ANALYSIS-New IMF plan could boost African
09:41 a.m. Jan 19, 2000 Eastern
By Luke Baker
LIBREVILLE, Jan 19 (Reuters) - The IMF's new lending
initiative for the world's poorest nations gives African leaders
more say in their affairs, but the continent -- torn by war and
AIDS -- must come up with prudent strategies to make it work.
Twenty African leaders ended an anti-poverty summit with senior
International Monetary Fund officials in Gabon on Wednesday
enthused about the Poverty Reduction and Growth Facility
The programme seeks to stimulate growth without ignoring social
priorities such as education. It replaces the Enhanced Structural
Adjustment Facility, a benchmark for African macroeconomic
restructuring for the past decade that was criticised for its tough
The new programme takes a gentler approach, putting the onus
for designing an adjustment programme on the loan recipient and
seeking to take into account views of development agencies,
unions and others in civil society.
Gabon's President Omar Bongo echoed the words of IMF
Managing Director Michel Camdessus in describing the scheme
as a new hope for the world's poorest continent.
``It's now up to us to formulate adequate strategies capable of
giving hope and confidence to the people of Africa,'' he said. ``But
we can only carry out this task with the help of our external
Some Western lenders and IMF officials said the PRGF could lay
a solid foundation for growth. But privately they expressed
disappointment that the leaders showed no signs of meeting the
IMF halfway and questioned how much would in fact be done, let
alone right away.
``It's a bit like visiting a doctor. Everyone feels good after hearing
what's wrong and leaving the consulting room, but do they actually
swallow the medicine and follow the prescription through to the
end?'' a World Bank official said.
LACK OF PROMISE
While the IMF has shown its concern for criticism by revising its
methods, there was no matching promise from the governments to
fight Africa's primary scourges: AIDS and war.
The heads of state at the three-day summit, backed by ministers
and a slew of central bank officials, promised to do their utmost to
promote growth and fight poverty and corruption.
``We recognise that poverty reduction is a challenge which we
must address ourselves,'' they said in a statement. ``We are
determined to move ahead in confronting this challenge head-on,
with the support of our development partners.''
Growth has picked up in many African countries since 1995, but
there has been no visible rise in living standards for the poorest
300 million people, who live on less than $1 a day.
Camdessus said gross domestic product growth of between five
and eight percent a year would be key to the programme's
success, but that is close to double the present average.
The IMF, World Bank, African Development Bank, European
development agencies and others have been propping up the
continent, particularly sub-Saharan Africa, for decades.
Half the sub-Saharan countries -- 22 of 44 -- are already
receiving aid through various IMF lending facilities or standby
loans. Others are expected to try to access the new programme.
Stanley Fischer, first deputy managing director of the IMF, told
Reuters he expected 36 to 41 of the world's poorest nations to be
covered by some new poverty initiative by year-end.
A VIRTUOUS CIRCLE
Camdessus, who steps down next month, has described growth as
the catalyst for a virtuous circle which, coupled to monetary
stability and fiscal diligence, would ease the worst poverty.
The theory is sound, but there are many other obstacles.
More than 23 million Africans are estimated to carry the HIV
virus that causes AIDS and the rate of infection is growing with
10,000 people infected each day.
Nine out of every 10 children infected with HIV live in Africa,
meaning the continent will be further handicapped against the rest
of the world for years to come.
Aside from the grave social costs, the disease will have a
profound impact on productivity.
Then there is war.
Fifteen African countries are engaged in either civil war or
cross-border fighting and conflict continues to spread. Military
spending as a proportion of GDP in many countries is far higher
than even that of the superpowers during the Cold War.
``That is the face of Africa that is not the face we wish to
maintain,'' Jean-Louis Sarbib, vice-president of the World Bank,
told leaders at the opening of the summit.
Though there is little indication that Africa's leaders are ready to
tackle AIDS head on or to end the conflicts tearing at the
continent, the IMF believes the new programme will help to
change policies in Africa to make growth more deep-seated.
``There are a lot of incentives on offer for countries to pursue
better policies...leaders understand that if they deliver, it will be
okay, things will improve,'' said Fischer.
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