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The government expects the external account to remain stable in FY27, particularly via extended tax incentives for the IT sector, a rise in exports and workers' remittances.

Source : © European Union, 2026 - EP

Credit: Andrew Caballero-Reynolds/IMF Photo

By Chie Aoyagi, Maurizio Leonardi, Athene Laws and Hamza Mighri
WASHINGTON DC, Jun 26 2026 (IPS)

For decades, official development assistance has been a central pillar of financing in sub-Saharan Africa. That pillar is now weakening—quickly and broadly.

In 2025, bilateral aid to the region fell sharply, with early estimates pointing to cuts of about 26 percent in a single year. Multilateral support is also under pressure, with major institutions projecting sizeable budget reductions. More cuts may follow as donors reset priorities in a shifting geopolitical environment.

As we explain in chapter 2 of the IMF’s recent Regional Economic Outlook for Sub-Saharan Africa, this is not a routine fluctuation. It is hitting countries that have limited room to adjust and few alternative sources of financing.

Why aid matters

Sub-Saharan Africa had the highest aid dependency globally in 2024. On average, aid accounted for 3 percent of GDP at the regional level. But that average hid sharp differences. In low-income countries and fragile states, aid often reached the equivalent of 6 percent of GDP or more, and in some cases far higher.

Over half of that aid was used to finance essential services such as health, education, and humanitarian assistance. And because development partners and non-governmental organizations (NGOs) often deliver services directly to people in need, aid cuts can also curtail the very systems that people rely on. Effective responses to crises such as the Ebola emergency in the Democratic Republic of the Congo and Uganda, the high and rising needs of people forcibly displaced by conflict, and the ongoing drought in the Horn of Africa rely heavily on the health and humanitarian infrastructure that aid has consistently helped to build.

A different reality

Aid flows have always fluctuated. But this episode stands apart.

The recent cuts are large and broadly simultaneous across countries. They are driven by donor decisions rather than changes in recipient economies. And they come at a time when traditional buffers are weaker: multilateral institutions and NGOs, which have often cushioned past declines, are themselves facing funding constraints. While non-traditional donors, such as China and the Gulf States, have grown their aid presence in the region, the magnitudes are not able to cover the reduction in traditional donors.

The cuts are also difficult to manage because they follow six years of successive shocks—including the pandemic, tighter global financial conditions, and food and energy crises—that have already eroded fiscal space.

Tough trade-offs

Governments now face difficult choices. Many have limited fiscal space, rising debt, and low reserves.

IMF-administered surveys covering 28 African countries suggest four broad policy responses:

o Some governments are not replacing lost aid, allowing programs to lapse. This limits immediate fiscal strain but carries high social costs.
o Many are reprioritizing spending, often cutting public investment—easier politically, but damaging to future growth.
o Others are borrowing more, including domestically, increasing debt risks.
o Some are stepping up revenue mobilization, though results take time.

Each option comes with trade-offs. Replacing lost aid can protect services and growth, but at the cost of wider deficits and external imbalances. Not replacing it stabilizes budgets and protects debt sustainability, but risks lasting damage to human capital and development.

There are no easy choices.

How to respond

The policy challenge is to manage the adjustment while preserving core development gains. Three priorities stand out.

First, protect and target high-impact aid.
With resources scarce, allocation matters more. Aid should be directed toward the countries and sectors where it has the greatest effect—especially low-income countries and fragile states, and essential humanitarian needs. Stronger coordination can reduce fragmentation and avoid duplication.

Second, broaden the financing toolkit.
Grant financing will remain essential, particularly in humanitarian contexts. But other instruments can play a larger role. Blended finance—using public funds to mobilize private investment—can help expand financing for infrastructure, energy, and agriculture. It is not a substitute for aid: it is harder to scale, more complex, and can add to debt if poorly designed. Managing these trade-offs will be critical.

Third, strengthen domestic capacity.
With aid less predictable, resilience increasingly depends on domestic institutions. This means mobilizing more revenue, improving spending efficiency, and strengthening policy design and service delivery. Aid has often provided both funding and implementation; replacing that capacity will take time and sustained investment.

