.4

6.3

8.6

Services

5.8

5.3

5.2

2.5

4.4

7.5

Real GDP growth, at constant factor prices

Inflation (Consumer Price Index)

1.3

0.5

1.0

2.0

2.0

1.5

Current Account Balance (% of GDP)

-7.4

-9.1

-9.1

-11.3

-11.4

-8.5

Fiscal Balance (% of GDP)

-3.0

-3.9

-3.9

-5.5

-3.3

-3.0

Debt (% of GDP)

61.0

62.1

64.2

67.4

67.6

66.6

-1.1

-1.9

-2.1

-3.5

-1.1

-1.1

Primary Balance (% of GDP)
a,b

34.2

33.4

32.9

32.4

31.5

30.3

Lower middle-income poverty rate ($3.2 in 2011 PPP) a,b

64.4

63.7

63.3

62.9

62.0

61.0

Upper middle-income poverty rate ($5.5 in 2011 PPP) a,b

84.0

83.1

82.5

82.0

80.9

79.5

International poverty rate ($1.9 in 2011 PPP)

So urce: Wo rld B ank, P o verty & Equity and M acro eco no mics, Trade & Investment Glo bal P ractices.
No tes: e = estimate, f = fo recast.
(a) Calculatio ns based o n 2005-ESP S-I and 2011-ESP S-I I. A ctual data: 2011. No wcast: 2012-2019. Fo recast are fro m 2020 to 2022.
(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.

The cut-off date for information in this MPO was April 02, 2020.

MPO / Apr 20 273

The global outlook is very uncertain. This outlook reflects information available at the time of its preparation. As more inf ormation becomes available,
these projections will be revised. They are presented now to assist policymakers to design alternative policy responses.

SEYCHELLES
Table 1

Recent developments
2019

P o pulatio n, millio n

0.1

GDP , current US$ billio n

1.6

GDP per capita, current US$

16975

Internatio nal po verty rate ($ 1.9)a

1.1

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

a

a

a

2.5
6.6
46.8

Gini index

Scho o l enro llment, primary (% gro ss)
Life expectancy at birth, years

b

99.8

b

74.3

Source: WDI, M acro Poverty Outlook, and official data.
Notes:(a) M ost recent value (201 3), 201 1 PPPs.
(b) M ost recent WDI value (201 7).

Seychelles is among the most tourismdependent countries in the world andwill likely experience double digit recession in 2020 due to COVID-19. While themedium-term forecast remains favorable,
the required fiscal response to the crisis
will substantially delay the country’s
ability to reach its debt target. The
economic downturn is expected to take atoll on poverty reduction in 2020 after
which poverty is expected to continue todecline slowly and reach 5 percent(USD 5.5 per day) by 2020.

Growth in 2019 was robust at an estimated 3.8 percent but economic activity remains heavily dependent on the tourism
industry. Tourism arrivals continued theirlong-term growth trend at 6.2 percent in2019. The only other significant source ofexport revenue is fisheries, which haslargely plateaued and provides limited
domestic value addition.
Monetary policy remained tight, which
helped to prevent the economy from overheating. Inflation for 2019 is estimated at
2.0 percent. Seychelles continues to runlarge current account deficits with sizeable
merchandise trade and income deficits
offset by large services trade and financial
account surpluses. Reserves stood at 3.8
months of imports in January 2020.
Fiscal policy was prudent with sizeable
primary budget surpluses helping toachieve the government’s objective of rapidly reducing its debt. At 2.6 percent, theprimary surplus in 2019 met the target
under a non-disbursing 3-year IMF Policy
Coordination Instrument, reducing public
debt to 56.4 percent of GDP at the end of
2019. The debt structure is favorable, withover half of the debt stock domestic andmost remaining external debt at long andconcessional terms.
Absolute poverty in Seychelles is low (at6.6 percent in 2013) when measured
against the high-income poverty line of
USD 5.5 a day per capita. Inequality, however, is significant with a Gini coefficientfor gross income at 0.47. The country’s

very generous social protection system is
not addressing inequality in a costefficient manner and has shortcomings insetting incentives for formal labor market
participation, while rapidly spreading
drug use is imposing an increasing humanand economic cost. Rising labor demandhas been met by a surge in expatriate
workers in recent years as labor force participation of Seychellois at 65 percent in
Q3 remains rather low and is declining (70percent in 2014). The unemployment rate
is low (2.4 percent in the third quarter of2019), indicating a tight labor market consistent with the strong macro indicators.

OutlookWith global tourism on a standstill andtravel restrictions on most foreigners inplace, tourism earnings for March andwell into Q2 are expected to drop to nearzero, with a gradual recovery starting in
Q3. This translates into negative growth of-11.1 percent and a 41 percent decline inexports. While a fiscal response to guarantee salaries and a strong social safety net
would mitigate some of the effect on consumption, a drop is nevertheless expected.
The impact on the current account is mitigated by simultaneous drop in imports
due to lower tourism arrivals, lower fuelprices, standstill of investment, and sharp
drop in repatriated profits from hotels.
Under this scenario, the fiscal deficit
would reach 15 percent in 2020 due toforegone tax revenue and increased
spending to support the private sector and

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 (%)
14

Percent of GDP
90
80

5

70

0
-5
-10

12

60

10

50

8

40

Real GDP per capita (constant LCU)
120000100000
80000
60000

6

30
20

-15
-20
2010

2012

2014

General gov. balance (lhs)
Public sector debt (rhs)
Source: WB staff estimates.

274 MPO / Apr 20

2016

2018

2020f

2022f

Primary balance (lhs)

40000

4

10

2

0

0

20000
0
2006 2008 2010 2012 2014 2016 2018 2020 2022
International poverty rate
Upper middle-income pov. rate

Lower middle-income pov. rate
Real GDP pc

Source: World Bank.
Notes: see Table 2.
The cut-off date for information in this MPO was April 02, 2020.

vulnerable population, and the resulting
increase in debt would derail the accomplishment of the debt target < 50 percent
of GDP, that was to be reached by 2021,
by several years.
In the medium term, the outlook remains
positive for a strong recovery and continued growth once global tourism has been
restored, although delays in 2020 investment make it unlikely that the country
will return to 2019 income levels in 2021.
Despite the setbacks from COVID-19 response, the country is expected to returnto primary surpluses and downward debt
trajectory from 2021.
Negative growth in 2020 is expected totake a toll on poverty reduction in Seychelles. Based on the 2013 household
budget survey, about 6 out of 10 poor individuals have a job, are more likely to be
self-employedcomparedwiththenonpoor and are largely employed in theservices sector, which is expected to be hit
hard due to COVID-19. Poverty is therefore projected to rise to 6.1 percent in 2020
and to slowly continue to decline to 5 percent by 2022 ($5.5 a day per capita line).
Inequality is expected to continue to increase if underlying challenges (next section) are not addressed. The 2018 household budget survey is expected to delivera much-needed update on the most recent
trends in poverty and inequality

Risks and challenges
While the baseline assumes a relatively
quick recovery and gradual reopening of
global travel starting in Q3 2020, a more
prolonged shut down could further deepen the recession in 2020 and also affect themedium term outlook. Such a scenario
would also put significant pressure on thebalance of payment, especially if oil prices
were to rebound.
The national airline, Air Seychelles, hasbeen making heavy losses in recent years
and has accumulated significant debt. Air
Seychelles has already announced reductions in flight activity due to COVID-19,
and resulting additional losses will further
aggravate its financial position and create
more demand for government support
Climate change increasingly puts key infrastructure and natural resources at risk,creating an increasing need for adaptationand disaster preparedness that will require significant resources in the medium
term. A recently completed Coastal Management Plan calls for investments of USD
13 mln for priority coastal resilience projects alone in the coming years.
The government’s vision of a stronger role
for the private sector remains to be put
into practice. Seychelles currently ranks

TABLE 2 Seychelles / Macro poverty outlook baseline scenario

100th in the Doing Business report withparticularly low scores on starting a business (147th), getting credit (144th), andenforcing contracts (128th). At the sametime, activity of SOEs has strong effects on
the economy, including in the retail andcivil aviation sectors.
In order to overcome the challenge of rising inequality without jeopardizing its
progress in fiscal consolidation, Seychelles
needs to improve the efficiency of public
expenditure in the social sectors and recalibrate the budget allocation, currently
skewed towards the elderly. This includes
reforms of the pension and home-basedcare systems, and more activating incentives for labor market integration. Improving the quality of education is an urgent
priority as skill premia continue to rise
and to benefit skilled workers while a
considerable share of the population is at
risk of falling behind. A strong and effective public policy response to the drug
epidemic is needed to prevent a sizeable
share of the population from losing its
livelihood to addiction.

(annual percent change unless indicated otherwise)
2017

2018

2019 e

2020f

2021f

2022 f

4.3

4.1

3.8

-11.1

6.3

5.0

Private Consumption

14.8

3.3

4.8

-4.8

5.2

5.1

Government Consumption

6.3

8.8

-0.8

15.1

-2.5

-1.7

Gross Fixed Capital Investment

-2.2

3.8

2.6

-40.9

33.9

11.7

Exports, Goods and Services

9.6

2.9

2.0

-42.0

39.2

7.2

Imports, Goods and Services

11.6

4.0

0.9

-38.2

37.2

6.5

3.9

4.1

3.8

-11.0

6.2

5.0

Agriculture

3.3

0.9

1.1

0.9

0.9

1.1

Industry

-2.2

2.4

2.1

2.2

1.6

2.1

Services

4.8

4.4

4.1

-12.9

7.0

5.5

3.5

3.7

2.0

2.1

3.0

3.0

Current Account Balance (% of GDP)

-20.7

-19.6

-18.6

-16.3

-18.6

-17.2

Net Foreign Direct Investment (% of GDP)

18.2

17.2

17.5

2.2

14.1

19.2

Real GDP growth, at constant market prices

Real GDP growth, at constant factor prices

Inflation (Consumer Price Index)

Fiscal Balance (% of GDP)

0.0

-0.2

0.0

-15.2

-1.9

-0.9

Debt (% of GDP)

63.9

59.7

56.4

73.6

69.2

64.8

Primary Balance (% of GDP)

3.1

2.9

2.6

-12.4

1.3

2.1

International poverty rate ($1.9 in 2011 PPP) a,b

0.8

0.8

0.8

0.9

0.8

0.8

Lower middle-income poverty rate ($3.2 in 2011 PPP)

a,b

2.0

1.8

1.8

2.3

2.0

1.8

Upper middle-income poverty rate ($5.5 in 2011 PPP)

a,b

5.5

5.1

4.8

6.1

5.3

5.0

So urce: Wo rld B ank, P o verty & Equity and M acro eco no mics, Trade & Investment Glo bal P ractices.
No tes: e = estimate, f = fo recast.
(a) Calculatio ns based o n 2013-HB S. A ctual data: 2013. No wcast: 2014-2019. Fo recast are fro m 2020 to 2022.
(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.

The cut-off date for information in this MPO was April 02, 2020.

MPO / Apr 20 275

The global outlook is very uncertain. This outlook reflects information available at the time of its preparation. As more inf ormation becomes available,
these projections will be revised. They are presented now to assist policymakers to design alternative policy responses.

SIERRA LEONE
Table 1

2019

P o pulatio n, millio n

7.9

GDP , current US$ billio n

3.8

GDP per capita, current US$

486

Internatio nal po verty rate ($ 1.9)

a

40.1

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

a

74.4

a

92.1

a

35.7

Gini index

Scho o l enro llment, primary (% gro ss)
Life expectancy at birth, years

b

124.5

b

53.9

Source: WDI, M acro Poverty Outlook, and official data.
Notes:(a) M ost recent value (201 8), 201 1 PPPs.
(b) M ost recent WDI value (201 7).

Economic growth rebounded to 5.4 in
2019; inflation moderated; and fiscal andcurrent account deficits narrowed, reflecting strong performance in agriculture
and services and a recovery in industry.
Growth is projected to initially decelerate
to 2.0 percent in 2020 due to the coronavirus but rebound to an average of 4.2
percent between 2021–22. Large expenditure arrears, terms of trade deterioration,
lower than anticipated FDI inflows, andfinancial sector weaknesses represent
downside risks to the outlook.

