Statement by IMF Managing Director Strauss-Kahn at the Conclusion of his Visit to Burkina FasoPress Release No. 08/30
February 26, 2008
Managing Director Dominique Strauss-Kahn of the International Monetary Fund (IMF) issued the following statement in Ouagadougou at the conclusion of his visit to Burkina Faso:
"This was my first visit to Burkina Faso as Managing Director of the IMF. I am grateful for this opportunity and want to thank President Compaoré for his warm hospitality and for organizing a successful roundtable with West African leaders. I thank President Yayi, President Gbagbo, President Touré, President Gnassingbé, Prime Minister Cabi, and Prime Minister Oumarou for taking the time to travel to Ouagadougou to participate in the discussions hosted by President Compaoré. The candid and productive discussions I had with those leaders on the challenges facing the region and the continent have provided me with valuable insights on how the IMF can best support countries in their efforts to reduce poverty, enhance growth, and achieve the Millennium Development Goals. I also wish to thank Prime Minister Zongo, Minister of Finance Compaoré and other senior officials I met for constructive discussions.
"In my meeting with President Compaoré, I congratulated him for his continued efforts to tackle poverty and improve the living conditions of his people, despite a difficult macroeconomic environment. Low international cotton prices, the appreciation of the euro and the CFA franc, and high oil prices will continue to pose severe challenges in 2008. The government is addressing these challenges through suitable adjustment measures. The planned fiscal stance for 2008 strikes an appropriate balance between adjusting to a deterioration in the debt sustainability outlook and high priority public spending under adverse economic conditions. President Compaoré also outlined plans for 2008 to further strengthen tax and customs administration, together with significant tax policy reforms. We agreed that reforms to foster private sector led growth and improve competitiveness are key. The planned reduction of government involvement in the cotton sector is a positive step toward ensuring the viability of the sector. To help the country in its efforts to address the impact of high oil prices and the adverse shock on cotton, the Fund's Executive Board last month approved an increase in access under a three-year Poverty Reduction and Growth Facility (PRGF).
"In my meeting with President Gbagbo, I congratulated him on the outcome of his direct dialogue with Prime Minister Soro that was brokered by President Compaoré one year ago. The resulting Ouagadougou Accord has consolidated the peace process and should hopefully lead to presidential elections by mid-year. We discussed the importance of a strong economic program for Côte d'Ivoire's recovery. With peace and reunification taking hold, it is crucial that the authorities achieve a peace dividend by mobilizing revenue in the whole country and reining in non productive spending in favor of spending for education, health, and basic infrastructure. We also talked about the importance of improving governance: first, by strictly adhering to budget allocations and making regularly public how the budget is spent; second, by improving reporting on energy sector flows, also to ensure adequate revenue for the budget; and third, by better managing the coffee/cocoa sector and lowering quasi-fiscal levies, to improve farmers' incomes. I assured President Gbagbo that the IMF stands ready to continue to support Côte d'Ivoire with Emergency Post-Conflict Assistance (EPCA), which could be a stepping stone for a PRGF arrangement and debt relief under the Heavily Indebted Poor Countries Initiative (HIPC) in due course.
"In my meeting with President Faure Gnassingbé of Togo, I congratulated him for the marked improvements in the political environment that have paved the way for the resumption of financial assistance by donors. I also commended his government for initiating important economic reforms monitored under a successful Staff Monitored Program, in particular steps to strengthen fiscal governance and begin addressing the weaknesses of state-owned enterprises and banks. As a result of these reforms, the macroeconomic situation is improving, particularly on the fiscal side with an increase in the revenue collection and reduction of domestic arrears. Going forward, we agreed that it will be vital for Togo to continue improving public expenditure management, increase social and infrastructure spending, strengthen the financial sector, and address Togo's unsustainably large debt. The IMF stands ready to support the government's economic program with a three-year Poverty Reduction and Growth Facility (PRGF) arrangement once a solution has been found for clearing Togo's large arrears to the World Bank and other multilateral creditors.
"In my discussion with President Touré of Mali, we discussed the challenges of achieving the sustained higher growth rates necessary to make inroads into poverty reduction. In this regard, we discussed the need for deeper structural reforms to encourage private sector activity and address the weakening of competitiveness caused by rising gold earnings as well as higher private transfers and foreign aid. I also noted that maintaining a more cautious fiscal stance would help Mali weather the external shocks to which it is exposed. I assured President Touré that the IMF stands ready to assist Mali in the next phase of deeper structural reform, including possibly through a successor PRGF arrangement or a Policy Support Instrument (PSI).
"In my meeting with Prime Minister Seyni Oumara we discussed Niger's satisfactory performance under the Fund-supported PRGF program. Economic growth, including in agriculture, has held up reasonably well and inflation is subdued. This, combined with donor support, has improved the food security situation. I welcomed the Prime Minister's interest in another PRGF program.
"In my meeting with Prime Minister Cabi of Guinea Bissau, I congratulated him on the recent approval of IMF Emergency Post-Conflict Assistance (EPCA), and for the progress achieved in restoring fiscal stability and improving governance and transparency under difficult circumstances. For 2008, the government is focusing on the immediate needs of further boosting revenue, balancing expenditures, especially the wage bill, with available resources, improving fiscal management and restoring economic confidence. The authorities' program has already attracted strong donor support, and continued improved performance should help catalyze much-needed additional donor support for critical structural reforms and priority spending. The EPCA-supported program could pave the way for a PRGF arrangement, the completion point for the HIPC initiative, and debt relief under the Multilateral Debt Relief Initiative, once a sufficient performance track record is established."