An IMF tilt to Africa

That alone will strengthen African treasuries far more than the combined weight of the G20’s over-cautious debt-relief plan and emergency funding from the international system. IMF management is prioritising the fight against inequality and the climate crisis, advocating carbon taxes and a massive social investment programme in health and education.

That policy agenda is mirrored in US President Joe Biden’s new deal, his plan to remake US capitalism over the next decade: a $1.9trn pandemic relief bill, a $2trn plan investing in power, roads, railways and bridges, greening the economy and cutting social inequities. It comes with a price tag in higher taxes of some $2.5trn.

Developing-country finance ministers are struggling to fund these same policies. The world’s richest economies have spent as much as 20% of national income on Covid-19 fiscal and monetary stimulus responses while the poorest economies managed 2% at most.

The first era of the Washington consensus was forged in the 1980s, in the time of Ronald Reagan and Margaret Thatcher. Their advocacy for lower taxes and government borrowing, deregulation, privatising and shrinking the state, ending capital controls, liberalising trade and exchange rates was heartily shared by the leaders of the IMF and the World Bank. By the end of the 1990s, the economic certainties were fraying and geopolitics were changing fast.

That took a succession of crises: Asia’s 1997 financial crisis, then the West’s financial crisis in 2008, with the coronavirus economic free-fall of 2020 completing the trilogy.

Now, the arguments are less about what and more about how. If it takes $4trn to pull the US’s 320 million people out of the pandemic recession, how much will it take for Africa’s 1.3 billion?

IMF managing director Kristalina Georgieva is emblematic of the new era. She argues that emerging and developing economies would need trillions of dollars to remake themselves.

Growing up in Bulgaria, and with a ringside seat at Russia’s transition from state socialism to crony capitalism, Georgieva speaks with passion about the long-term human costs of bad policies. She spent much of 2020 working with Africa’s policy-makers at the national and regional level. The pandemic has driven the IMF and African governments into a new embrace.

Important policy differences persist between Washington and Africa, but the IMF is seen more as an ally than an adversary in the region’s negotiations over debt relief and infrastructure finance.

When the IMF calculates that the global economy would get a $9trn boost from a comprehensive international vaccination programme, it puts into perspective Africa’s struggle to raise $100bn for its continental vaccination programme.