Recent developments
Economic growth rebounded to 5.4 percent
in 2019 from 3.5 percent the previous year,
reflecting strong performance of agriculture and services and a recovery in industry. Agricultural valued added increased to
4.5 percent, up from 3.9 percent in 2018
driven by robust output in crops, forestry
and fisheries. Services grew by 6.6 percent,up from 4.4 percent in 2018 supported by
the continued recovery in trade and tourism, transport and communication andbanking and finance. The implementationof priority projects in the road and energy
sectors helped push construction growth to
6.5 percent from 4.7 percent in 2018.
Average inflation declined to 14.8 percent
in 2019, from 16.0 percent in 2018, reflecting
stronger than anticipated decline in foodprices, which in turn was helped by increased domestic food production associated with seasonal factors. Despite keeping
the monetary policy rate (MPR) constant at
16.5 percent throughout the year, broadmoney (M3) expanded by 14.5 percent
compared to 14.2 percent in 2018. Private
sector credit growth also expanded by anaverage of 32.0 percent during the year, up
from 14.9 percent in 2018, as growth ingovernment credit decelerated by 5 percentage points reflecting Government’s
fiscal consolidation efforts. Still, liquidity
conditions in the money market remained
tight, evidenced by an increase in the interbank rate, which continued to trend above
the MPR. The Leone came under intensepressure, depreciating against the US dollar

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

Poverty rate (%)

16

120

12

by 21.0 percent, reflecting lower-thanexpected export receipts. The financial sector remained broadly stable as banks remained well capitalized and profitable.
However, challenges in the two stateowned banks continued despite improvements in their earnings.
Overall, the budget deficit declined from 5.7
percent of GDP to 2.9 percent in 2019. Improved revenues and better expenditure
management supported the deficit reduction program. Total domestic revenue increased by 0.5 percentage points, to 14.2
percent of GDP, driven mainly by increased
tax and nontax revenues. The migration to
ASYCUDA World, adoption of ECOWAS
CET, upfront payment of petroleum excise
duties and stringent tax enforcement supported the increase in tax revenues whilenontax revenue increased principally due tofees levied by government agencies. Grants
increased to 3.7 percent of GDP from 2.2
percent in 2018, reflecting increased disbursement of budget support by the World
Bank, African Development Bank and European Union. Total expenditure declined
marginally by 0.8 percentage point to 20.6
percent of GDP, as capital spending slowed.
The deficit was financed mainly from domestic sources (2.2 percent of GDP). Total
public debt reached 66.9 percent of GDP in2019 (up from 58.2 percent of GDP in 2018),
reflecting high fiscal deficit as well as thedepreciation of the exchange rate. The country’s risk of external and overall risk of debt
distress remain “high”, unchanged from the2018 assessment.
The current account deficit (CAD) narrowed to 11.6 percent of GDP from (13.9
percent in 2018) as mineral and agricultural

Real GDP per capita (constant LCU)
2000000100

81500000

4

80

0

60

-4

100000040-8500000

-12
2016

2017

2018

Change in inventories
Net Exports
Public Consumption
Real GDP growth
Source: World Bank.

276 MPO / Apr 20

2019

2022

20

Statistical discrepancy
Gross fixed capital formation
Private Consumption

0

2020

2021

0
2003

2010

International poverty rate
Upper middle-income pov. rate

2017
Lower middle-income pov. rate
Real GDP pc

Source: World Bank.
Notes: see Table 2.
The cut-off date for information in this MPO was April 02, 2020.

exports increased and the trade balance
improved. Imports remained subdued,growing by 8.1 percent during 2019 (upfrom -11.5 percent the previous year). Sierra
Leone’s terms of trade deteriorated in 2019as global demand slowed due to US-China
trade tensions and weak industrial production. The CAD was financed mainly by foreign direct investments to the agriculture,mining and telecommunications sectors.

Outlook
Economic growth is expected to slow down
to 2.0 percent in 2020 reflecting the contraction in services as tourism and transportation grinds to halt due to the fallout fromthe Coronavirus Disease (COVID-19).
Growth will rebound to 4.6 and 3.7 percent
in 2021 and 2022, respectively, underpinned by strong recovery from COVID-19,
improved agricultural productivity, increased investment in infrastructure(energy and roads) and strong performanceof mining and services. Even if a significant
outbreak of coronavirus in the country is
avoided, any past progress on poverty reduction is likely to be halted this year, withthe proportion of poor households living
below the international poverty line of
US$1.9/day (2011 PPP) forecasted to stayflat at 39 percent in the medium-term. Inflation is expected to continue to moderate tosingle digits by 2022, supported by increased domestic food production, fiscal
consolidation and exchange rate stability.
However, inflationary pressure could increase due to COVID-19 as disruption in
global supply chains generates scarcity ofimported food items including rice (thestaple food). Already food inflation has
increased from 5.4 percent in December
2019 to 7.5 percent in January 2020 withadverse implications for household poverty. Self-employment is the sole source ofincome for over a third of the urban poor.
The continuation of fiscal consolidation
efforts will bring the budget deficit to 3.5
percent of GDP by 2022, reflecting vigorous
revenue mobilization and better expenditure management under the IMF ECF program and new public financial management regulations. The CAD is projected tonarrow to 8.8 percent of GDP in 2022 percent driven mainly by the recovery of mineral exports which will support reserve
accumulation and exchange rate stability.

Risks and challenges(due to trade tensions and COVID-19),
lower than anticipated FDI inflows, andfinancial sector weaknesses represent themain risks to the outlook. First, a recent
stock-taking exercise revealed that thestock of domestic payment arrears was Le
3.2 trillion (8.7 percent of GDP), whichweighs heavily on public finances andcould impede fiscal consolidation efforts.
Second, weaker demand for the country’s
export due to trade tensions and COVID19 could worsen the terms of trade andlimit exports, negatively affecting growth.
In addition, quarantines and travel restrictions to limit the spread of COVID-19
could cause severe disruption in global
trade and hurt import-dependent economies like Sierra Leone. Notably, a serious
outbreak in major rice producing regions
could increase the price of rice, pushingsome households into poverty. Third, lower than anticipated FDI inflows especiallyin the light of disagreements between
Government and a mining company could
create uncertainty and limit investmentsin the sector, causing a drawdown of reserves and putting further pressure on theexchange rate. Finally, the weak financial
positions of the two state-owned banks
could adversely impact financial sector
stability and the growth outlook.

Large domestic expenditure arrears,
weaker demand for Sierra Leone’s export

TABLE 2 Sierra Leone / Macro poverty outlook baseline scenario(annual percent change unless indicated otherwise)

2017

2018

2019 e

2020f

2021f

3.8

3.5

5.4

2.0

4.6

3.7

Private Consumption

-0.2

13.2

2.7

4.0

9.5

10.5

Government Consumption

-4.8

-1.3

-8.6

10.3

11.1

-3.8

Gross Fixed Capital Investment

17.6

-20.6

19.3

-14.5

3.4

8.1

Exports, Goods and Services

23.3

-33.5

19.2

14.5

14.0

11.2

Imports, Goods and Services

6.3

-11.5

8.1

14.5

17.4

17.4

3.7

3.4

5.6

2.0

4.6

3.7

Agriculture

4.5

3.9

4.5

4.3

4.3

4.3

Industry

-5.3

-2.5

7.6

6.8

1.6

1.6

Services

5.4

4.4

6.6

-2.4

6.0

3.5

Consumer Prices (end-of-period)

18.2

16.0

14.8

13.0

11.1

9.6

Current Account Balance (% of GDP)

-14.5

-13.9

-11.5

-10.4

-9.4

-9.0

Fiscal Balance (% of GDP)

-8.7

-5.7

-2.9

-4.2

-3.7

-2.6

Debt (% of GDP)

57.6

58.2

66.5

66.9

66.1

66.4

Primary Balance (% of GDP)

-6.6

-4.5

-2.1

1.7

-0.8

0.8

..

40.1

38.9

38.9

38.0

37.5

Lower middle-income poverty rate ($3.2 in 2011 PPP) a,b

..

74.4

73.6

73.6

73.0

72.6

a,b

..

92.1

91.8

91.8

91.5

91.4

Real GDP growth, at constant market prices

Real GDP growth, at constant factor prices

International poverty rate ($1.9 in 2011 PPP) a,b
Upper middle-income poverty rate ($5.5 in 2011 PPP)

2022 f

So urce: Wo rld B ank, P o verty & Equity and M acro eco no mics, Trade & Investment Glo bal P ractices.
No tes: e = estimate, f = fo recast.
(a) Calculatio ns based o n 2011-SLIHS and 2018-SLIHS. A ctual data: 2018. No wcast: 2019. Fo recast are fro m 2020 to 2022.
(b) P ro jectio n using po int-to -po int elasticity (2011-2018) with pass-thro ugh = 0.5 based o n GDP per capita in co nstant LCU.

The cut-off date for information in this MPO was April 02, 2020.

MPO / Apr 20 277

The global outlook is very uncertain. This outlook reflects information available at the time of its preparation. As more inf ormation becomes available,
these projections will be revised. They are presented now to assist policymakers to design alternative policy responses.

SOMALIA

Recent developments

Table 1

2019

P o pulatio n, millio na

14.6

GDP , current US$ billio n

5.0

GDP per capita, current US$

339

Internatio nal po verty rate ($ 1.9)
Gini co efficient

b

69

b

34.0

Scho o l enro llment, primary (% gro ss)
Life expectancy at birth, years

b

b

33.0
56.7

Sources: WDI, IM F, UNFPA and M acro Poverty Outlook.
Notes:(a) Based on 201 3 population estimates by UNFPA andassumes an average annual population growth of 2.9%.
(b) Somali Poverty and Vulnerability Assessment Report(World Bank, 201 9); Life expectancy for 201 7 from WDI.

Growth has remained steady in 2019, at
2.9 percent. However, growth continues
to be vulnerable to shocks, which haveparticularly deleterious impacts on thenearly 70% of the population living below
the poverty line. This situation is likely
to be exacerbated by the spread of
COVID-19. Somalia has reached the firstmilestone in qualifying for debt relief under the HIPC initiative, which increases
access to financing but remains insufficient to address vast development needs.

Growth in 2019 remained steady at 2.9
percent, on par with the estimated population growth rate. Small-scale investments and entrepreneurial activities,
mainly in urban areas, are being supported by increased lending to the private
sector (at 4.2 percent of GDP in 2019, increasing almost two-fold since 2017), as
financial institutions benefit from a rise incustomer deposits following growing consumer confidence. The growth in mobile
money payments is further facilitating
private transactions including the steadyreceipt of remittances, estimated at around
32 percent of GDP.
However,devastating
floodsanddrought, as well as locusts, have left 5.2
million people in need of assistance andat risk of food insecurity. This crisis is
expected to be met with humanitarianrelief, estimated at 16.5 percent of GDP.
Despite these shocks, prices remained
relatively stable, with inflation hovering
at above 3 percent at end-2019, in linewith the previous year’s trends. Highlevels of dollarization help to shelter the
economy from substantial variations inprices, particularly since the country typically imports more than four times as it
exports, including basic food items. Somalia’s high structural trade deficit (at 89 percent of GDP) is financed by stable
external flows including remittances,
grants and foreign direct investment.
In March 2020, Somalia qualified for debt
relief through the Heavily Indebted Poor

FIGURE 1 Somalia / Sources of revenue and growth forecast

Percent

Percent of GDP
12

4Countries (HIPC) initiative, clearing US$
740 million in arrears to international
financial institutions. While the first milestone under debt relief will enable thecountry to regain access to regular concessional financing, expenditure needs
far outstrip the resources required to
implement Somalia’s poverty reduction
strategy. The global spread of COVID-19
is already placing strain on the country’s
fiscal capacities. Following the confirmation of one case, in March 2020 the airport will be temporarily closed, which
will result in losses of revenues frominternational trade and non-tax revenues,
such as overflight fees.
Somalia remains among the most poorand fragile states in the world. More than
two in three Somalis live on less than
US$1.90 per day, in 2011 purchasing
power parity terms (PPP). Limited economic opportunities, economic exclusion,
conflict, and natural disasters are contributors to poverty. Due to insecurity, climate-related changes and constrained
humanitarian access, most rural and nomadic communities remain vulnerable toshocks, with limited coping mechanisms.
Access to basic social services, as well as
their investment, remains limited in hardto-reach areas accounting for relatively
lower educational and health outcomes;
and resulting in multidimensional poverty.
Supply side GDP data is unavailable inSomalia. Efforts are ongoing to strengthen
capacity in statistics.
This milestone follows progress in maintaining macroeconomic stability, elaborating a participatory poverty reduction
program, the steady implementation of

FIGURE 2 Somalia / Actual poverty rates by region and population group
Percentage of population
100
80

10
3
8

60

6

2

4
1
2

40
20

0

0

0
2017

2018

2019e

2020f

Domestic revenue (lhs)Real GDP growth (rhs)
Sources: Ministry of Finance, IMF and World Bank.

278 MPO / Apr 20

2021f

Mogadishu Other urban

2022f

Rural

IDPs insettlements

Nomads95 percent confidence interval
Overall average (survey estimates)

External grants (lhs)
Source: World Bank.

The cut-off date for information in this MPO was April 02, 2020.

economic reforms and financial assurances from 70 percent of Somalia’s creditors
for debt relief.

Outlook
The COVID-19 crisis has resulted in adowngrading of the growth outlook froma projected 3.2 percent to 2.3 percent
through the combined forces of a fall in
consumption, lower exports, and a potential slowdown in private investments.
Somalia’s growth is largely consumption
driven, with remittances supporting
households particularly in urban areas
and for internally displaced people living
outside of settlements. Recessionary impacts related to COVID-19 in more advanced economies are expected to resultin a lowering of the remittance-to-GDP
ratio from 32 percent to 23 percent, which
may contribute to a fall in demand forfood imports and increase vulnerability of
those close to the poverty line.
Somalia’s exports are dominated by livestock to major markets in the Gulf Cooperation Council countries, which are expected to decline by as much as 50 percent
following restrictions to pilgrimagerelated activities. Uncertainties surrounding the spread of COVID-19 may also contribute to a fall in private investment.