A turning point

The shift that began in 2025 is unlikely to be temporary. It reflects a broader reconfiguration of development finance, shaped by tighter donor budgets and changing priorities.

The implications will vary by country, depending on exposure, initial buffers, and policy choices. But the direction is clear: reliance on external aid will become more uncertain, and domestic policy will matter more.

The immediate task is to manage the decline in aid without backsliding on the significant human development achievements of the past decades. The longer-term challenge is to adapt to a world where aid is less abundant and less predictable. How countries navigate both will shape growth and development outcomes for years to come.

Chie Aoyagi, Maurizio Leonardi, and Athene Laws are economists in the IMF’s African Department, where Hamza Mighri is a research analyst.

IPS UN Bureau

 

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As the afternoon sun casts a golden glow over Mukwiro village on Wasini Island on Kenya’s Indian Ocean South Coast, Mwanasiti Mwalola, 26 and Mzungu Mohammed Dhossa, 45, stand at the community fish landing site, carefully receiving baskets of freshly caught fish from returning fishers. A weighing scale hangs before them, with a pen and […]

Far from shoring up support for the Thai monarchy, the deployment of pseudo-academics and influencers is damaging the royalist cause.

By Appolinaire Djikeng
NAIROBI, Kenya, Jun 26 2026 (IPS)

Smallholder farmers in Africa and Asia are likely to still be reeling from the fuel and fertilizer crisis caused by conflict in the Middle East when what forecasters expect to be a “super” El Niño arrives later this year.

Appolinaire Djikeng

When climate extremes and conflict converge to cause crop harvests to fail, livestock will once again offer a resilient source of nutrition, organic fertilizer and incomes. But the confluence of shocks will nevertheless reverberate worldwide in everything from global food supply chains to increased migration and social tensions.

Consensus is increasingly clear that tackling climate change to avert such crises is a legal duty under international law. Bringing down emissions requires both short-term and long-term action. And yet one of the most effective levers available — sustainable livestock farming — receives just 1 to 2 per cent of climate finance dedicated to agriculture. That is a vanishingly small share for a sector that, in many low- and middle-income countries, accounts for as much as 80 per cent of agricultural GDP.

This funding gap matters because livestock offer something relatively rare in climate policy: the chance to cut emissions fast while also building resilience. Methane is a more potent greenhouse gas than carbon dioxide over the short term, which means reducing it delivers quicker climate benefits.

Cattle and other livestock are among the primary sources of methane emissions. But crucially, both direct and indirect methane emissions from livestock production are often higher than necessary because of the same factors that hold back productivity. Poor animal health, low quality feed and nutrition, and climate stress all undermine production and increase both direct emissions and emission intensity. Tackling these fundamental factors solves both challenges.

In Ethiopia, for example, poor animal health has been found to increase livestock emissions by 50 per cent while also resulting in lower meat, milk and egg yields. Parasites and other vector-borne diseases increase the methane produced in animals’ guts while stunting growth and development.

Simply by applying existing tools to improve animal health, such as vaccines, drugs that kill parasites and good nutrition, research suggests that emissions could be conservatively reduced by at least 15 per cent per unit of output. The same interventions also increase productivity and improve livelihoods.

New research is also uncovering new opportunities to reduce methane from livestock while also boosting productivity and resilience.

Scientists from CGIAR research centres and partners have analysed nearly 300 forage samples and found that varieties of African clover, cowpea and lablab could reduce methane emissions by up to 90 per cent. These plants contain compounds that alter the microbes in cows’ stomachs and block the process that generates methane.

Testing is now under way to identify varieties that could be grown as low-methane feed, which not only helps reduce emissions but also supports local seed systems.

Restoring rangelands adds another layer: it helps improve forage availability to support better animal nutrition, lower methane emissions and build stronger ecosystems. Last year, for example, participatory rangeland management (PRM) was strengthened across 340,000 hectares in Ethiopia and 50,000 hectares in Tanzania, improving rangeland health and supporting livestock production.

Many more solutions exist to improve livestock sustainability for short-term and long-term gains, including those developed by the Livestock and Climate Solutions Hub. But despite growing evidence of impact from livestock interventions, climate finance continues to flow elsewhere, away from the agricultural systems that hundreds of millions of people depend on most directly.

