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Adjustment and Recovery During 1995–97

Written by: International Monetary Fund

Article Overview: To what extent did the variables highlighted above play an important role in explaining the more recent economic recovery? To answer this question, IMF researchers looked at the experiences of a sample of 46 countries during 1995–97.

Adjustment and Recovery During 1995–97

To what extent did the variables highlighted above play an important role in explaining the more recent economic recovery? To answer this question, IMF researchers looked at the experiences of a sample of 46 countries during 1995–97. The available data showed that sub-Saharan Africa grew significantly during 1995–97. The average annual growth rate of per capita real GDP, which was negative through most of the 1980s and –2.2 percent during the five-year period 1990–94, rose to 1.2 percent during 1995–97. Moreover, whereas per capita real GDP increased in 16 countries in 1990–94, twice as many countries registered positive growth rates during 1995–97. Those countries in the study that experienced negative or declining growth rates did so largely as a result of a combination of long-standing, deep-rooted economic problems and the debilitating effects of past or continuing political turmoil.

In the 1990s, while many countries implemented structural adjustment programs, several other countries experienced economic disruptions because of war. The data for 1995–97 show that the measured improvement in economic performance in sub-Saharan Africa is much stronger when countries that experienced either unsettled political (or conflict) situations or a stop-go pattern of program implementation are excluded from the sample data.

A closer look at the countries that achieved positive growth rates during 1995–97 reveals that these countries also made progress in a number of other areas. Specifically, many countries were successful in:


Reducing and containing inflationary pressures: more than two- thirds of the countries in the study group experienced either a decline in the average inflation rate or maintained average inflation at single digit rates.

Increasing the ratio of domestic savings to GDP: two-thirds of those countries that improved their growth performance also increased domestic savings as a percentage of GDP.

Strengthening fiscal performance: two-thirds of the countries that raised their domestic savings ratios improved their overall fiscal balances.

Increasing private sector investment: overall investment increased in sub-Saharan Africa during the period under study, but the private sector share in investment grew proportionately more.

Restructuring public expenditures: in recent years, the governments of most sub-Saharan African countries have tried to restructure their public expenditure, devoting more funds to human resource development. Based on the data available, indications are that about half of the countries of the study group increased spending on health and education, while just under half the countries reduced the share of spending on defense.

Improving export performance: an increasing number of countries have succeeded in improving their export performance. Between the two periods 1990–94 and 1995–97, more than half of the countries registered an increase in export volume growth, which in most cases was accompanied by real exchange rate depreciation; 20 of these countries also recorded a recovery in growth rates of per capita real GDP.

Promoting Growth in Sub-Saharan Africa: Learning What Works
Anupam Basu, Evangelos A. Calamitsis, Dhaneshwar Ghura
©2000 International Monetary Fund
August 2000

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Article Tags: average inflation rate, closer look, conflict situations, economic disruptions, economic performance, economic problems, economic recovery, fiscal performance, gdp, growth performance, imf, inflationary pressures, per capita, political turmoil, program implementation, real gdp, structural adjustment programs, study group, sub saharan africa, two thirds



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