However, the steep decline in oil prices
should reduce the cost of energy production and could provide a much-needed
boost to households and businesses. As
remittances and demand for imports decline, revenues from international trade(which accounts for 63 percent of taxes)
are also expected to fall, which will further constrain Somalia’s ability to respond to a shock.
A fall in the growth outlook combinedwith a reduction in remittances could result in a contraction of household earnings, including for those engaged in the
livestock supply chain. Social distancing
measures are likely to continue, including
school closures, which could have an impact on demand for services provided bysmall businesses. However, the projected
fall in global commodity prices could help
to alleviate pressure on households.

Risks and challenges
Presuming that the global health pandemic related to COVID-19 is contained within
the next two months, the medium-term
growth outlook is only moderately downgraded to 3.2 percent in 2021. Other factors which may affect the growth outlook
include vulnerability to climate-related
shocks and security incidences, as well as

TABLE 2 Somalia / Macro poverty outlook baseline scenario

the potential for further instability in the
run-up to the elections programmed forlate 2020. Early signs indicate that the federal government is taking a proactive
stance to act in the national interest in
response to the COVID-19 pandemic,
which may support continuous intergovernmental dialogue.
In the event of COVID-19 spreading
around Somalia, a sustained public healthinformation campaign will be needed to
implement health guidelines, particularly
in densely-populated urban areas and inInternally Displaced People’s camps,
which are most at risk. A COVID-19 outbreak is likely to have significant economic and social impacts on the poor
stemming from the direct and indirect
effects of illness and transmission control
policies. Potential effects include loss ofearnings, increased food and nutrition
insecurity
especiallyamongselfsufficient agricultural producers, reduced
human capital accumulation, and risks ofsocial stigma brought on by fear and anxiety about the disease.
To support the Somali government andpopulation to cope with multiple shocks,
it is likely that additional grant financing
will be programmed, to support thehealth system, cushion the impact of lower fiscal revenues, and scale-up social
protection measures for the poorest andmost vulnerable.

(annual percent change unless indicated otherwise)
2017

2018

2019 e2020 f

2021 f

2022 fReal GDP growth, at constant market prices

1.4

2.8

2.9

3.2

3.5

3.7

Inflation (Consumer Price Index)

6.1

3.2

3.1

3.0

2.5

2.2

Current Account Balance (% of GDP)

-9.8

-10.3

-12.0

-12.3

-12.5

-12.5

Trade balance (% of GDP)

-86.7

-84.8

-87.3

-88.9

-89.3

-90.2

Private remittances (% of GDP)

31.5

31.3

31.9

32.4

32.7

32.9

Official grants (% of GDP)

46.1

43.9

44.1

44.9

44.9

45.6

Fiscal Balance (% of GDP)a
Domestic revenue (% of GDP)

0.0

0.0

0.5

0.0

1.0

1.7

2.5

2.9

3.0

3.0

3.2

3.5

External grants (% of GDP)

2.8

1.8

2.1

5.0

6.0

7.2

Total expenditure (% of GDP)

5.3

5.7

6.0

9.1

9.5

10.4

2.8

3.0

3.1

4.2

4.3

4.7

Compensation of employees (% of GDP)So urces: Wo rld B ank (P o verty & Equity and M acro eco no mics, Trade & Investment Glo bal P ractices) and IM F (2019).
No tes: e = estimate, f = fo recast.
(a) Federal Go vernment o f So malia (FGS).

The cut-off date for information in this MPO was April 02, 2020.

MPO / Apr 20 279

The global outlook is very uncertain. This outlook reflects information available at the time of its preparation. As more inf ormation becomes available,
these projections will be revised. They are presented now to assist policymakers to design alternative policy responses.

SOUTH AFRICA
Table 1

2019

P o pulatio n, millio n

58.6

GDP , current US$ billio n

356.1

GDP per capita, current US$

6078

Internatio nal po verty rate ($ 1.9)

a

18.9

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

a

37.6

a

57.1

a

63.0

Gini index

Scho o l enro llment, primary (% gro ss)
Life expectancy at birth, years

b

100.9

b

63.5

Source: WDI, M acro Poverty Outlook, and official data.
Notes:(a) M ost recent value (201 4), 201 1 PPPs.
(b) M ost recent WDI value (201 7).

The growth momentum remained muted inSouth Africa throughout 2019, with business confidence reaching decade lows in thesecond half of the year and extensive
black-outs by power utility Eskom further
curbing activity. Growth for 2019 was amere 0.2 percent and the economy is predicted to contract by 3.5 percent in 2020 as
the novel COVID-19 pandemic weighsheavily on both external demand anddomestic activity. Fiscal slippages have intensified, and public debt remains on an
upward trajectory. Poverty is expected torise to 21.6 percent in 2020, from 19.8 in
2019, and to reach.

Recent developments
Domestic and external headwinds intensified during the second half of 2019. The
resurgence of extensive black-outs associated with operational and financial difficulties at the energy utility Eskom in thesecond half of the year saw the economy
enter a technical recession. The weakness
was broad-based as both the primary andthe secondary sectors experienced declining activity, while output decelerated
markedly in the tertiary sector. Mining
and manufacturing have been particularly
hard hit by energy supply disruptions,compounded by waning global demandand low commodity prices. Amid low
business confidence, investment has remained stagnant while productivity ishindered by the slow pace of reforms to
improve the business environment andstrengthen infrastructure services. The
financial sector continues to remain one of
the few growth drivers in the economy. A
muted domestic and global backdrop
have led to subdued growth in imports
and exports, respectively, through 2019with the fourth quarter current accountdeficit registering 1.3 percent of GDP.
Overall, growth decelerated to 0.2 percent
in 2019, 0.6 ppt lower than what was previously expected.
Deteriorating labor market outcomes are
expected to have resulted in rising poverty
rates in 2019. In the third quarter of 2019,the unemployment rate reached an 11-year
high of 29.1 percent (58.1 percent for youth
unemployment), despite government's

FIGURE 1 South Africa / Reported cases of COVID-19

Confirmed cases

OutlookWith the COVID-19 pandemic stalking theglobe since the start of this year, the rapid
escalation in local infections in March
prompted President Cyril Ramaphosa todeclare a national disaster and a nationwide

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

New cases

1401

300

1201

250

Poverty rate (%)
80

Real GDP per capita (constant LCU)
58000

70

56000

60

1001

200

50

150

40

801
601

54000
52000

50000

30
100

401

50

201
1
3/01 3/04 3/07 3/10 3/13 3/16 3/19 3/22 3/25 3/28
Cases (LHS)

New cases (RHS)

Sources: John Hopkins database and World Bank staff.

280 MPO / Apr 20

efforts to arrest the deterioration througha jobs summit and Presidential economic
stimulus and recovery plan. The plight ofyouth unemployment is particularly
grave as it contributes to entrenched poverty and rising inequality. Extreme poverty, measured as incomes below $1.90
per day, is expected to have risen from
19.6 percent of the population in 2018 to
19.8 percent last year.
Fiscal slippages are putting the sovereign
credit rating at risk of further downgrades. The fiscal deficit is expected tohave increased to 7.1 percent of GDP in
fiscal year 2019/20, causing gross public
debt to climb to an estimated 64.1 percent
of GDP. This largely reflects subdued
growth, deepening challenges of the energy utility Eskom, weaker than expected
revenue collections, and additional public
transfers. As a result, all three major credit
rating agencies have South Africa’s sovereign credit at sub-investment grade andon a negative outlook, underscoring theextent of economic adversity facing thecountry. Of these, Moody’s downgraded
South Africa’s sovereign credit to junkstatus in March 2020, having had it at one
notch above junk status on a negative outlook from November 2019.

0

48000

20

46000

10
0

44000
2005 2007 2009 2011 2013 2015 2017 2019 2021
International poverty rate
Upper middle-income pov. rate

Lower middle-income pov. rate
Real GDP pc

Source: World Bank.
Notes: see Table 2.
The cut-off date for information in this MPO was April 02, 2020.

lockdown of 21 days (Figure 1). Stringent
travel bans were put in place, half of theports of entry have been closed, andmass gatherings and large events havebeen prohibited. Heightened risk-off
sentiment has fueled record portfolio
outflows, a sharp fall in the stock market, significant rand weakness, andhigher sovereign borrowing costs.
In this context, economic prospects arebeing severely dimmed by contracting
external demand, declining commodity
prices, and domestic containment
measures to ‘flatten the curve’. As a result, the economy is expected to contract
by 3.5 percent in 2020 - a significant
downward revision from the 1 percent
growth previously predicted. Activity isforeseen to gradually regain strength
once the containment measures are lifted in the second half of the year. As
international and domestic demand recover, bringing about a reaction in supply, the economy is expected to expandby 2.7 percent in 2021 and 1.9 percent in
2022, also aided by lower fuel prices, theimplementation of structural reforms,
private investment pledges from theinvestor conferences materializing, andgovernment efforts to improve public
investment management amid a new
infrastructure fund yielding a growth

dividend. However, the recovery willcontinue to be constrained by electricity
supply disruptions amid extensive
maintenance work to arrest the deterioration of plants capacity.
In response to sudden deterioration in theoutlook, the central bank lowered interest
rates by 100 basis points to 5.25 percent
and stepped in with measures to increaseliquidity for banks—to ease financial conditions and to improve the resilience ofhouseholds and firms to the short-term
economic implications of COVID-19.
A stimulus package, aimed at supporting
livelihoods and businesses, was also announced. The budget deficit is expected towiden to a marked 11.1 percent of GDP in
2020/21 before moderating somewhat to10.4 percent in 2022/21, as fiscal consolidation takes hold. This will result in a continued upward trajectory for public debt,
reaching 71.8 percent of GDP in 2020/21
and 83.3 percent in 2022/23, which is approximately 20 percentage points higher
than under the 2019 Budget. In this context,
debt service costs are expected to remain
the fastest growing spending category,
progressively crowding out spending onsocial and economic investment.
At current rates, growth is insufficient to
reduce poverty. Extreme poverty rates are
expected to increase to 21.6 percent in 2020

TABLE 2 South Africa / Macro poverty outlook baseline scenario

Real GDP growth, at constant market prices

and to moderate to 20.6 in 2022 (Figure 2).
These numbers reflect the need for South
Africa to garner the will to fast-track thereform agenda to generate much neededjobs while ensuring that the economicallyvulnerable benefit from social progress.

Risks and challenges
South Africa is vulnerable to a further
deterioration in global economic conditions due to the COVID-19 pandemic.
Fiscal space to maneuver is limited, and if
the outbreak lingers such that containment measures need to be prolonged, theeconomy will enter a deeper economic
recession and stands to lose millions ofjobs. The downgrade of sovereign debt tojunk status will exacerbate the risk of decelerating activity and could lead to renewed currency pressures, as nonresidents hold 37 percent of the total government bonds.

(annual percent change unless indicated otherwise)
2017

2018

2019 e

2020f

2021f

2022 f

1.4

0.8

0.2

-3.5

2.7

1.9

Private Consumption

2.1

1.8

1.0

-6.7

3.5

2.4

Government Consumption

0.2

1.9

1.5

1.9

1.0

0.9

Gross Fixed Capital Investment

1.0

-1.4

-0.9

-5.4

1.5

1.5

Exports, Goods and Services

-0.7

2.6

-2.5

-21.7

7.2

4.0

Imports, Goods and Services

1.0

3.3

-0.5

-24.8

6.7

4.1

1.5

0.7

0.1

-3.5

2.7

1.9

Agriculture

21.1

-4.8

-6.9

2.5

3.0

3.0

Industry

1.1

-0.1

-1.5

-4.8

2.3

2.0

Services

1.0

1.3

1.0

-3.3

2.8

1.8

Inflation (Consumer Price Index)

5.2

4.5

4.1

3.3

4.2

4.5

Current Account Balance (% of GDP)

-2.6

-3.6

-3.9

-3.3

-3.2

-3.0

Net Foreign Direct Investment (% of GDP)

1.5

-0.3

0.5

-7.5

1.0

1.5

Fiscal Balance (% of GDP)

-4.0

-4.2

-7.1

-11.1

-10.8

-10.4

Debt (% of GDP)

52.7

55.6

64.1

71.8

77.7

83.3

Primary Balance (% of GDP)

-0.4

-0.4

-2.9

-6.2

-5.5

-4.6

International poverty rate ($1.9 in 2011 PPP) a,b,c

19.4

19.6

19.8

21.6

21.2

20.6

Lower middle-income poverty rate ($3.2 in 2011 PPP) a,b,c

38.2

38.4

38.7

41.0

40.4

39.7

a,b,c

57.6

57.8

58.1

60.0

59.5

58.9

Real GDP growth, at constant factor prices

Upper middle-income poverty rate ($5.5 in 2011 PPP)

So urce: Wo rld B ank, P o verty & Equity and M acro eco no mics, Trade & Investment Glo bal P ractices.
No tes: e = estimate, f = fo recast.
(a) Calculatio ns based o n 2014-LCS.
(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.
(c) A ctual data: 2014. No wcast: 2015-2019. Fo recast are fro m 2020 to 2022.

The cut-off date for information in this MPO was April 02, 2020.

MPO / Apr 20 281

The global outlook is very uncertain. This outlook reflects information available at the time of its preparation. As more inf ormation becomes available,
these projections will be revised. They are presented now to assist policymakers to design alternative policy responses.

