Michel Camdessus
Michel Camdessus  

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Gabon and the IMF

The IMF's Poverty Reduction and Growth Facility (PRGF) -- A Factsheet

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Poverty Reduction and Growth:
An Agenda for Africa at the Dawn of the Third Millennium

Opening Remarks by Michel Camdessus
Managing Director of the International Monetary Fund
at the Summit Meeting of African Heads of State1
Libreville, Gabon, January 18, 2000

Français

President El Hadj Omar Bongo, Excellencies, Ladies and Gentlemen. It is a great privilege to be with you today at the start of this conference you have convened to consider an agenda for Africa at the dawn of the third millennium. The presence today of so many eminent leaders of this continent is a crucial signal to the world that Africa is ready for a new beginning, and that the development of the continent, centered on improving the situation of the poorest of the poor, is a matter of profound concern and urgency throughout Africa. President Bongo, I would like to extend our deepest gratitude to you, and through you to the Government and people of Gabon, for making this occasion possible and for the customary splendid arrangements you have made. For me, it is an occasion with special significance, a last chance not only to reflect on this mandate—which is so dear to me—but also to ensure that the three new instruments we have just created following your requests respond well to the needs of Africa, can be adapted well to your individual situations, and are used as expeditiously as possible, to help this continent seize the opportunities currently at hand.

At the start of the new millennium, we have an opportunity for a fresh start in the struggle for African development. It is an occasion for Africa, under the leadership of all of you, to seize the initiative to consolidate the gains of the past decade and build on them.

You know well how, and why, after the first euphoric years of independence, Africa was caught in a vicious spiral, seemingly condemned to a self-perpetuating cycle of poverty.

But in the past decade many countries have firmly taken their destiny into their own hands, and these efforts are beginning to bear fruit. Difficult, often painful, steps have been taken. A first generation of reforms has harnessed market forces for development: trade and exchange liberalization, improving incentives by rolling back price controls and subsidies, reforming public enterprises; and strengthening financial systems. And now the effects of these bold policies are evident in countries across the continent, as inflation has declined, external positions have strengthened, and, above all, per capita income is beginning to grow again. Twenty years of negative trends have been reversed. The seeds of a new renaissance have been sown.

But no one is more aware than you of just how much remains to be done. Living conditions for millions of Africans are little better than they were 30 years ago, and for many they are worse. The gains that have been made in the past decade have not been enough to improve living conditions for the poorest in society, and many countries still lack the resources to address the problem convincingly.

More, far more, is needed. It is time for Africa to find a way out of this impasse and into a virtuous circle of poverty alleviation, sustained high-quality growth, and social progress. Such a leap forward calls for more than just stability, more than sound institutions, more even than growth-oriented policies; it is possible only if all levels of society, and especially the poorest, participate in the debate to launch this new growth, and in its benefits.

And now, in this improved world economic environment, I believe we have a unique opportunity to act. Provided, however, that all of us—African policymakers, the IMF and the World Bank, our sister international organizations, and the international community at large—come together to draw conclusions from the successes and failures of the past decades. And provided that we are willing to honor the pledges, the international development goals, made at one international conference after another—conferences at which the whole world reaffirmed its will to work resolutely toward the alleviation of poverty—and to adhere closely, in particular, to the key commitment made in Copenhagen, by the North and the South together, to halve the number of absolute poor in the world by 2015. All of us have a role to play in this venture. We, the Bretton Woods institutions, are determined to shoulder our responsibilities fully. You have reminded us of your priorities: poverty, debt, and growth. Today I bring you our response.

But Excellencies, you have reminded us also that it is your societies that have the primary responsibility for the fight against poverty and that your countries must occupy the driving seat:

    · when you define your priorities and strategies;

    · when you consult with civil society;

    · when you welcome private sector initiative;

    · when you create the conditions in which the private sector will invest so as to increase the productive potential of your economies;

    · when you turn to the international community—including, of course, the IMF and the World Bank—to provide you, if you so desire, with policy advice, technical and financial assistance, and bold debt reduction; and

    · when, at the same time, you work untiringly for peace, for if it is true, as one eminent person has stated, that development is another name for peace, we also discover every day that peace is another name for development.

