Opening Remarks for Seminar on Scaling Up Aid and Promoting Growth in The West African Economic and Monetary Union (WAEMU), by John Lipsky, First Deputy Managing Director, IMF
November 10, 2006By John Lipsky
First Deputy Managing Director
November 10, 2006
Good morning. I am happy to join you today for this discussion. The major macroeconomic challenge before us now is to ensure that scaled-up spending helps to accelerate economic growth in the WAEMU region.
Before we begin the discussion, let me first express my appreciation to all of you—distinguished ministers, governors, and representatives of civil society—for traveling to Mali from your home countries to share your views on this difficult topic. I am particularly grateful to our Malian hosts for their assistance in putting this event together, and to our colleagues from l'Agence Française de Développement for their support. And finally, I must offer my appreciation to my IMF colleagues—especially Mr. Idrissa Thiam, Coordinator of our Africa Regional Technical Assistance Center here in Bamako, and Mr. Abdoul Aziz Wane, our Resident Representative here. Both of them and their staffs have put in much time arranging this seminar.
As you know, I joined the IMF as First Deputy Managing Director only at the beginning of September. Of course, it is not my first experience in the organization. I spent a decade in the Fund as an economist early in my career. Our world has changed considerably in the intervening years—and Africa is no exception. It is extremely important to me to have this opportunity to meet here with so many of you, so that I can deepen my understanding of these changes. The direct contacts I have had in the course of my visit have already given me invaluable insights. Here I would like to thank the representatives of civil society for joining us today. Your contributions to our dialogue are extremely useful.
Average inflation in this region is the lowest in a quarter century, and growth in the last two years has been the highest in a decade. I do not mean to downplay the enormous problems still to be dealt with, but this is a significant achievement. It speaks volumes about the efforts governments, the private sector, and civil society organizations are making in so many African countries.
The real challenge now is to accelerate and sustain this growth. That is the only way we can make substantial progress toward reducing poverty.
In this regard, the WAEMU Commission is taking the lead. It has recently prepared a comprehensive strategy for reform and investment for the purpose of accelerating economic growth in this region. This initiative represents a commendable collaborative effort by all the member states and regional institutions. Indeed, the IMF is greatly encouraged by the development of home-grown strategies. Where there is ownership, there is much more likely to be implementation.
The Commission's strategy appropriately seeks to raise investment in infrastructure and human development. I am sure that all of you will agree that it is essential that the resources for this effort be used efficiently and transparently to ensure that growth indeed accelerates.
That is why this seminar is so important. Scaling up spending is a challenge to macroeconomic management, including the conduct of monetary and fiscal policy. Strengthened public financial management is needed to ensure that the intended sectors receive their full share of resources. In addition, the absorptive capacity of WAEMU economies needs to be enhanced by alleviating structural bottlenecks like rigidities in labor markets and by improving the business climate. Scaling up of spending also needs to be accompanied by improved capacity to formulate and implement sound policies.
Several of the honorable ministers in this room attended the IMF's Annual Meetings in Singapore six weeks ago. As you know, there was a great deal of discussion of reform of the IMF in the context of the Fund's Medium-Term Strategy. Let us not lose sight of the fact that our work in developing countries—and especially the poverty reduction effort—is an essential part of that reform strategy. The bottom line is that the IMF needs to direct its expertise to those areas where it can best assist developing countries in achieving economic growth. Helping them address the macroeconomic challenges of scaling up is one such area. The IMF stands ready to assist the WAEMU countries in implementing their economic program..
Many countries have yet to see a significant increase in aid beyond the resources freed up by debt relief. This is an issue to be addressed by you and the donor countries, who have repeatedly stated their commitment to this process. For the IMF, our primary responsibility is to work with your governments to ensure that increased aid flows are accommodated in the best possible way to reduce poverty.
The Fund is fully committed to making that process a success. I can assure you that as First Deputy Managing Director of the IMF, I am personally committed to this effort as well. But today, I am here to listen and learn from you as we explore this topic. I look forward to a most productive meeting. Thank you.