SOUTH SUDAN
Table 1

2019

P o pulatio n, millio n

13.0

GDP , current US$ billio n

4.7

GDP per capita, current US$

364

Life expectancy at birth, years

a

57.4

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

The economy recovered with a growthrate estimated at 3.2 percent during
FY2018/19 from a contraction of -3.5
percent during FY2017/18. These developments reflect activity in the oil sector
which rebounded strongly. A Revitalized
Transitional Government of National
Unity was formed in February 2020, but
subnational conflict persists. Nearly 7
million people are experiencing acute foodinsecurity and more than 1.3 million
children are malnourished. Poverty is
forecast to have risen to a little over 88
percent in 2019.

Recent developments
The economy is estimated to have recovered with a growth rate of 3.2 percent in
FY 2018/19. Growth in the oil sector was
estimated at 10.7 percent which reflects
improved production as the country
moved to rehabilitate oilfields that had
been damaged by war. Consequently,
net oil exports increased from about
128,297 bpd in FY2018 to 133,294 bpd in
FY 2019. The gap between the official
and parallel market exchange rates remains high and increased from 85 percent in June 2019 to more than 100 percent in November 2019. Following exchange rate depreciation on the parallelmarket and food price pressures resulting from floods that affected harvests
and market access, inflation picked upstrongly in the first half of FY2019/20
and averaged 108 percent in the six
months during July – December 2019.
The fiscal deficit narrowed to 2.2 percent
of GDP in FY2018/19 from 3.3 percent in
FY2017/18. However, government has
been accumulating arrears owed to civil
service salaries, which were in arrears ofmore than four months by end of December 2019. At the same time only 35
percent of oil revenues is estimated tohave reached the budget during
FY2018/19 with the rest earmarked forsettling payment to Sudan, Nilepet’s
share, and oil advances. The current
account deficit, excluding grants, rose to
5.7 percent of GDP during FY2018/19
from 3.7 percent in FY2017/18.

The FY 2018/19 DSA indicates that
South Sudan remains in debt distressand the external position is weak with
depleted reserves. Total public debt
during FY 2018/19 was estimated at 34.2
percent of GDP of which external debt is30.2 percent. Accumulation of arrears,
low capacity to service debt, and low
foreign exchange reserves indicate unsustainable debt dynamics.
The national poverty rate at the US$1.90
2011 PPP poverty line is estimated tohave risen a little over 88 percent in
2019, from 82 percent in 2016. The urban
poverty rate stands at over 70 percent,up from 66 percent in 2015.

Outlook
Economic
growthprojectionsfor
FY2019/20 have been further downgraded to 4.3 percent, reflecting lower oil
prices and a weak global economy onaccount of the COVID-19 pandemic.
Private consumption is expected to remain weak, contracting by 0.8 percent in
FY2019/20. Border closures and social
distancing are expected to contribute tothis contraction. Lower oil prices could
be partly offset by higher oil production(178,833 bpd) with exports increasing by
14.5 percent in FY2019/20 but decline
sharply by -16.1 percent in FY2020/21.
The budget deficit, excluding arrears, isprojected to grow to 3.7 percent of GDP
in FY2019/20 and to 7.4 percent in
FY2020/21. The current account deficit
is expected to reach 9.6 percent of GDP

FIGURE 1 South Sudan / Inflation developments

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

Percent

Poverty rate (%)

200

100

1600

90

1400

GDP per capita (constant LCU)

80

150

1200

70
100
50

60

1000

50

800

40

600

30

400

20

-0
1/1 2/1 3/1 4/1 5/1 6/1 7/1 8/1 9/1 10/1 11/1 12/1
Food inflation
Energy, fuel & utilities inflation
Core inflation
Headline inflation
Source: National Bureau of Statistics.

282 MPO / Apr 20

200

10
0

0
2015

2016

2017

2018

2019

International poverty rate

2020

2021

2022
GDP pcSource: World Bank.
Notes: see Table 2.
The cut-off date for information in this MPO was April 02, 2020.

in FY2019/20 and to 19.5 percent in
FY2020/21. Poverty levels are expected
rise slightly, and to remain extremely highon the back of severe food insecurity, inflation and limited access to basic services.

Risks and challenges
The major risk to the outlook is the sustainability of peace and security in the
country. The formation of a unity government on 22 February 2020, delayed
twice amidst political deadlock, gives thecountry’s leaders a chance to build upona ceasefire between the warring factions
that has largely held since September
2018. While these developments are encouraging, significant challenges remain
and the new government will have towork in concert to unify the national army, resolve disputes over control of key
cities and make peace with holdout rebel
groups. A relapse to conflict would reverse the modest gains made in the economy and would exacerbate the macroeconomic and the humanitarian situation.
A sustained downturn in oil prices
would have negative consequences forSouth Sudan’s economy. While lower
sulfur cap regulations for global maritime shipping fuels could pushSouth Sudan oil into premium category,
the COVID-19 pandemic is expected tocontribute to lower oil demand and prices, which could decline by 14.9 percent
during FY20 and 17.8 percent in FY21,
resulting in significantly lower GDP
growth rates in FY20 (4.3 percent) andFY21 (-5.3 percent). In addition, South
Sudan’s agricultural sector is at risk ofdesert locust infestation currently ravaging the Horn of Africa, threatening foodsecurity and livelihoods.

TABLE 2 South Sudan / Macro poverty outlook baseline scenario(annual percent change unless indicated otherwise)

2017
Real GDP growth, at constant market prices
Private Consumption
Government Consumption

20182019 e

2020f

2021f

2022 f
4.6

-6.9

-3.5

3.2

4.3

-5.3

-21.9

-17.8

-1.2

-0.8

-1.5

1.5

3.0

4.0

19.4

-46.4

0.7

-12.9

Gross Fixed Capital Investment

3.0

4.0

-34.1

249.3

-0.7

17.6

Exports, Goods and Services

18.4

27.9

10.7

14.5

-16.1

11.3

Imports, Goods and Services

-10.0

3.2

5.1

3.2

3.5

4.3

Real GDP growth, at constant factor prices

-6.9

-3.5

3.2

4.3

-5.3

4.6

Agriculture

-16.0

-11.5

-2.5

1.5

1.7

2.0

Industry

-3.5

15.0

8.0

11.4

-12.2

9.2

Services

-7.2

-13.3

0.4

-1.2

0.3

1.2

384.8

125.8

106.9

88.2

60.8

48.3

Current Account Balance (% of GDP)

-0.7

-3.7

-5.7

-9.6

-19.5

-7.6

Net Foreign Direct Investment (% of GDP)

-0.2

0.3

-0.6

-0.2

0.2

0.2

Inflation (Consumer Price Index)

Fiscal Balance (% of GDP)

-0.3

-3.3

0.0

-3.7

-7.4

-8.1

Debt (% of GDP)

85.3

59.7

38.3

38.6

43.4

51.9

Primary Balance (% of GDP)

-0.2

-3.0

0.4

-3.6

-7.4

-8.0

International poverty rate ($1.9 in 2011 PPP) a,b,c

86.1

88.0

88.1

87.9

90.0

89.8

Lower middle-income poverty rate ($3.2 in 2011 PPP) a,b,c

96.7

97.4

97.4

97.3

98.1

98.0

So urce: Wo rld B ank, P o verty & Equity and M acro eco no mics, Trade & Investment Glo bal P ractices.
No tes: e = estimate, f = fo recast.
(a) Calculatio ns based o n 2016-HFS.
(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.
(c) A ctual data: 2016. No wcast: 2017, 2018, 2019. Fo recast are fro m 2020 to 2022.

The cut-off date for information in this MPO was April 02, 2020.

MPO / Apr 20 283

The global outlook is very uncertain. This outlook reflects information available at the time of its preparation. As more inf ormation becomes available,
these projections will be revised. They are presented now to assist policymakers to design alternative policy responses.

SUDAN

Recent developments

Table 1

2019

P o pulatio n, millio n

42.5

GDP , current US$ billio n

18.9

GDP per capita, current US$

444

Internatio nal po verty rate ($ 1.9)

a

12.7
a

45.0

a

79.9

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)
Life expectancy at birth, years

b

b

76.8
64.9

Source: WDI, M acro Poverty Outlook, and official data.
Notes:(a) M ost recent value (201 4), 201 1 PPPs.
(b) M ost recent WDI value (201 7).

Economic activity in Sudan will be impacted by the global COVID-19 pandemic. Economic growth for 2020 has been
will be affected by declining external demand, and lower domestic consumption
due to containment measures. Severe economic challenges will remain in the medium-term as the country struggles to restore macroeconomic stability in the absence of access to much needed externalfinance. The ongoing economic crisis,
exacerbated by COVID-19, is expected tolead to higher poverty rates.

Sudan’s economic performance continued
to deteriorate in 2019, with real GDP contracting by an estimated 2.6 percent, after
a contraction of 2.3 percent in 2018. The
recession is predominantly driven by reductions in private consumption and investment, which were negatively impacted by political unrest and an ongoing currency crisis. Weak economic performancein 2019 also reflects declining agriculture
production, amid continued droughts.
The fiscal deficit (excluding quasi-fiscal
operations of the Central Bank of Sudan)
deteriorated from 6.6 percent of GDP in2017 to 10.5 percent of GDP in 2019 due
to higher fuel subsidies (driven by higher international oil prices and a sharp
depreciation of the currency) which increased by 7.5 percentage points to 11.8
percent of GDP between 2018 and 2019.
The fiscal deficit also widened due topersistently low revenue mobilizationand increasing government expenditure.
Revenue collection is estimated at 6 percent of GDP in 2019.
Sudan’s fiscal deficit is financed throughmonetization which has been the primarysource of inflationary pressures in the
country. The exchange rate on the parallel market depreciated to 85 SDG to 1
USD in December 2019, prompting thegovernment to devalue the official exchange rate from 47.5 SDG to 1 USD to
53.9 SDG to 1 USD. Money supply
growth reached 111.8 percent in 2018 but
has since moderated to 67 percent in2019. The inflation rate averaged 51.3
percent in 2019. Sudan’s debt to GDP
ratio as at end-2019 stands at 213 percent
of GDP of which external debt accounts
for approximately 90 percent. External
debt is US$54.5 billion of which 85 percent is in arrears.
The current account deficit increased from
6.3 percent of GDP in 2018 to an estimated
8.1 percent of GDP in 2019 as months ofprotest and the droughts affected exports.
In addition, as the currency continued todepreciate the trade balance also depreciated as the value of imports increase. The
Gross international reserves are low at$1.4 billion in 2019 (2 months of imports).
It remains unclear what current poverty
and inequality levels are because the poverty data from the latest household survey(2014/15) do not reflect the current macroeconomic imbalances in Sudan. Assuming
distribution-neutral consumption growth,
poverty rates may have increased consistently in recent years, to reach in 2019 an
estimated 14.2 percent at $1.90/day PPP
and 47 percent at $3.20/day PPP. The 2018
food price hikes are estimated to haveaggravated the poverty, inequality, andoverall economic welfare situation. The
price increases of wheat, sorghum, millet,
and their derivative products alone resulted in an increase in extreme poverty by an
estimated 3.2 percentage points.

Outlook
Economic growth is expected to remain
subdued in the medium-term as the

FIGURE 1 Sudan / Inflation and money supply

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

Percent, SDG per USD

Poverty rate (%)
100

140
120

Real GDP per capita (constant LCU)
1000

80

800

60

600

60

40

400

40

20

200

100
80

20
0

0

0
2009

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

Inflation Rate
Sources: WDI and staff estimates.

284 MPO / Apr 20

Broad Money

2011

2013

2015

International poverty rate
Upper middle-income pov. rate

2017

2019

2021

Lower middle-income pov. rate
Real GDP pc

Source: World Bank
Note: see Table 2.
The cut-off date for information in this MPO was April 02, 2020.

country grapples with the COVID-19 pandemic and economic imbalances continue.
Specifically, economic growth is expected to
decline by a further 0.8 ppt in 2020 to -2.1
percent due to disruptions associated with
the COVID-19 outbreak. Under the baseline
scenario, closure of ports and collapsing
demand from trading partners like United
Arab Emirates (37 percent of exports), Saudi
Arabia and China (13 percent) will result indrop in exports. Domestic (private) consumption is also expected decline as a resultof domestic containment measures. In addition, if economic reforms are further delayed high inflation will persist as the exchange rate continues to depreciate andmonetary aggregates continue to expand
due to monetisation of fiscal deficits.
The fiscal deficit will widen in the medium-term as revenue mobilization remains
low and government expenditure remains
high. The 2020 budget includes planned
increases in revenue by 16.1 percentage
point and increase in spending by 16.6
percentage point. These increases represent more than a doubling from 2019. The
major driver of the increase in revenue ispresumed to be substantial increases in
grants and revenue from tax, custom, andstate-owned-enterprise income. Expenditure will be driven by increase spending
on wages and salaries as well increase insubsidy. The 2020 budget depends on

significant external financing from thegulf countries and Arab development
funds. The current crisis could affect that
supply adversely, and thereby increase
budgetary imbalance. On the positiveside, lower oil prices will decrease the sizeof fuel subsidies that are currently a hugeburden on the budget.
The outlook for poverty remains negative.
Poverty rates are projected by 2022 to increase to 18.3 percent at $1.90/day PPP,and 53.5 percent at $3.20/day PPP. Highinflation, shortage of fuel and other basic
commodities are expected to continue
having negative effects on living conditions. The impending economic stabilization reforms are expected to take time todeliver positive results.

