Zambia turns to the IMF – could Ghana follow suit?

As the tailwinds from the past decade’s commodity boom fade, several economies in Africa are losing their shine. Zambia remains the focus of attention – faced with widening twin budget and current account deficits, the authorities formally requested assistance from the IMF earlier this month. Financial markets have rallied in response, with the kwacha strengthening by nearly 15% against the US dollar so far this month. But with a period of fiscal austerity now looming, growth is likely to weaken over the next couple of years. Elsewhere in the region, Ghana suffers from many of the same vulnerabilities as Zambia and could also be forced to turn to the IMF for assistance over the coming months. And while this month’s long-awaited eurobond issue by Kenya was nearly four times oversubscribed, economic vulnerabilities, including a widening current account deficit, are building. The long-run growth outlook for Africa remains good – but recent developments have put something of a dent in the “Africa Rising” story.