Sub-Saharan African countries would have to rebuild fiscal room and would have to move its focus away from the near-term objectives of stabilising output to medium-term considerations, such as increasing spending on growth-enhancing priorities, including infrastructure, health, and education, the International Monetary Fund (IMF) suggested on Wednesday.

In its latest World Economic Outlook (WEO) report, the IMF forecast gross domestic product (GDP) for the sub-Saharan African region to grow by 4,7% this year and by 5,9% in 2011.

South Africa's GDP growth was forecast to be 2,6% in 2010 and 3,6% in 2011.

The South African economy contracted by 1,8% in 2009.

The IMF stated that the use of countercyclical fiscal policy during the global downturn had been a welcome development in the region. It pointed out that in the majority of cases, the sustainability of public debt trajectories had not been adversely affected.

However, it warned that the risks to the outlook in the region were varied.

Some of the biggest risks could be the impact of a more hesitant recovery in advanced economies, the fact that the outlook for official aid flows to the region were subject to downside risks and the fact that political uncertainty in a number of economies, particularly in West Africa, could dampen economic growth.

The IMF noted that one of the major policy challenges for sub-Saharan Africa would be to attract private capital flows and to ensure that macroeconomic policy accommodated this.

The promotion of trade and financial sector development, the encouragement of domestic saving and investment and the improvement of governance standards would assist in attracting private capital inflows on a sustained basis, stated the IMF.

Meanwhile, IMF research director Olivier Blanchard noted that while a global depression had been avoided, more work would now be needed to ensure that economies achieved sustained and balanced growth.

This work would include fiscal consolidation in advanced economies, exchange rate adjustments and a rebalancing of demand across the world.

There was a need for policy action to ensure a sustained recovery of the global economy, the IMF highlighted.

Reducing sovereign risk, unwinding stimulus packages and dealing with unemployment were just three issues that should be on the policy agenda, the fund said.