Risks and challenges
Risks to Sudan’s outlook remains on thedownside. Growth and poverty reduction
prospects may be further delayed due tothe global threat of COVID-19. A more
severe and prolonged the COVID-19 outbreak than currently assumed could havefurther negative effects on the outlook.
Under an escalating scenario, outbreaks inadvanced economies linger so that containment measures can only be lifted after

TABLE 2 Sudan / Macro poverty outlook baseline scenario

four months, leading to further social distancing and containment measures. In thiscontext, an escalating outbreak could
affect supply chains and disrupt furthertransportation (air and freight) and resultin a -2.6 percent decline in economic
growth in 2020. Growth would then improve in 2021 to -0.5 percent. Poverty may
be exacerbated if the pandemic results in along-time lockdown of businesses andloss of jobs.
Sudan also faces the risk of further macroeconomic instability and deterioratingproductivity as the government of Sudan
struggles to implement reforms. Withouta strong stabilization program, the current fragile economic situation risks deteriorating further. Restoring macroeconomic stability will require adjustments
to monetary, fiscal and exchange rate
policy. The feasibility of revenue mobilization envisioned by the government in
the 2020 budget is uncertain. In addition,
the budget does not include subsidy reductions that could free up more resources for better uses. In addition, Sudan remains on the U.S. State Sponsors ofTerrorism List (SSTL), which continues tolimit the country’s access to external resources, dissuade foreign investment,
and delay a restoration of correspondentbanking relationships.

(annual percent change unless indicated otherwise)
2017

2018

2019 e

2020f

2021f

4.3

-2.3

-2.6

-2.1

-0.5

0.3

Private Consumption

3.0

-3.2

-2.5

-2.4

-1.2

-0.3

Government Consumption

15.5

-1.1

-9.8

-1.7

-0.1

-0.3

Gross Fixed Capital Investment

3.0

-2.9

-1.5

-1.5

-1.2

1.1

Exports, Goods and Services

3.5

0.8

2.3

-1.3

2.8

2.8

Imports, Goods and Services

-1.0

-0.4

1.6

-0.3

2.4

2.6

3.9

-2.3

-2.6

-2.1

-0.5

0.3

Agriculture

2.5

-1.5

-1.0

-1.5

0.2

-0.3

Industry

4.5

-1.7

-0.7

-1.3

-0.7

-0.7

Services

4.5

-3.2

-4.7

-3.0

-0.8

1.4

Inflation (Consumer Price Index)

32.0

64.8

51.3

62.1

63.4

64.8

Current Account Balance (% of GDP)

-3.9

-6.3

-8.1

-9.9

-8.9

-10.1

Net Foreign Direct Investment (% of GDP)

0.9

1.9

5.9

8.5

8.7

10.0

Real GDP growth, at constant market prices

Real GDP growth, at constant factor prices

Fiscal Balance (% of GDP)
Debt (% of GDP)

2022 f

-6.6

-4.3

-10.5

-12.4

-13.5

-15.7

122.8

91.2

213.1

232.3

247.4

260.1

Primary Balance (% of GDP)

-6.1

-3.0

-8.5

-11.3

-13.1

-13.0

International poverty rate ($1.9 in 2011 PPP) a,b

10.6

12.1

14.2

15.8

17.2

18.3

Lower middle-income poverty rate ($3.2 in 2011 PPP)

a,b

40.4

43.7

47.0

49.9

51.9

53.4

Upper middle-income poverty rate ($5.5 in 2011 PPP)

a,b

76.6

79.0

81.5

83.3

84.4

85.0

So urce: Wo rld B ank, P o verty & Equity and M acro eco no mics, Trade & Investment Glo bal P ractices.
No tes: e = estimate, f = fo recast.
(a) Calculatio ns based o n 2014-NB HS. A ctual data: 2014. No wcast: 2015-2019. Fo recast are fro m 2020 to 2022.
(b) P ro jectio n using neutral distributio n (2014) with pass-thro ugh = 1 based o n GDP per capita in co nstant LCU.

The cut-off date for information in this MPO was April 02, 2020.

MPO / Apr 20 285

The global outlook is very uncertain. This outlook reflects information available at the time of its preparation. As more inf ormation becomes available,
these projections will be revised. They are presented now to assist policymakers to design alternative policy responses.

TANZANIA

Recent developments

Table 1

2019

P o pulatio n, millio n

60.9

GDP , current US$ billio n

62.8

GDP per capita, current US$

1030

Internatio nal po verty rate ($ 1.9)

a

49.1
a

76.6

a

91.7

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)
Life expectancy at birth, years

b

89.2

b

64.5

Source: WDI, M acro Poverty Outlook, and official data.
Notes:(a) M ost recent value (201 8), 201 1 PPPs.
(b) M ost recent WDI value (201 7).

According to official data, GDP growththrough the first three quarters of 2019was 6.9 percent. Growth is projected todecelerate in 2020 due to the impact of
COVID-19 in the global economy, withan expected rebound near 6 percent overthe medium-term. Estimates based on thenational poverty line show the headcountpoverty rate falling from 28.2 percent in2012 to 26.4 percent in 2018, with modest
reduction in poverty incidence expected
over the medium term.

According to official data, GDP growththrough the first three quarters of 2019was 6.9 percent, similar to the official
growth rate of 7.0 percent in 2018. However, high-frequency indicators suggest
an annual GDP growth closer to 6.0 percent. In 2019 growth was driven by astrong performance of mining, construction, and transport services.
Headline inflation reached 3.8 percent asof December 2019, below the authorities’
target of 5.0 percent. Tanzania has beensuccessful in keeping inflation in check:in 2018-2019 annual inflation was 3.5
percent on average, the lowest rate in thelast two decades.
The current account deficit improved to
3.0 percent of GDP in 2019, down from
3.8 percent in 2018, due to higher exports of gold and manufactured goods.
Imports increased at a slower pace, withintermediate goods recording the highest growth due to an expanding oil import bill. The current account deficit was
funded primarily by external borrowing. Official gross reserves reached USD
5.6 billion in December 2019, adequate
to cover 6.4 months of imports of goods
and services, above Government’s
threshold of 4 months. The shilling has
remained stable.
The fiscal deficit for 2019 was an estimated 2.3 percent of GDP, up from theprevious year’s deficit of 1.7 percent.
Domestic revenue reached 14.0 percent
of GDP, below the budgeted target of

15.5 percent of GDP. Total expenditures
were also lower at 16.9 percent of GDP(against the target of 20.4 percent ofGDP) due to lower than expected capital
expenditures. In 2019/20 H1 tax collection improved to 15.5 percent of GDP,
while total expenditures have also accelerated driven by increasing expenditures in goods and services and in capital goods. The level of public debt iscurrently sustainable, with Tanzania
assessed at low risk of debt distress inthe most recent joint WB-IMF Debt Sustainability Analysis.
The Bank of Tanzania continued pursuing an accommodative monetary policy.
M3 grew by 9.6 percent in December
2019 and private sector credit grew by
11.1 percent in 2019. Commercial lending rates have remained high at 16.8
percent in December 2019, partly reflecting high NPLs.
Poverty remains widespread with almost one in two Tanzanians living on
less than PPP USD 1.90 per day. Alongthis measure, poverty remained unchanged at 49 percent between 2012 and2018. Estimates based on the national
poverty line, equivalent to PPP US$ 1.35
per day, show the headcount poverty
rate falling from 28.2 percent in 2012 to26.4 percent in 2018, lower than the dropof 6.7 percentage points between 2007
and 2012. The slowing pace of poverty
reduction, combined with a growing
population size, led to an increase of 1.7
million in the number of poor – based on
the national poverty line – people between 2012 and 2018. This suggests thatgrowth has become less broad-based and

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

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

Percent, percentage points

Poverty rate (%)
100

8Real GDP per capita (constant LCU)
250000080

2000000

60

1500000

40

1000000

20

500000

6

4

2

0

0

2011

2012
Agriculture

2013

2014

2015

Industry

2016

2017

Services

2018

2019
GDP

Sources: National Bureau of Statistics (NBS) and World Bank staff estimates.

286 MPO / Apr 20

0
2007

2009

2011

2013

2015

International poverty rate
Upper middle-income pov. rate

2017

2019

2021

Lower middle-income pov. rate
Real GDP pc

Source: World Bank.
Notes: see Table 2.
The cut-off date for information in this MPO was March 20, 2020.

less pro-poor. Growth has been concentrated in sectors where few of the poor work. It
is mostly the better-off Tanzanians, withhigher human and physical capital, thathave been able to benefit from growth.

Outlook
Growth is expected to decelerate in 2020
to 3.0 percent due to the COVID-19 pandemic. The global slowdown and travelbans will reduce exports of services related to tourism, reducing employment inthis sector and in related activities. Exports of manufactured goods will also
decrease due to a contraction in global
demand. The surge in global uncertainty
and risk premia will reduce capital inflows to the region and increase investor’srisk aversion. Thus, private investment is
expected to decelerate. Consumption will
decelerate due to a decline in discretionary consumption arising from higher consumer’s risk aversion and higher precautionary savings, and lower disposable
income due to higher unemployment. As
the most acute eco-nomic effects of social
distancing ease in the second half of 2020,
the economy is projected to strengthen,and is projected to grow at close to 6 percent over the medium term, conditionalon steady implementation of reforms to
improve: (i) the business environment to
attract private investment, and (ii) fiscal
management to strengthen revenue collection and budget execution. Inflation
should remain low driven by decreasing
global energy prices. The authorities
target an overall fiscal deficit of 3-4 percent of GDP over the medium term asrecurrent and capital expenditures rise,
driven by expenses related to the upcoming general elections, additional
health spending and an ambitious public
infrastructure investment program. The
current account deficit is expected towiden to 4-5 percent of GDP over the
medium term as the growth in capital
imports for infrastructure investment
outpaces export growth.
During 2011-18, the growth elasticity ofpoverty—using the international poverty
line of PPP USS 1.90 per day—has beenvery low at -0.01. Limited progress in poverty reduction is expected over the medium term as most of the poor are unable tobenefit from Tanzania’s growth given thatit continues to be largely concentrated incapital-intensive sectors and in large urban areas. Fast population growth also
undermines per capita welfare growth.
Under these circumstances, the incidenceof poverty based on the USD 1.90 line ispredicted to remain at 49.1 percent.

TABLE 2 Tanzania / Macro poverty outlook baseline scenario

Risks and challenges
The main risk to the outlook is an uncontained spread of COVID-19 which is not
mitigated before the first half of 2020. Under this scenario, Tanzania’s healthcare
system would be strained, and social distancing measures would paralyze most of
manufacturing and services. Moreover,the expansionary fiscal and monetary policies that Governments and Central Banks
are undertaking to stimulate the economy
could lose effectiveness under a scenario
with higher uncertainty and with the costof borrowing for emerging markets increasing. Therefore, the economy could
not rebound strongly in 2021. A slow paceof reform implementation and erratic regulatory changes could undermine private
investment and the recovery of the economy, as well as the Government’s efforts topromote industrialization and boost job
creation over the medium-term.
Improved coverage and targeting ofexisting social protection and productive transfer programs, as well as investments in human capital, especially of
the youth, and rural infrastructure canreduce vulnerability and increase accessto productive work, with significant
impact on poverty.

(annual percent change unless indicated otherwise)
2017

2018

2019 e

2020f

2021f

2022 f

6.8

5.4

5.8

3.0

7.0

6.0

Private Consumption

2.3

7.2

5.5

2.4

6.5

5.1

Government Consumption

1.1

4.3

6.9

9.0

0.7

2.3

Gross Fixed Capital Investment

15.8

7.7

8.0

4.0

10.9

9.6

Exports, Goods and Services

-4.1

-3.9

4.5

-8.0

7.0

3.3

Imports, Goods and Services

-7.1

8.5

9.5

-1.5

11.3

8.0

7.0

5.8

5.8

2.9

7.0

6.0

Agriculture

6.0

3.4

3.5

3.5

3.6

3.5

Industry

10.7

11.0

10.2

5.0

12.0

9.9

Services

5.3

3.8

4.2

0.9

5.3

4.5

Inflation (Consumer Price Index)

5.3

3.5

3.8

3.5

3.5

3.5

Current Account Balance (% of GDP)

-3.0

-3.9

-3.0

-4.3

-4.1

-4.3

Net Foreign Direct Investment (% of GDP)

2.1

1.8

1.8

0.8

1.5

1.6

Real GDP growth, at constant market prices

Real GDP growth, at constant factor prices

Fiscal Balance (% of GDP)

-1.1

-1.7

-2.3

-4.2

-3.5

-3.5

Debt (% of GDP)

37.0

36.7

36.2

38.7

39.2

39.1

Primary Balance (% of GDP)

0.3

-0.2

-0.8

-2.4

-1.6

-1.2

..

49.1

49.1

49.1

49.1

49.1

Lower middle-income poverty rate ($3.2 in 2011 PPP) a,b

..

