Natural Resources, Finance and Development: Confronting Old and New Challenges
Organized by the IMF Institute in collaboration with The Bank of Algeria on November 4—5, 2010
"… in resource-rich countries, the blessing of riches can turn rapidly into the curse of conflict." Dominique Strauss-Kahn, Kenya International Conference Center, Nairobi March 8, 2010.
The seminar took place in Algiers on November 4-5, 2010 and was aimed chiefly at policymakers in sub-Saharan Africa. It brought together 17 cabinet ministers and central bank governors, 23 other senior policy makers, and a number of well known academics from around the world.
Countries with an abundance of natural resources, many of which are in sub-Saharan Africa, often show a record of relatively poor economic performance compared with non-resource rich countries. The consensus in both academic and policy circles is that the presence of natural resources could pose various challenges: (i) a loss of competitiveness in potentially dynamic, non-natural resource sectors, (ii) a consequent narrowing of the production base, (iii) excessive reliance on commodities for both government revenues and export earnings, (iv) high vulnerability to commodity price fluctuations, (v) macroeconomic and financial volatility, and (vi) rent-seeking behavior that can undermine governance and exacerbate the difficulty of building robust, growth-enabling institutions. The seminar focused on how to manage these challenges so as to reap the benefits of resource wealth while avoiding the pitfalls.
Starting from a diagnosis of the wide range of challenges to macroeconomic management and financial policies in resource-rich countries, the seminar sought to propose context specific solutions, drawn from experiences in the most successful cases and implementable in Africa. As such, the seminar discussed fiscal, monetary and exchange rate policies; savings policies; institutional arrangements to safeguard the economy against volatility; economic diversification; and institution building.