In a post-aid world, directing more climate finance towards sustainable livestock farming in low- and middle-income countries is an investment in global stability.

Investing in more sustainable livestock production has a ripple effect that improves food security, livelihoods, and economic growth and contributes to greater stability and resilience in the face of shocks like the “super” El Niño.

Climate vulnerability is costly. Building resilience through the primary sectors of low- and middle-income countries is an insurance against future crises.

Prof. Appolinaire Djikeng is Director General of the International Livestock Research Institute

IPS UN Bureau

 

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By Jomo Kwame Sundaram and Nurina Malek
KUALA LUMPUR, Malaysia, Jun 26 2026 (IPS)

Leadership of the Global South has gradually declined since the 1980s. Many hope BRICS+ will fill the vacuum, but its purpose and membership suggest such hopes may be misplaced. A repurposed Non-Aligned Movement (NAM) offers the best way forward.

Jomo Kwame Sundaram

Golden Age
The post-World War Two (WW2) Keynesian ‘Golden Age’ saw significant postwar reconstruction and post-colonial development, especially in South Asia.

In 1964, developing countries formed the G77 caucus and created the UN Conference for Trade and Development (UNCTAD) within the UN system.

In 1974, the UN General Assembly called for a New International Economic Order (NIEO) after President Nixon ended the 1944 Bretton Woods international monetary system in 1971.

In 1979, the US Fed responded to Western stagflation by sharply raising interest rates. This triggered fiscal and sovereign debt crises in Latin America and Africa, forcing many to seek IMF emergency funds to cope.

Meanwhile, the Thatcher-Reagan-inspired counter-revolution against Keynesian and development economics led to ‘neoliberal’ Washington Consensus policy reforms, deepening economic contraction.

At New York’s Plaza Hotel, the US got its G7 caucus of the world’s 7 largest allied economies to address its overvalued dollar by requiring the currencies of Japan and Germany to appreciate sharply.

Nurina Malek

G7-encouraged financial liberalisation, especially the IMF-promoted opening of national capital accounts in the 1990s, increased the frequency and impact of crises.

With its legitimacy at stake following the East Asian, Russian, and other financial crises of 1997-99, G7 finance ministers agreed in 1999 to create a more inclusive G20 grouping of finance ministers of the world’s 20 largest economies.

Soon after the 2008 global (actually Western) financial crisis began, the first G20 leaders’ summit convened in the White House in November 2008.

Making BRICS
‘BRICs’ was coined in late 2001 by then-Goldman Sachs Global Economic Research head Jim O’Neill, referring to Brazil, Russia, India, and China.

Ostensibly to include Africa, the BRICs invited South Africa to join, creating BRICS as a coalition of the five more independent large ‘emerging market’ economies.

Also serving as a caucus within the G20, BRICS has tried to improve international monetary and financial relations. It has since admitted more nations into an expanded BRICS+ with two tiers of affiliation.

To be sure, neither BRICS nor BRICS+ was ever intended to represent the even more diverse interests of the entire Global South. Understandably, it serves its ‘financially significant’ developing economy members.

BRICS and the South
The BRICS promise a world less dominated by the rich and powerful nations of the Global North, mainly in the West.

The world has been dominated by the US since the end of WW2, and especially after the first Cold War. Despite occasional dissent, the US’s European NATO allies seem happy playing second fiddle.

Many developing countries have long felt that existing arrangements do not serve their best interests. The BRICS seem to offer some ‘voice’ and alternative bases for international economic cooperation.

BRICS has undoubtedly strengthened the Global South’s voice and developed new arrangements to support developing country interests, especially to finance development.

The BRICS have also advocated on specific international issues for the Global South. All five BRICS countries have also led developing-country groupings on specific issues with varying degrees of success.

Unsurprisingly, many developing countries appreciate the BRICS role in such matters, with some choosing to publicly align with and even affiliate with it.

However, the BRICS expansion into BRICS+ is unlikely to resolve many problems faced by developing nations due to international power asymmetries and imbalances.

Potential and problems
The diversity of the Global South complicates any grouping’s claim to represent it.

BRICS+ brings together countries with very different political and economic systems, priorities and aspirations, including development goals and interests.