76.6

76.2

76.0

75.4

75.0

a,b

..

91.7

91.5

91.4

91.1

90.8

International poverty rate ($1.9 in 2011 PPP) a,b
Upper middle-income poverty rate ($5.5 in 2011 PPP)

So urce: Wo rld B ank, P o verty & Equity and M acro eco no mics, Trade & Investment Glo bal P ractices.
No tes: e = estimate, f = fo recast.
(a) Calculatio ns based o n 2011-HB S and 2018-HB S. A ctual data: 2018. No wcast: 2019. Fo recast are fro m 2020 to 2022.
(b) P ro jectio n using average elasticity (2011-2018) with pass-thro ugh = 1based o n GDP per capita in co nstant LCU.

The cut-off date for information in this MPO was March 20, 2020.

MPO / Apr 20 287

The global outlook is very uncertain. This outlook reflects information available at the time of its preparation. As more inf ormation becomes available,
these projections will be revised. They are presented now to assist policymakers to design alternative policy responses.

TOGO

Recent developments

Table 1

2019

P o pulatio n, millio n

8.2

GDP , current US$ billio n

5.5

GDP per capita, current US$

671

Internatio nal po verty rate ($ 1.9)

a

49.8
a

73.4

a

90.4

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)
Life expectancy at birth, years

b

124.4

b

60.5

Source: WDI, M acro Poverty Outlook, and official data.
Notes:(a) M ost recent value (201 5), 201 1 PPPs.
(b) M ost recent WDI value (201 7).

Economic activity regained momentum in2019 as growth reached 5.3 percent, supported by public investment, industry andagriculture. Fiscal and external deficits widened, reflecting higher public investment
and capital imports. The economic outlook
remains moderately favorable. Growth will
temporarily slow to 4.1 percent in 2020
owing to COVID-19, from declines in private consumption and services, such as
airport and port activities and tourism.
Downside risks include larger-thanexpected COVID-19 effects, political uncertainty, heightened insecurity in neighboring
countries, and banking sector vulnerability.

The economy maintained growth momentum in 2019 with growth increasing from
4.9 percent in 2018 to 5.3 percent in 2019(2.8 percent in per capita terms). This isslightly slower than potential growth estimated at 5.4 percent. On the supply side,
it reflects the increasing productivity of
the agricultural sector as well as a pick-up
in industrial production. The expansion of
the agriculture sector is supported by anincrease in land under cultivation andimproved access to financing. In the industrial sector, the declining performanceof the phosphate sector was more thanoffset by higher building and construction
activities. On the demand side, growth
was supported by an acceleration of public investment, such as the construction of
new roads and port infrastructure. Inflation decreased from 0.9 percent in 2018 to
0.7 percent in 2019, reflecting a decline ininternational oil prices and lower foodprices from increased food production.
The external current account deficit rosefrom 3.5 percent in 2018 to 4.0 percent of
GDP in 2019, from an increase in capital
goods imports and a slight decline in exports in dollar terms because of the underperformance of phosphate and coffee exports. The current account deficit was
financed through a combination of external concessional borrowing and foreign
direct investments (FDI).
The tight fiscal stance loosened in 2019.
The deficit increased from 0.8 percent of
GDP in 2018 to 1.2 percent of GDP in 2019,reflecting an increase in public investment. Public debt declined from 76.2 percent of GDP in 2018 to 70,9 percent in2019. driven by a primary surplus andnominal GDP growth.
Togo’s monetary and exchange rate policies are managed by the Central Bank ofWest African States (BCEAO), which maintains a fixed peg between the CFA Francand the Euro. BCEAO’s international reserves reached 4.9 months of imports in
2019, up from 4.5 months in 2018, on theback of fiscal consolidation and higher net
capital inflows. Despite an unchanged tightmonetary policy, regional liquidity pressures were alleviated due to higher BCEAO
supply and lower demand for refinancing
from banks. The real effective exchange
rate (REER) depreciated by 5 percent in
2019, due to the Euro nominal depreciation
against the US dollar combined with persistently lower inflation of the WAEMU
compared to trading partners.
The poverty rate (using the national poverty line) decreased from 58.7 percent in2011 to 55.1 percent in 2015. Estimates suggest poverty has continued to fall since2015, particularly in rural areas, thanks totargeted interventions and relatively strong
agricultural production. The extreme poverty rate (at US$1.9 PPP per day) is estimated to have declined to 45.8 percent in 2019
compared to 47.8 percent in 2017.

Outlook
The COVID-19 pandemic will negatively
impact economic growth in 2020, disrupting

FIGURE 1 Togo / Real GDP and potential output growth, witha decomposition of contributions to potential output growth

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

Percent, percentage points

Poverty rate (%)

6100

Real GDP per capita (constant LCU)
350000530000080

4250000360200000401500002
1

100000

0

20
2017

2018

2019

2020

2021

Capital Stock
Working Age Population (15-64)
TFP
Potential GDP
Actual GDP growth
Sources: INSEED and World Bank staff estimates.

288 MPO / Apr 20

50000

2022

0

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

Lower middle-income pov. rate
Real GDP pc

Source: World Bank.
Notes: see table 2.
The cut-off date for information in this MPO was April 02, 2020.

service sector activity and lower household
consumption. Travel bans and flight restrictions will severely reduce tourism andport and airport activities. On the demandside, containment measures will weakenhousehold consumption.
Medium term growth will average 4.9
percent (2.5 percent in per capita terms)
supported by public investment in roadand port infrastructure, the planned construction of a phosphate mining complex
and the opening of the Kara Agropole.
Growth will, however, remain below potential, increasing the negative output
gap. As domestic demand rises more
quickly than supply, especially from supply shortage of food and medicine in the
short-run, inflation is expected to average
2.0 percent during the forecast period.
The external current account deficit isprojected to stabilize at around 4.2 percent
of GDP in the medium term, reflecting
lower-than-expected exports due to slower global growth. The deficit will be financed by FDI inflows, a steady increasein capital grants and long-term nonconcessional loans.
In response to COVID-19, the fiscal deficit
is expected to increase sharply to 3.7 percent in 2020 before falling in 2021-22 toaverage 2.4 percent over the medium term.
Tax and non-tax revenues are expected to
decline as a result of lower production andconsumption. Spending is forecast to rise,
driven by an increase in health expenditures to curb the spread of the virus andincreased transfers to protect households
and firms. Public debt will decline to 67.2
percent of GDP in 2020, below the
WAEMU 70 percent target.
WAEMU reserves are expected to reachabout 5.1 months of imports by 2022 asmember countries continue to implementfiscal consolidation measures and external competitiveness improves. In December 2019, the WAEMU authorities announced a currency reform involving
changes to the underlying arrangementswith France. Market reactions have been
muted so far, likely reflecting expectations that the foundations of the currency
regime would remain broadly unchanged
for the foreseeable future.
Extreme poverty is projected to decline to43.3 percent by 2022, assuming continued
growth of agricultural productivity andincomes, implementation of inclusive
growth policies through targeted social
spending, and greater employment opportunities in semi-urban areas and community development programs implemented
since 2017. But, the negative impacts of the
COVID-19 pandemic are likely to slow thepace of poverty reduction, by reducing
remittances, increasing prices of basic
goods and services, and lowering theTABLE 2 Togo / Macro poverty outlook baseline scenario

income of the poorest and most vulnerable, particularly those working in agriculture, tourism, and other related sectors.

Risks and challenges
Though economic prospects remain positive, both external and domestic risks aretilted to the downside. External risks include the uncertain impact of COVID-19,
global trade uncertainty, lower commodity prices and the rising security threat inneighboring countries. For example, amore negative COVID-19 scenario, assuming the extension of the containment period beyond 4 months and a sharp increasein borrowing costs, could lower 2020
growth to 2.3 percent. Domestic risks include political uncertainty and weak administrative capacity, which could limit
private investment. Contingent liabilities
associated with a delay in restructuring
two weak public banks are also a risk tofinancial stability and fiscal sustainability.
Poverty reduction could also slow fromlower social transfers to the poor and vulnerable, higher food prices, and from increased unemployment, lower remittances, and loss of income for those working
in affected sectors.

(annual percent change unless indicated otherwise)
2017

2018

2019 e

2020f

2021f

2022 f

4.4

4.9

5.3

4.1

5.3

5.4

Private Consumption

1.7

3.9

3.4

1.5

3.1

2.0

Government Consumption

17.7

13.7

-5.4

2.9

-13.9

4.9

Gross Fixed Capital Investment

-10.6

18.6

18.1

6.1

21.8

9.9

Exports, Goods and Services

-0.1

-1.0

5.4

6.7

7.5

6.7

Imports, Goods and Services

-0.4

4.3

4.1

3.2

5.0

5.0

2.8

4.8

5.3

4.1

5.3

5.4

Agriculture

3.4

3.4

5.2

5.5

5.9

5.9

Industry

-4.4

1.7

4.2

4.4

4.6

4.6

Services

7.1

7.6

6.1

2.9

5.4

5.6

Inflation (Consumer Price Index)

-0.2

0.9

0.7

2.0

2.0

2.0

Current Account Balance (% of GDP)

-2.0

-3.5

-4.0

-4.0

-4.3

-4.2

Fiscal Balance (% of GDP)

-0.3

-0.8

-1.2

-3.7

-1.7

-1.7

Debt (% of GDP)

75.9

76.2

70.9

67.2

63.2

59.6

Primary Balance (% of GDP)

1.5

1.8

1.6

-0.8

1.0

0.8

International poverty rate ($1.9 in 2011 PPP) a,b

47.8

46.6

45.8

45.3

44.5

43.3

Lower middle-income poverty rate ($3.2 in 2011 PPP) a,b

72.3

71.9

70.5

69.8

68.9

68.2

a,b

89.5

89.0

88.5

88.3

87.8

87.4

Real GDP growth, at constant market prices

Real GDP growth, at constant factor prices

Upper middle-income poverty rate ($5.5 in 2011 PPP)

So urce: Wo rld B ank, P o verty & Equity and M acro eco no mics, Trade & Investment Glo bal P ractices.
No tes: e = estimate, f = fo recast.
(a) Calculatio ns based o n 2015-QUIB B . A ctual data: 2015. No wcast: 2016-2019. Fo recast are fro m 2020 to 2022.
(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.

The cut-off date for information in this MPO was April 02, 2020.

MPO / Apr 20 289

The global outlook is very uncertain. This outlook reflects information available at the time of its preparation. As more inf ormation becomes available,
these projections will be revised. They are presented now to assist policymakers to design alternative policy responses.

UGANDA

Recent developments

Table 1

2019

P o pulatio n, millio n

45.7

GDP , current US$ billio n

33.5

GDP per capita, current US$

732

Internatio nal po verty rate ($ 1.9)

a

41.7
a

69.9

a

87.8

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)
Life expectancy at birth, years

b

102.7

b

62.5

Source: WDI, M acro Poverty Outlook, and official data.
Notes:(a) M ost recent value (201 6), 201 1 PPPs.
(b) M ost recent WDI value (201 7).

Real GDP continued growing robustly at
6.5 percent in FY19. Consequently, thecurrent account deficit almost doubled to
9.8 percent of GDP, but strong FDI inflows limited external vulnerabilities.
GDP growth is projected to average
3.8 percent during FY20-FY21 owing to
the impact of the pandemic. Uncertainty
related to the 2021 elections and extent of
decline in domestic and external demandweighs on the outlook. After falling in
FY19 due to agricultural growth, poverty
will increase in the short run.

Real GDP grew 6.5 percent in FY19, maintaining the rebound in economic activity
over the last two years. This has been
driven by domestic consumption and sustained public and private investments.
Net FDI inflows rose to 5.1 percent of GDP
in FY19 from 3 percent the previous year.
The construction sector grew strongly,
while manufacturing output jumped supported by investments in new factories.
However, real GDP decelerated sharply to
3.2 percent in the first half of FY20 compared to 7 percent a year ago due to thedecline in cash crop production of
8 percent caused by heavy rains andflooding. Following the release of rebased
GDP estimates, in October 2019, nominal
GDP increased 17 percent, and the structure of the economy changed, with theshare of industry rising from about 20 toalmost 30 percent of GDP, and a corresponding drop in the share of services.
The economic recovery observed in FY19,
associated with robust growth in agriculture, is estimated to have lowered poverty
from 41.7 percent in FY17 to around39 percent in FY19. Poverty in Uganda
remains a rural phenomenon, with around
90 percent of the poor population residing
in rural areas, where crop income is themain source of livelihood. Thus, the increase in crop production by 7.7 percent in
FY19 is expected to have lowered poverty.
However, the recent decline in cash crops
at the end of 2019, is predicted to havestalled further poverty reduction.

