Balance of Payments

In 2008, Africa’s average current account balance exhibited a surplus equivalent to 3.3 per cent of GDP, up from 2.2 per cent in 2007. This overall figure, however, masks large differences among countries. On the one hand, net oil-exporting countries recorded a current account surplus of 10.7 per cent in 2008 (up slightly from 8.9 per cent in 2007); on the other hand, the group of net oil-importing countries experienced a large average current account deficit of 7.1 per cent of GDP in 2008 (up from 5.4 per cent in 2007) compared with an average of 1.6 per cent in the period 2000 to 2005. Among the net oil importers, only 7 countries out of 40 improved their current account balances significantly (Burundi, Cameroon, Chad, Guinea, Liberia, Mali and Swaziland). The surplus in the current account balances of net oil-exporting countries is projected to give way to deficits of 3.5 and 2.4 per cent of GDP in 2009 and 2010, respectively, due to declines in oil prices and production (among the African OPEC countries). Meanwhile the average current account deficit of the net oil-importing countries is expected to improve in 2009 with reductions in the international prices of their imports exceeding reductions in the prices of their exports, but then to worsen slightly in 2010 as imports pick up along with economic growth.

In recent years, Africa’s overall balance of payments has benefited from increased foreign direct investment flows and significantly reduced debt service payments in many heavily indebted poor countries (HIPCs) (see details in previous section). However, the rapidly rising current account deficits associated with the global recession is rapidly eroding international reserves, with African countries increasingly turning to the IMF for support in order to avoid exchange rate crises.