MEFMI and IMF Jointly host a Seminar on Macroeconomic Shocks and Fiscal Stress Testing

Many African countries are experiencing severe macroeconomic shocks and considerable uncertainty around their economic and fiscal outlook. The COVID-19 pandemic has created substantial fiscal risks, both through the potential for large errors in fiscal forecasts, and the potential realisation of contingent liabilities. Hence, building the capacity of governments to understand the fiscal impact and/or implications of different macroeconomics shocks and risks becomes a priority.

MEFMI, in collaboration with the IMF Fiscal Affairs Department (FAD), IMF AFRITAC South (AFS), IMF Africa Training Institute (ATI) and IMF AFRITAC East (AFE) conducted a virtual seminar on macroeconomic shocks and fiscal stress testing.  The seminar, which was conducted in English, French and Portuguese, combined theory and hands-on-group exercises covering various topics. Participants were introduced to the importance of macro-fiscal stress testing, particularly in the COVID-19 operating environment. They were then taken through a thorough review of main revenue, expenditure and simple debt forecasting techniques.  Participants were also divided into various groups where each was tasked to simulate the sectoral impact of a macroeconomic shock on the fiscal side of the economy.

The seminar was also used as a platform to launch the new IMF FAD fiscal risk toolkit and knowledge hub. The toolkit comprises a suite of analytical tools designed to help countries to identify their largest and most important sources of fiscal risks, prioritise areas to focus their efforts, and quantify the potential fiscal impact of risk.  The following toolkits were also launched i) Fiscal Risk Assessment Tool; (ii) Public Sector Balance Sheet Assessment; (iii) State-Owned Enterprise (SoE) Health Check Tool; (iv) State-Owned Enterprise (SoE) Stress Test Tool; (v) Discrete Guarantee and Loan Assessment Tool; (vi) Standardized Guarantees Assessment Tool; (vii) Fiscal Stress Test; (vii) COVID-19 Fiscal Stress Test; and the (viii) Public-Private Partnerships (PPP) and Fiscal Risk Tool.

It is expected that participants will better apply the skills learnt from this seminar to assess how macroeconomic shocks and the potential realisation of new and existing fiscal risks that affect economies and the overall fiscus.

The seminar was attended by 44 participants (15 females and 29 males) from 23 African countries. Of these, eight (8) females and ten (10) males were from MEFMI member countries, namely Angola, Botswana, Eswatini, Lesotho, Mozambique, Namibia, Rwanda, Uganda, Zambia and Zimbabwe. The participants were guided by a resource team which comprised of Mr. Camilo Gomez Osorio (IMF-AFS); Mr. Jyoti Rahman, Mr. Bryn Welham and Ms. Trish Chiinze (IMF-STX); Mr. Ian Nield (IMF-ATI), Mr Matthew Quillinan (IMF-AFE) and Mr Bryn Battersby (IMF-FAD) and Dr. Sayed Timuno (MEFMI Staff).

By: Sayed Timuno