FIGURE 1 Uganda / Evolution of primary fiscal deficit andpublic debt
Percent of GDP

Percent of GDP

6

45

5

40

Inflationary pressures in 2019 remained
subdued and the central bank recently
loosened monetary policy. At 3.6 percent
in 2019, inflation remained below the central bank’s core inflation target of
5 percent. Subdued price levels have been
supported by an appreciation of the shilling, while favorable weather and ample
food supply maintained deflationary foodprice pressures. In response to these developments and the price outlook, thepolicy interest rate was cut from 10 to
9 percent in October 2019. Subdued prices
persisted in early 2020, with 12-month
headline inflation in March at 3 percent.
The pick-up in growth doubled the current
account deficit to 9.8 percent of GDP in
FY19, yet the external position remains
manageable due to large net FDI inflows.
Aided by a real exchange rate appreciation,
total imports grew 20 percent in FY19, exceeding strong export growth. The surge in
non-oil imports was driven by private consumption and investment fueled by higher
incomes and private sector credit growth.
More than half of the external shortfall was
financed by net FDI inflows, which helped
increase foreign exchange reserves to
US$3.3 billion, equivalent to 4.1 months ofimports. For the first half of FY20, preliminary data suggest a narrowing of the current account deficit to 4.8 percent of GDP
from 7.7 percent of GDP last year.
The fiscal deficit totaled 4.9 percent of GDP
in FY19 and was below the budgeted deficitof 5.8 percent of GDP. This slower increasein the fiscal deficit can be attributed to therise in tax revenues, by about 0.9 percent of
GDP compared to the year before, andslower execution of externally financed

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

Real GDP per capita (constant LCU)

100

3500000
300000080

2500000

35

4

60

2000000

40

150000030

325

1000000

2

20

1

15

0

10
2017

2018

2019

Primary fiscal deficit (lhs)

2020

2021

2022

Total public debt (rhs)

Source: Ministry of Finance, Planning and Economic Development.

290 MPO / Apr 20

20500000002005 2007 2009 2011 2013 2015 2017 2019 2021
International poverty rate
Upper middle-income pov. rate

Lower middle-income pov. rate
Real GDP pc

Source: World Bank.
Notes: see Table 2.
The cut-off date for information in this MPO was April 02, 2020.

capital spending. At 12.6 percent of GDP,tax revenues have benefitted, in part, fromhigher corporate income and withholding
tax collections. The fiscal deficit rose to
5.8 percent of GDP in the first half of FY20
compared to 4.8 percent of GDP in FY19 as
current spending rose significantly andrevenues improved marginally.

Outlook
The COVID-19 pandemic and locust invasion are expected to reduce average real
GDP growth to about 3.8 percent over the
next two years. In the short term, the pandemic is likely to cause a slowdown in private consumption and private investment,
including FDI inflows. Real output growthis expected to decelerate to 4.0 percent in
FY20 and 3.5 percent in FY21. A rebound of
5.9 percent is projected for FY22, as private
consumption and private and public investments accelerate. Inflation is expected
to remain in line with the inflation target of
5 percent, barring any shocks to food prices
from bad weather, pests, and supply interruptions caused by the pandemic.
The fiscal deficit is expected to accelerate to
6.9 percent of GDP in FY20, and close to
8 percent of GDP the following year. The
jump of 2 percentage points in the deficit

compared to last year is explained by thegovernment’s response to the pandemic, inthe form of higher current spending andsizably smaller revenues. The sharply increasing deficit is in part offset by a decline
in externally financed capital spending.
Debt vulnerabilities will grow as public
debt rises above 44 percent of GDP by 2022.
The slowdown in exports due to an expected halt in external demand will keep
the current account deficit at around
6 percent of GDP over the next two years.
The external shortfall is expected to be met
by concessional borrowing, which will offset smaller net FDI inflows. The decline inoil prices to around US$30 – half the estimated breakeven price in Uganda – could
shift oil exports beyond 2025.
Poverty will increase in FY20 to at least 41
percent, as a result of the impact of
COVID-19 on the services and construction sectors. Lower demand for agricultural products (internal and external) will
curb agricultural incomes and, without
the support of social protection programs,
welfare will suffer.

investment and export performance could
be more acute than currently predicted,
given COVID-19’s prolonged impact on
domestic and external demand, FDI andglobal travel and supply-chains. Heightened uncertainty around the 2021 elections could also slow investments andeconomic activity, and strain fiscal management through increased electionrelated spending. The impact on growth
could be aggravated by the locusts andweather shocks, the effects of which werealready observed in the first quarter of
FY20. Finally, delays in oil productionand exports could create liquidity pressures, especially as government turns to
non-concessional borrowing and faces
shortfalls in revenue mobilization.

Risks and challenges
Downside risks dominate the outlook. The
drop in private consumption, domestic

TABLE 2 Uganda / Macro poverty outlook baseline scenario(annual percent change unless indicated otherwise)
2017

2018

2019 e

2020f

2021f

2022 f

3.9

6.2

6.5

4.0

3.5

5.9

Private Consumption

0.0

4.9

8.0

1.2

1.6

5.4

Government Consumption

12.9

11.6

11.5

17.6

14.7

7.1

Gross Fixed Capital Investment

-0.9

7.9

16.5

2.8

3.5

10.2

Exports, Goods and Services

31.0

9.3

20.1

9.9

6.3

11.2

Imports, Goods and Services

4.8

7.6

24.1

4.1

5.1

13.8

3.9

6.2

6.5

4.0

3.5

5.9

Agriculture

2.8

3.8

5.0

2.6

2.8

4.1

Industry

6.7

8.0

10.8

6.2

5.5

8.1

Services

2.9

6.5

4.6

3.4

2.5

5.3

Inflation (Consumer Price Index)

5.7

3.4

3.1

3.2

4.0

4.5

Current Account Balance (% of GDP)

-3.3

-5.3

-9.8

-6.5

-5.5

-7.6

Net Foreign Direct Investment (% of GDP)

2.3

3.0

5.1

3.9

3.0

3.1

Real GDP growth, at constant market prices

Real GDP growth, at constant factor prices

Fiscal Balance (% of GDP)

-3.3

-4.2

-4.9

-6.9

-7.8

-5.3

Debt (% of GDP)

33.7

37.0

37.6

39.7

42.3

44.5

Primary Balance (% of GDP)

-1.1

-2.2

-2.8

-4.0

-5.5

-3.2

International poverty rate ($1.9 in 2011 PPP) a,b

41.4

39.8

38.2

37.2

35.9

34.5

Lower middle-income poverty rate ($3.2 in 2011 PPP) a,b

69.6

67.9

66.2

65.0

63.6

62.0

a,b

87.6

86.9

86.0

85.5

84.8

84.0

Upper middle-income poverty rate ($5.5 in 2011 PPP)

So urce: Wo rld B ank, P o verty & Equity and M acro eco no mics, Trade & Investment Glo bal P ractices.
No tes: e = estimate, f = fo recast.
(a) Calculatio ns based o n 2009-UNHS and 2016-UNHS. A ctual data: 2016. No wcast: 2017-2019. Fo recast are fro m 2020 to 2022.
(b) P ro jectio n using annualized elasticity (2009-2016) with pass-thro ugh = 2.5 based o n GDP per capita in co nstant LCU.

The cut-off date for information in this MPO was April 02, 2020.

MPO / Apr 20 291

The global outlook is very uncertain. This outlook reflects information available at the time of its preparation. As more inf ormation becomes available,
these projections will be revised. They are presented now to assist policymakers to design alternative policy responses.

ZAMBIA

Recent developments

Table 1

2019

P o pulatio n, millio n

18.1

GDP , current US$ billio n

25.2

GDP per capita, current US$

1389

Internatio nal po verty rate ($ 1.9)

a

57.5
a

74.3

a

87.2

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)
Life expectancy at birth, years

b

98.7

b

63.0

Source: WDI, M acro Poverty Outlook, and official data.
Notes:(a) M ost recent value (201 5), 201 1 PPPs.
(b) M ost recent WDI value (201 7).

Growth in 2019 slowed significantly to
1.7 percent from 4.0 percent in 2018, reflecting the impact of weather shocks andfiscal policy inertia. There was also an
uptick in the poverty rate as a result.
FY19 fiscal performance remained expansionary, compounding the challenge ofdebt sustainability. Inflationary pressures
have persisted, and the Kwacha depreciated markedly, prompting monetary policy
tightening. Growth in 2020 is projected at
1.6 percent, reflecting the lack of policy
space to counteract the COVID-19
economic impact.

Zambia’s real GDP growth moderated significantly to 1.7 percent in 2019 from 4.0
percent in 2018, dragged by stagnation andnegative growth in industry and primarysectors, respectively. Growth in the services
sector was driven by wholesale and retailtrade. However, agriculture and mining
production declined, leading to a negative
contribution of the primary sector to
growth. Similarly, industrial activity remained stagnant, as weak manufacturing
growth was offset by a contraction in construction. Lower growth, in turn, led to aslight uptick in poverty rates, especially inrural areas dependent on agriculture. Fiscal
weaknesses led to further domestic arears
build-up, lower private sector credit, andworsening financial sector balance sheets.
The electricity load-shedding program also
contributed to the weak performance inindustry and tertiary sectors.
The drought-induced reduction in the2019 maize harvest has exacerbated poverty and food insecurity. As a significant
number of the rural poor are both producers and net-buyers of maize, their purchasing power to acquire food has beeneroded by the double burden of income
losses and price increases.
The fiscal deficit, at 10.9 percent in 2019,was more expansionary than budgeted(6.5 percent) and higher than in 2018(10.7 percent). Domestic revenue outturn
exceeded the budget by 1.2 percent ofGDP, reflecting improved revenue collection efforts and increases in user fees.

However, pressures from higher debt
service costs, public investment spending
and the Farmer Input Subsidy Program
saw overall expenditure (on cash-basis)increase by 2.2 percent of GDP. With
little or no external financing, the deficit
was financed from domestic issuances
and increases in payment arrears, puttingpressure on the private sector’s balance
sheets and access to finance.
The 2020 budget is premised on an ambitious revenue mobilization and financing
framework. Domestic revenue is programmed to increase by 2.1 percent to 23.1
percent of GDP, driven by one-off exceptional non-tax revenue. Expenditure is
expected to increase by about 3 percentage
points from the 2019 budget to 28.5 percent of GDP, bringing the fiscal deficit to
5.5 percent of GDP (or 7.6 percent excluding the one-off revenue). However, falling
revenues and increased expenditure pressures due to the the COVID-19 crisis could
see the deficit increase by between 3-5
percent of GDP. Absent strong fiscal adjustment measures, budget implementation will face the same challenges as in2019 with continued build-up of arrears,
high cost of domestic financing, and low
external financing.
CPI inflation averaged 9.2 percent in 2019and hit 14.0 percent by March 2020, driven
by rising food prices, exchange rate pressures, and energy prices. In response, theBank of Zambia tightened its monetary
policy in 2019, increasing its policy rate bya cumulative 175 basis points to 11.50 percent and tightening the reserve requirement framework. Inflationary pressuresare expected to persist throughout 2020,

FIGURE 1 Zambia / Central government fiscal operations

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

Percent of GDP

Poverty rate (%)
100

-12

Real GDP per capita (constant LCU)
10000

-11
-10

80

8000

60

6000

40

4000

20

2000

-9
-8
-7

-6
-5
-4
-3
-2

0

-1

0
2004 2006 2008 2010 2012 2014 2016 2018 2020 2022

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019eFiscal Deficit: budget

Fiscal Deficit: actual

Sources: Ministry of Finance, Zambia and World Bank estimates.

292 MPO / Apr 20

International poverty rate
Upper middle-income pov. rate

Lower middle-income pov. rate
Real GDP pc

Source: World Bank.
Note: see Table 2.
The cut-off date for information in this MPO was March 20, 2020.

inhibiting the central bank’s ability to easemonetary policy in response to the
COVID-19 crisis. Instead, the BoZ has
introduced some regulatory incentives tofinancial services providers to provide
relief to the private sector and facilitate
long-term lending.
The current account deficit weakened to
1.5 percent of GDP in 2019 from 1.3 percent in 2018. While both goods exports
and imports declined, the higher pace of
decline in the latter due to subdued demand and a more depreciated Kwacha led
to an improved trade surplus. However,income and services accounts deteriorated, in part due to higher interest payments on external debt. With low capital
inflows, the overall BoP was financed by adrawdown in official reserves, which fell
to US$ 1.45 billion at end-December 2019from US$ 1.6 billion in 2018.
Public debt vulnerabilities heightened in
2019. Central government external debt
stock jumped from 37 percent of GDP in2018 to 45 percent in 2019, while the total
public debt stock is estimated at 89 percent of GDP. Debt service consumed 46
percent of domestic revenue in 2019 from36 percent in 2018, reflecting a weaker
Kwacha and higher domestic interest
rates. External debt service is expected toaverage $1.6 billion per year over 2020-22,
while official reserves continue to decline.

The latest World Bank/IMF Debt Sustainability Analysis concluded that Zambia is
at high risk of debt distress.

OutlookMedium-term growth prospects areweighed down by the limited policy space
to respond to the COVID-19 impact. Mining output will be affected by lower global
demand and price for metals, while supply
chain breakdowns from major trading partners like China and South Africa could
negatively affect domestic production andconsumption. Lower copper export earnings and capital inflows will put pressure
on reserves and the Kwacha. Domestically,
increased social distancing will impact
businesses and employment, especially inthe urban informal sector. Resumption of
normal rainfall should, however, help improve agriculture production and electricity generation. In this context, growth isprojected to decline to 1.6 percent in 2020
and inflation will remain significantly
above the 6-8 percent target range.
The modest medium-term outlook imply
that poverty reduction will not take place as
expected. Absent a proactive macroeconomic adjustment program, the high debt service
may lead to a large forced fiscal adjustment,

TABLE 2 Zambia / Macro poverty outlook baseline scenario

Real GDP growth, at constant market prices

further impacting core recurrent spending
and incurring high economic and social
costs. In that context, social sector funding
challenges— only 18 percent of the budgeted social cash transfers in FY19 was disbursed-- mean that most of the vulnerable
population could receive little or no relief.
Resumption of active donor support to cashtransfer programs, protection of social
spending in the budget, and improved distribution of agriculture inputs will be criticalfor medium-term poverty reduction.

