IMF projects 5.5pc Sub-saharan Africa growth

Most countries in sub-Saharan Africa have recovered quickly from the global financial crisis, with the region projected to grow by 5.5 per cent in 2011. But the pace of the recovery has varied within the region.
"Output growth in most oil exporters and low-income countries (LICs) is now close to precrisis highs," according to the 2011 World Economic Outlook (WEO) published by the International Monetary Fund (IMF). "The recovery in South Africa and its neighbours, however, has been more subdued, reflecting the more severe impact of the collapse in world trade and elevated unemployment levels that are proving difficult to reduce."
The report said that prior to the recent global crisis, sub-Saharan Africa enjoyed a period of strong growth. Growth in the region’s 29 LICs was particularly impressive at more than six per cent during 2004–08, second only to developing Asia. This reflected the improved political environment, favorable external conditions, and sound macroeconomic management.
The strong initial conditions helped most countries in the region weather the worst effects of the food and fuel price hikes of 2007–08 and the subsequent global financial crisis, it said, adding that many countries supported output by injecting fiscal stimulus and lowering interest rates. As a result, LICs in the region continued to grow at nearly five per cent in 2009, although output fell in the region’s middle-income countries — a grouping dominated by South Africa.
In most of the oil-exporting countries growth slowed, with the notable exception of Nigeria.
Most countries in the region have now returned to precrisis growth rates. In 2011, LICs are projected to grow by 6.5 per cent, it said. "Domestic demand is being supported by automatic stabilisers, expansion in public investment and social support programs, and continued monetary accommodation."
Growing trade ties with Asia are also playing a role in the region’s recovery, primarily through commodity markets. Output growth has rebounded in South Africa, but high unemployment and subdued confidence are expected to continue to dampen the pace of recovery, restricting growth to about 3.5 per cent in 2011.
Risks remain weighted to the downside, however. The pace of recovery in Europe, the dominant trade partner for most non-oil-exporting countries in sub-Saharan Africa, is modest and uncertain. More immediately, the sharp pickup in fuel and food prices stands to make a significant impact on many non-oil-exporting countries.
Rising food prices are likely to affect the urban poor in particular, given the high share of food in their consumption baskets. In response, governments will need to consider targeted social safety nets, with attendant fiscal costs. Managing these pressures, particularly against the backdrop of elevated fiscal deficits and narrowing output gaps, will be an important challenge for the region in 2011— a year with a busy political calendar, including perhaps 17 national elections.
With recovery at hand in most countries in the region, the emphasis of macroeconomic policies needs to shift to countercyclical fiscal policy helped support output growth during the crisis, but has resulted in wider fiscal deficits across the board. With growth in most countries now approaching potential, the consistency of these wider deficits with financing and medium-term debt sustainability considerations should be reviewed. To promote growth and poverty reduction, attention also needs to be given to the appropriateness of the composition of government spending and revenue sources.
Similarly, inflation remains in check in most countries, and the monetary stance seems appropriate. But policymakers should remain alert to potential pressure from rising commodity prices — particularly with growth approaching potential levels.
Other policy areas requiring sustained attention include more intensive monitoring and sounder regulation of the financial sector, continuing policy improvements targeted at the business environment, and robust public financing mechanisms to plan and control government spending, including infrastructure investment.

Highlights of Indian interim Budget

Following are the highlights of the Indian interim budget presented by Minister for External Affairs Pranab Mukherjee in the Lok Sabha on Monday.
* Plan expenditure for 2009-10 pegged at IRs.952,231 crore (IRs.9.52 trillion)
* Budgetary support for 2009-10 at IRs.2,85,149 crore (IRs.2.85 trillion), 17.16 percent
* Additional plan expenditure between 0.5 percent to 1 percent of GDP may be considered
* Fiscal deficit forecast 5.5 percent of GDP for 2009-10
* Revenue deficit forecast 4 percent of GDP for 2009-10
* Subsidy for food, fertiliser and petroleum at IRs.95,579 crore
* Defence allocation increased to IRs.141,703 crore (IRs.1.417 trillion)
* Urban renewal spending pegged at IRs.11,842 crore (IRs.118.42 billion)
* Rural sanitation spending at IRs.1,200 crore (IRs.12 billion)
* National rural health mission spending at IRs.12,070 crore (IRs.120.7 billion)
* Rural infrastructure development outlay at IRs.14,000 crore (IRs.140 billion)
* Midday meal scheme spending at IRs.8,000 crore (IRs.80 billion)
* India remains second-fastest growing economy in the world
* Economy expected to grow 7.1 percent this fiscal
* Need to make economic growth inclusive
* Government spent IRs.70,000 crore (IRs.700 billion) on 37 infrastructure projects in 2008-09 * Under public-private partnership (PPP), 54 central infrastructure projects approved
* Total expenditure of PPP projects estimated at IRs.67,700 crore (IRs.677 billion)
* India Infrastructure Finance Company to raise IRs.10,000 crore (IRs.100 billion) by end-March
* India has weathered inflation crisis, but no room for complacency
* Country's agriculture outlook is encouraging
* Focussed attention to agriculture
* Plan allocation for farm sector hiked 300 percent in past five years
* Three-fold increase in short-term agriculture credit to IRs.250,000 crore (IRs.2.5 trillion)
* Farm debt worth IRs.65,300 crore (IRs 653 billion) waived
* Government will continue to provide additional subsidy to farmers
* Corpus of Rural Infrastructure Development Fund hiked to IRs.14,000 crore (IRs.140 billion) from IRs.5,500 crore (IRs.55 billion)
* Outlay for higher education hiked 900 percent for 11th Five Year Plan
* Country's social security net will be strengthened
* New scheme unveiled for young widows in the age group of 18-40
* New disability pension scheme introduced for age group of 18-40
* 15 point programme for welfare of minorities set up
* Record foreign direct investment of $32.4 billion attracted
* Global economic situation not encouraging
* Extraordinary situation merits extraordinary measures
* Need to consider additional fiscal measures in regular budget
* Financial sector reforms need to be accelerated
* Non-performing assets (NPAs) of public sector banks have declined
* State-run banks see NPAs drop from 7.8 percent to 2.3 percent in four years
* Number of loss-making state-run units down from 73 to 58
* Profit-making units up from 143 units to 158 units
* In past three years, India grew by average of over 9 percent
* Per capita income expanded by 4.7 percent per annum
* Fiscal deficit was brought down from 4.5 percent to 2.7 percent
* Revenue deficit was cut from 3.6 percent to 1.1 percent
* Exports increased 26.4 percent per annum
* Foreign trade increased from 27.3 percent to 35.5 percent
* Tax to gross domestic product ratio expanded by 9.2 to 12.5 percent
* Agriculture grew by 3.7 percent per annum
* Revised estimates for 2009-09 peg plan expenditure at IRs.282,957 crore (IRs.2.83 trillion)
* Central plan increased for host of areas like telecom, rural development
* Tax collections expected to fall to IRs.627,949 crore (IRs.6.28 trillion)
* Revised revenue deficit is 4.4 percent of GDP against one percent
* Revised fiscal deficit at 6 percent of GDP against 2.5 percent