IMF Unfairness to Africa’s Loans

The stereotype that Africa is perpetually reliant on IMF assistance is deeply rooted in international discourse. Terms like structural adjustment and macroeconomic diagnosis evoke a long history of IMF missions across the continent, reinforcing the notion of Africa as a primary beneficiary of international financial aid. Yet, recent data indicates that this narrative is misleading.

During the 2024 financial year, which spans from May 1, 2023, to April 30, 2024, the IMF approved approximately 53 billion Special Drawing Rights (SDRs)—equivalent to around $70 billion—in new loans. This mirrors the $74 billion allocated in 2023, involving 30 countries, including $15 billion designated for 20 low-income nations. The loans consist of a mix of reinforced existing loans, new financing, and debt rescheduling under initiatives aimed at heavily indebted countries.

While Africa emerged as the continent with the most beneficiaries this year—20 countries including Morocco and Egypt—this statistic is somewhat misleading. The IMF approved over 15.2 billion SDRs for African nations in the 2024 financial year, amounting to more than $20 billion. This marks a significant increase from the mere 3.6 billion SDRs allocated to sub-Saharan Africa in 2023.

Leading the pack, Côte d’Ivoire received the largest share of these funds with 3.58 billion SDRs, followed by Egypt (3.16 billion SDRs), Kenya (1.52 billion), Senegal (1.37 billion), and Morocco (1 billion). These figures reflect a growing acknowledgment of Africa’s financial needs, particularly in the face of ongoing economic challenges.

However, a closer examination reveals a stark contrast. Mexico alone secured 26.74 billion SDRs—over $39 billion—accounting for half of the total SDRs approved by the IMF this year. This sum dwarfs the combined financial assistance provided to sub-Saharan Africa.

Amid the ongoing fallout from the COVID-19 pandemic, the IMF extended its Flexible Credit Line (FCL) to Mexico, a mechanism designed for countries in strong economic standing to access funds without needing prior approval for each disbursement. This line of credit, first established in 2019, was seen as a strong vote of confidence in Mexico’s economy. Colombia also benefitted from the FCL, receiving SDR 6.1 billion this year, while Chile accessed SDR 16.5 billion in 2023. Notably, no African or Central Asian nation has qualified for the FCL in 2024, despite Morocco’s successful application the previous year.

The IMF’s 2024 annual report further underscores the global disparities in financial support. No countries from the Asia-Pacific region received loans this year, a stark contrast to the SDR 6.5 billion allocated in 2023. In Europe, only Moldova and Kosovo saw assistance, receiving SDR 129 million and SDR 142 million, respectively.

As global financial dynamics shift, the narrative surrounding African reliance on IMF loans must evolve. While the continent is indeed a major recipient of IMF support, the figures highlight a broader trend: financial assistance is increasingly diversified across regions, with countries like Mexico receiving disproportionate levels of aid. This raises questions about the criteria and priorities that shape IMF lending practices, emphasizing the need for a more nuanced understanding of international financial support in a rapidly changing global landscape.