This diversity enhances BRICS’ broad appeal but also makes it difficult to ensure it becomes an effective platform consistently advocating all developing nations’ interests.

This challenge becomes more apparent when the interests and ambitions of weaker developing countries are compared with those of the major BRICS+ powers.

Many vulnerable nations are preoccupied with food security, structural change, deindustrialisation, environmental sustainability, planetary heating, and financialization.

Meanwhile, BRICS members seek to pursue their own strategic interests, garner finance and investments, boost their exports and increase their influence internationally.

Such objectives are not inherently contradictory, but rarely fully aligned. This makes it more difficult to pursue shared interests, advocate collectively, and sustain cooperation.

BRICS+ membership by invitation also limits its effective accountability to the Global South. It is unrealistic to expect BRICS+ to consistently advocate for the full range of concerns of all developing countries, especially the poorest and least influential.

The Global South should undoubtedly try to benefit from the economic weight and voice of BRICS+. But it can best advance its shared interests with its own voice and organised strength via a revived NAM, repurposed for peace, development and justice.

IPS UN Bureau

 

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On 25 June 2026, EUHealthGov hosted Dr Chloé Bérut (Ca’ Foscari University of Venice) for a presentation on digital health and the transformation of EU health policymaking.

Chloé presented the results of her MSCA postdoctoral research project, which focused on digital health interoperability. Interoperability refers to the ability of data to circulate between different computer systems. Ensuring interoperability of health data across member states is the EU’s priority in relation to digital health. Chloé emphasised that even though this may seem like a purely technical issue, questions of interoperability are inherently political.

Her research investigated these political dimensions, looking at whether and how interoperability – and digitalisation more broadly – create new decision-making dynamics at EU level. The findings she presented were based on two case studies: EU cooperation around COVID-19 contact-tracing apps and the ongoing development of the European Health Data Space (EHDS). Health data, she noted, represents a pioneer case of EU-level data interoperability governance.

She first explored the role of private actors and illustrated the enormous power that tech giants now have in the sphere of health(care) policy through the digitalisation of healthcare. Their ownership of the digital infrastructure means they can shape policy either directly and/or indirectly. In the case of the contact-tracing app, she explained how Google and Apple announced that their systems would only support decentralised contact tracing apps, which effectively took away the choice for member states to decide whether to use a centralised or decentralised system. In the case of the EHDS, tech giants tend to offer the most competitive digital environment, placing them in a strategically influential position. In the Q&A, the question of how the EU’s digital strategy is informed by the EU’s goal to ensure strategic autonomy – and whether the reliance on US tech giants is perceived as a vulnerability – was further discussed.

A second theme presented by Chloé was how and where decisions about interoperability standards are made at EU level. She identified the European Commission as leading the process and using the scientific evidence deriving from EU-funded digital health projects to inform its position and approach. A major finding she put forward is that these EU-funded research projects should be understood as a form of governance, as they provide the standards and knowledge base which inform future decision-making. This point was further discussed in the Q&A, where Chloé elaborated on the complexity and ‘messy’ dynamics of how these projects feed into policymaking.

Chloé’s presentation also highlighted that the pandemic gave the European Commission the political space to coordinate health data, and that its performance and ability to showcase competence mattered more than the need to politically justify EU-level action. She also reflected on how digitalisation can lead to a ‘technologization of political debate’, and that this runs the risk of oversimplifying complex issues, and exacerbating inequalities. An example here was the ‘opt-in/opt-out’ debate, which gives citizens the impression of control over their health data through a binary choice, while the question of consent in a legal sense is in fact much more complex. Finally, her findings revealed new political cleavages emerging in debates over digitalisation, where Green and far-right parties depart (for varying reasons) from the consensus uniting the other parties.

Speaker bio: Dr Chloé Bérut is an MSCA postdoctoral researcher at Ca’ Foscari University of Venice. Her work focuses on digital health in the European Union, the ways in which these policies are shaped at the EU level, and how they influence domestic policymaking in this sector. More recently, her research has expanded beyond the field of health to explore broader questions about how digitalization transforms EU policymaking across different sectors. Her work has been published in several academic journals and edited volumes, including Governance, European Policy Analysis, and West European Politics.

