Nigel Clarke: “Preserving fiscal sustainability must be Africa’s priority” [Interview]

Middle East Crisis: African Economies on the Front Line

As the International Monetary Fund (IMF) Spring Meetings come to a close in Washington, one reality stands out: the repercussions of the crisis in the Middle East continue to weaken the most vulnerable economies, particularly in Africa.

Behind the geopolitical tensions, very concrete economic effects are being felt in low-income countries. Rising prices, pressure on public finances, and slowing financial flows: the shock is both multifaceted and profound.

A Surge in Prices with Direct Consequences

Among the first impacts observed is the rapid and significant increase in the prices of food, energy, and fertilizers. This widespread inflation is weighing heavily on already fragile economies.

This is compounded by rising transportation costs, declining revenues from tourism and remittances, and tightening financing conditions. For countries with access to international markets, spreads are widening, while currencies are coming under increased pressure.

As a result, many African countries are facing strong balance of payments pressures, at a time when fiscal space is limited—or even nonexistent.

Uneven Impact Depending on Economic Profiles

While the crisis is global, its effects are not uniform. Some African countries that export oil or strategic minerals might, in theory, benefit from higher commodity prices. But the reality is more nuanced.

Even these economies are experiencing the effects of global inflation. Some import refined oil, exposing them directly to rising prices. Others are severely affected by the surge in fertilizer costs, a key factor in economies where agriculture remains dominant.

One figure highlights this vulnerability: in low-income countries, 43% of household spending goes to food, compared to 25% in emerging markets and just 12% in advanced economies. Any increase in food prices therefore has a disproportionately large impact.

Tourism and Air Connectivity Declining

Another affected sector is tourism. Several African economies rely heavily on international tourist flows, particularly through Gulf hubs such as Dubai or Doha.

Reduced connectivity and fewer travelers are leading to a drop in tourism revenues, further worsening economic conditions.

Limited Room for Government Action

Faced with this situation, African governments have constrained options. The main challenge is to respond to the crisis without undermining fiscal sustainability.

Countries are urged to avoid excessive policy commitments and to prioritize targeted measures. In many cases, responses must be budget-neutral, relying on reallocating existing resources.

The goal is twofold: to protect the most vulnerable populations while preserving long-term development priorities.

A Delicate Equation for Africa

Caught between imported inflation, dependence on international markets, and structural fragilities, African economies find themselves on the front line of a crisis they did not cause.

In this context, the ability of governments to adapt, along with support from international institutions, will be crucial to prevent a deepening of economic and social imbalances across the continent.