Risks and challenges
Risks to the outlook are tilted to the downside. Intensification of the COVID-19 crisis
across the globe and domestically could
amplify the country’s macroeconomic vulnerabilities, intensifying debt servicing anddomestic liquidity challenges, and further
squeezing private sector activity. Domestically, another drought season would
dampen the recovery in agricultural production and electricity generation, further
constraining industry and services growth.
However, if the authorities embark on amacroeconomic adjustment program, it
would help reverse the disorderly fiscal
adjustment, restore market confidence, andhelp rebuild budget credibility.

(annual percent change unless indicated otherwise)
2017

2018

2019 e

2020f

2021f

2022 f

3.4

4.2

1.7

1.6

2.3

3.7
-5.3

Private Consumption

12.5

1.2

2.3

3.1

3.6

Government Consumption

-8.6

-14.9

-12.2

13.5

-7.4

1.1

Gross Fixed Capital Investment

10.2

9.9

-13.2

-6.4

-3.9

18.0

Exports, Goods and Services

-3.8

8.7

-7.2

8.0

18.5

7.8

Imports, Goods and Services

10.9

4.9

-13.7

4.5

14.7

7.4

Real GDP growth, at constant factor prices

3.5

4.0

1.7

1.6

2.3

3.7

Agriculture

9.8

-21.2

-2.8

5.0

4.5

4.5

Industry

5.4

4.6

-0.1

1.6

1.4

5.0

Services

1.7

7.3

3.2

1.3

2.5

3.0

Inflation (Consumer Price Index)

6.6

7.5

9.1

12.9

11.5

10.0

Current Account Balance (% of GDP)

-1.7

-1.3

-1.5

-2.8

-3.4

-1.5

Net Foreign Direct Investment (% of GDP)

4.6

1.4

1.6

1.6

1.8

3.0

Fiscal Balance (% of GDP)

-7.7

-8.6

-6.9

-9.0

-6.7

-4.4

Debt (% of GDP)

65.5

77.8

88.6

92.0

94.5

92.5

Primary Balance (% of GDP)

-3.7

-3.9

-3.0

-4.6

-0.8

0.8

57.0

56.4

57.1

57.6

57.8

57.6

Lower middle-income poverty rate ($3.2 in 2011 PPP) a,b,c

74.0

73.7

74.0

74.3

74.4

74.3

Upper middle-income poverty rate ($5.5 in 2011 PPP) a,b,c

87.0

86.7

87.0

87.3

87.4

87.3

International poverty rate ($1.9 in 2011 PPP)a,b,c

So urce: Wo rld B ank, P o verty & Equity and M acro eco no mics, Trade & Investment Glo bal P ractices.
No tes: e = estimate, f = fo recast.
(a) Calculatio ns based o n 2015-LCM S-VII.
(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.
(c) A ctual data: 2015. No wcast: 2016-2019. Fo recast are fro m 2020 to 2022.

The cut-off date for information in this MPO was March 20, 2020.

MPO / Apr 20 293

The global outlook is very uncertain. This outlook reflects information available at the time of its preparation. As more inf ormation becomes available,
these projections will be revised. They are presented now to assist policymakers to design alternative policy responses.

ZIMBABWE
Table 1

Recent developments
2019

P o pulatio n, millio n

17.3

GDP , current US$ billio n

13.0

GDP per capita, current US$

749

Internatio nal po verty rate ($ 1.9)

a

a

21.5
43.2

Gini index

Life expectancy at birth, years

b

60.8

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

GDP is estimated to have contracted by
8.1 percent in 2019, underpinned byclimatic and economic shocks and by
policy missteps. Devastating drought
and cyclone Idai exacerbated structural
deficiencies. Amid failed de-dollarization
efforts and significant fiscal adjustment,
inflation reached triple-digit levels. Extreme poverty reached 38.5 percent of the
population in 2019, up from 33 percent
in 2017. The outlook is gloomy as recession persists in 2020 while Government’s ability to mitigate the social
impacts is constrained.

GDP is estimated to have contracted by
8.1 percent in 2019, as the economy was
hit by climate shocks, exacerbating existing structural deficiencies that have led toshortages of foreign currency, fuel, andelectricity. A severe drought and cyclone
Idai, coupled with shortages of foreign
currency led to double-digit contraction ofagriculture, electricity, and water production and increased food insecurity. Industry, especially mining, was adversely
affected by shortages of foreign currency
and power outages. In addition, tripledigit inflation and significant fiscal consolidation suppressed domestic demand andcontributed to rising poverty.
Inflation surged to 521 percent year-onyear in December 2019, sharply eroding
disposable incomes. Inflation was fueled bya rapid exchange rate depreciation, poor
harvests, and reduction of subsidies on fueland electricity. Food prices increased by
725 percent, resulting in a severe loss ofpurchasing power for the poor. Inadequate
de-dollarization efforts and quasi-fiscal
activities by the Central Bank (RBZ) failed
to slow the depreciation of the local currency and contain inflationary pressures. The
local currency lost over 60 percent of its
value between the end of June and December 2019. The depreciation of the local currency necessitated significant adjustment ofprices of imported goods with a passthrough effect on overall inflation levels.
External adjustment was significant andcurrent account balance turned into asurplus in 2019. Trade deficit narrowed
to 3 percent of GDP in 2019 as imports
were adversely affected by weak domestic demand and foreign exchange rationing. Imports contracted, with all major
imports such as food, fuel and electricity
contracting by over 25 percent. Exports
remained flat as structural weaknesses
offset the positive impact of depreciating
local currency. Official reserves remained
low, providing a cover of less than one
month of imports.
Fiscal consolidation led to a reduction ofunsustainable deficits but also affected
adversely the delivery of basic services.
Fiscal deficit is estimated to have reached
2.9 percent of GDP in 2019, well below thelevels of the previous three years. Fiscal
consolidation relied mostly on addressing
unsustainable levels of public service
wages, which declined sharply from 72
percent of government revenue in 2018 toaround 37 percent in 2019. Despite increases in social protection spending, including repayment of arrears on important social programs, most of the extreme poor remained unprotected. In
2019, 47 percent of the extreme poor
households received at least one form ofsocial assistance. Education and healthspending budgets, which mostly consist ofsalaries, were eroded by inflation, worsening the service delivery, compounded bydoctors on strike for 5 months, and increased absenteeism of teachers.
As a result of climate and economic
shocks, social conditions deteriorated
sharply, and poverty levels increased. The
number of extreme poor doubled compared to 2011 reaching 6.6 million in 2019.

FIGURE 1 Zimbabwe / Exchange rates and inflation

FIGURE 2 Zimbabwe / Number of extreme poor and growthof real GDP per capita

ZWL$/US$
25

Millions of people

Inflation (%)
600

500

20

Percent

8

15

7

10

6
400

15

5

5

300

4

200

3

100

2

0

10
5
0

0
Jan-18 Apr-18 Jul-18 Oct-18 Jan-19 Apr-19 Jul-19 Oct-19
Parallel market exchange rate (LHS)
Official exchange rate (LHS)
CPI (RHS)

Sources: Zimstat and World Bank staff estimates.

294 MPO / Apr 20

-5
-10

1
0

-15
2011

2013

2015

2017

2019

2021*

Millionsofofextremely
extremelypoor
poor(left(lhs)
numberaxis)
Real perGDP/
capitaGDP(right
growthGrowthcapitaaxis)(rhs)
Sources: World Bank calculations using data from Zimstat PICES surveys 2011,2017 and mini-PICES 2019.
The cut-off date for information in this MPO was March 20, 2020.

Substantial decline in agriculture production and high food prices increased foodinsecurity with close to 50 percent of the
population being food insecure in 2019.
Extreme poverty reached 38.5 percent of
the population in 2019, up from 33.4 percent in 2017, with urban poverty rising
faster (from 4 percent to 10 percent) thanrural poverty.

Outlook
The outlook is gloomy as domestic vulnerabilities are likely to persist while COVID19 pandemic poses new challenges. PreCOVID-19 outbreak, real GDP was projected to contract by 1.7 percent in 2020, partly
due to persistent drought, continued foreign currency and fuel shortages, and depressed domestic demand. Real GDP is
projected to contract further to 5 percent asa result of the COVID-19 pandemic. Continued local currency depreciation, disruption of production and trade as a result of
lockdown of businesses due to COVID-19
might fuel further inflationary pressures
suppressing domestic demand. Recovery ofexports is likely to be delayed due to rapidly weakening external demand, worsening
terms of trade and difficulties in importingintermediate inputs.

Fiscal consolidation efforts are likely to becomplicated by growing social needs andwage pressures. Fiscal deficit is projected
to widen to 5.6 percent in 2020, as revenues are projected to fall short of increased social needs arising from COVID19 threats. Civil servants’ salaries wereincreased by over 140 percent in January,
but pressures are likely to mount if depreciation of the local currency continues.
Emergency public health financing needs
and continuation of various subsidies (e.g.
gold export incentives) would also increase the spending pressure.
In the absence of access to external financing, money supply is likely to continue toincrease to support higher government
spending and quasi-fiscal operations. As aresult, exchange rate pressures will continue in 2020 and inflation, albeit declining, is likely to remain in triple-digit levels, reinforced by recent increase in wages.
Poverty levels are projected to rise further
in 2020 due to continuing economic contraction and loss of employment and income, exacerbated by the restrictions onmobility, inflationary pressures anddrought conditions. The urban poor are
likely to bear the brunt of the high inflation, exacerbated by further drops inavailable productive jobs and limited capacity to implement urban social protection programs. The number of extreme

TABLE 2 Zimbabwe / Macro poverty outlook baseline scenario

poor is projected to increase from 6.6 million in 2019 to 7.6 million in 2020.

Risks and challenges
Prolonged and deeper global recession
and severe spread of the virus locallywill deepen the recession to 10 percent
and increase the risk for a repeat of a
hyperinflation in the country. There is ahigh risk that the RBZ will continue
printing money, as it seems to have exhausted most available external borrowing sources while financing needs continue to increase. The shortages of foreign
currency may put pressure on the prices
and wages with a high possibility of entering into a wage- price spiral. External
vulnerabilities could increase as external
trade could be further reduced by theeffects of the COVID-19. Risks of social
tension remain high if the macroeconomic instability continues and external support is not forthcoming.

(annual percent change unless indicated otherwise)
2017

2018

2019 e

2020f

2021f

2022 f

4.7

3.4

-8.1

-5.0

1.8

2.1

Private Consumption

1.4

2.1

-13.4

-11.0

3.2

3.6

Government Consumption

14.5

9.2

-28.1

5.7

-5.2

-2.2

Gross Fixed Capital Investment

23.0

4.5

-5.2

-12.0

8.2

1.2

Exports, Goods and Services

4.7

4.1

-5.1

-5.6

3.5

4.5

Imports, Goods and Services

3.2

7.7

-21.0

-12.3

3.7

4.3

4.8

3.1

-8.8

-5.1

2.2

2.0

Agriculture

10.0

18.3

-18.3

-3.3

4.9

4.9

Industry

2.5

2.1

-6.8

-2.0

2.5

2.5

Services

5.1

1.3

-8.0

-6.7

1.6

1.3

Inflation (Consumer Price Index)

0.9

10.6

255.1

250.0

58.5

33.3

Current Account Balance (% of GDP)

-1.4

-11.7

0.6

-0.6

-1.0

-0.9

Fiscal Balance (% of GDP)

-9.8

-5.1

-2.9

-5.6

-5.7

-6.1

Debt (% of GDP)

63.8

61.4

53.8

61.4

63.2

64.8

Primary Balance (% of GDP)

-8.8

-3.8

-2.0

-4.9

-5.1

-5.3

International poverty rate ($1.9 in 2011 PPP) a,b,c

33.9

33.4

38.5

40.4

40.6

40.6

Lower middle-income poverty rate ($3.2 in 2011 PPP) a,b,c

61.0

60.7

64.7

66.2

66.3

66.3

a,b,c

81.3

81.1

83.6

84.5

84.6

84.6

Real GDP growth, at constant market prices

Real GDP growth, at constant factor prices

Upper middle-income poverty rate ($5.5 in 2011 PPP)

So urce: Wo rld B ank, P o verty & Equity and M acro eco no mics, Trade & Investment Glo bal P ractices.
No tes: e = estimate, f = fo recast.
(a) Calculatio ns based o n 2017-P ICES.
(b) 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.
(c) A ctual data: 2017. No wcast: 2018-2019. Fo recast are fro m 2020 to 2022.

The cut-off date for information in this MPO was March 20, 2020.

MPO / Apr 20 295

Macro Poverty Outlook

04 /2020