The post EUHealthGov with Dr Chloé Bérut: Digital Health and the transformation of EU health policymaking appeared first on Ideas on Europe.

As of now, geopolitics overtook trade policy uncertainty as the primary concern for countries. Credit: Unsplash / Sajimon Sahadevan

By Maximilian Malawista
UNITED NATIONS, Jun 25 2026 (IPS)

Amidst increased geopolitical tensions, the risk of volatile energy markets, trade corridors, and regional stability in the Middle East has garnered more attention than trade policy in terms of its power to alter the global economy, according to new findings from the United Nations Conference on Trade and Development (UNCTAD).

In their report on trade and development, “Global Economy Faces a Geopolitical Challenge”, UNCTAD says that a protracted escalation “raises the likelihood of deeper disruptions in global trade and finance, potentially, foreshadowing a cascading crisis”.

Credit: UN Conference on Trade and Development (Trade and Development Foresights 2026)

Daily crude oil prices in the Middle East since the beginning of the conflict have risen from around USD 60-70, to a fluctuating rate between a high of over USD 110-. With oil prices surging more than 60 percent, and gas doubling in price, many markets have been left in an inflating scenario as higher energy prices increase macroeconomic pressure and overall slow and contract the economy.

The increase per barrel is largely due to a constriction of supply, where most Gulf economies can barely output oil due to a lack of transport ability through the strait of Hormuz. The International Monetary Fund (IMF) records a spike in the price of Brent crude rising over USD 100 per barrel and remaining at elevated levels, with European gas also jumping roughly “60 percent amid disruptions to LNG exports”.

The numbers are impacted by an estimated loss of capacity of 10 million barrels per day of oil and “about 500 million cubic meters per day of natural gas”. This is roughly 10 percent of global oil production, and roughly 5 percent of global natural gas production for every single day.

The IMF records the following:

Daily Traffic through the Strait of Hormuz (in number of vessels) between 26 February and 6 April 2026. Credit: IMF

Oil being an inelastic good means that consumers won’t be able to curb their spending. Rather, they have to pay more for as long as the conflict lasts as fuels are needed for many essential routine tasks, from driving your car, to taking your vitamins, to growing your food, and having your Amazon packages shipped.

In their April 2026 Regional Economic Outlook Update for the Middle East and Central Asia, the IMF details that a continued conflict will likely for every 10 percent rise in the average oil price lead to a loss of about 0.5 percent of GDP and an inflation increase of around 1 percent in Gulf economies, ultimately affecting global markets heavily.

As the report notes, “Longer trade disruptions or greater damage to oil production capacity raises the possibility of higher and more sustained oil prices and a larger risk premium than is currently embedded in oil futures prices”.

However, for developing countries higher energy prices hit a lot harder to consumers in developing countries, which in this case don’t have the same money to spare. The IMF warns that “Low-income countries and other fragile and conflict-affected states in the MENAP region are especially vulnerable to higher energy, fertilizer, and food prices”.

Due to the conflict, estimates stand that vulnerable economies, mostly least developed countries (16.1 billion) and small island developing states (4.3 billion), could incur a USD 20 billion a year increase in spending, representing a huge composition of their GDP expenditure.

Among least-developed nations, Mauritania is recorded to have their bill increase by 7.3 percent, The Gambia 6.3 percent, Burkina Faso 5.0 percent, Liberia and Zambia 4.3 percent, with 17 other least developed countries also estimating to increase their spending by at least 0.5 percent in terms of GDP points.

Similarly for small-island developing states, Vanuatu is recorded to have an increase of 5.8 percent, Maldives 5.2 percent, Tonga 4.4 percent, Mauritius 4.2 percent, and Fiji 3.2 percent, with 18 other small developing states recording an increase of at least 0.6%.

UNCTAD also expects this conflict to take away capital investment into developing nations, as these assets are perceived as riskier. The UNCTAD report states that “the start of the Middle East conflict triggered a sell-off of developing countries’ assets, with equity markets of emerging markets sliding by more than 12 per cent between 28 February and 29 March.” Likely such effects will trigger a compacting of issues, contributing to an economic downturn that could take years to recover from depending on the length of the conflict.

IPS UN Bureau Report

 

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