What must we do to make these concepts operational? We must take concrete action, now that the discussion phase of these past months is over. Yesterday, with the Ministers here in Libreville, we tried to see where we stand. The key issues are well formulated in the document prepared by the Ministers. What should the strategy be for increasing growth and reducing poverty in each country? How best can the participation of civil society be secured and, first, what exactly do we mean by "civil society"? What can the IMF itself contribute through its new Poverty Reduction and Growth Facility (PRGF)? Recent discussions in the Executive Boards of the World Bank and the IMF have resulted in decisive progress. But this is still "work in progress," and I hope at this conference you will guide us on how best we can support your action to eradicate poverty.

Let me simply sum up the key elements of consensus at this stage for a new approach—some of this will seem obvious:

    · Poverty reduction is a priority for all of you, calling for country-driven strategies that involve all partners in development;

    · These strategies should make poverty alleviation the centerpiece of economic policy, together with a renewed emphasis on achieving rapid private-sector-led growth;

    · As the causes of poverty are complex, the strategies for reducing it must take account of this diversity and be based on careful analysis of the origins and consequences of poverty;

    · We must trigger and intensify the circular dynamic that leads from monetary stability to the strengthening of macroeconomic equilibria, to the reduction of poverty and inequalities, and back to increased stability, and so on;

    · Transparency and good governance will be key factors of success and of the expansion of both public and private external financial support;

    · We should spare no effort to ensure that the series of pledges made by the entire international community, North and South together, at Copenhagen and at other conferences on development are honored by the deadlines set, namely, 2005 and 2015. As a souvenir of our meeting and deliberations, you will receive a small memento of these pledges,2 which bind us all together and which are the key to a better future for our children.

* * * * *

What action will the IMF take in cooperation with the World Bank and our sister organizations?

I have come to tell you that we stand ready to be associated with your poverty reduction strategies. To that end, the World Bank and the Fund are strengthening our collaboration to pool our relative strengths. Your strategies will serve as the basis for all our concessional lending.

In the case of the Fund, we will use the new Poverty Reduction and Growth Facility (PRGF)—particularly for assisting the HIPC countries. This facility marks a profound shift in our objectives and in our way of doing business. Its central objectives will be poverty reduction, debt reduction, growth, and stability. Our core mandate, of course, remains unchanged: promoting prudent macroeconomic management and market-oriented reforms. But this guidance will be part of a broader effort determined by your choices and drawing on the expertise of other major partners, especially the World Bank and the African Development Bank. The latter's unique experience, especially in its regional dimension, will be precious, as—it goes without saying—will be that of the other UN agencies which share a vision for human development, and of the OAU.

All this virtually goes without saying. But as we move forward with implementation, there are still some issues to be addressed. The paper your Ministers prepared for this conference identifies many of them, and I look forward to the opportunity of discussing them here with you. Let me just mention some of them:

    · We must work together to improve our understanding of the factors linking growth, poverty reduction, the macroeconomic framework, and the economic and social institutions.

    · The participation of civil society is crucial; people must assume ownership of the major economic choices adopted by their countries. But, of course, this process cannot fail to raise many questions. How can such a process be effective in countries where civil society—especially its poorest segments—is not yet well organized, or where democracy is only now taking root? How can we ensure that the process builds the capacity of government and elected institutions? Will this approach be too costly for countries with weak administrative systems? How can we ensure that the consultative process does not result in undue delays in mobilizing badly needed external assistance?

    · How can we ensure that governments wishing to prepare a national poverty reduction strategy receive adequate external assistance? How should this be done without stifling national effort but also without giving national authorities the impression that the multilateral institutions are not strongly engaged in the process.

    · What mechanisms should be established to recognize and promote the role of the private sector, both domestic and foreign, as a key source of investment for future growth, and hence as a key stakeholder in the process?

    · What changes in international mechanisms for coordinating the delivery of assistance can we recommend to the wider international community of donors?

Finally, let me leave the economic and social spheres for a moment to address a matter of the greatest importance—the quest for peace, an end to the conflicts that plague so many countries on this continent. As the head of an international organization whose sphere of competence is economics, I feel I can take a stand in this area because conflicts have economic causes and economic consequences.

Ultimately the solution must come from the countries themselves, as President Blaise Compaoré put it so well at the opening the 34th OAU Summit: "The issue of security and peace is the prime responsibility of Africans themselves. No mechanism can be sustainably effective when [it is] imposed from outside. Peace will result from an internal dynamic or it will not prevail." That is why it is so heartening to hear of the recent peace initiative in East and Central Africa and the progress to date in Sierra Leone. And that is why I endorse the efforts made by many countries to reduce or contain their military spending and encourage others to follow their example. But the rest of the world also has a role to play in this regard; it can support your efforts by curbing the sale and financing of military equipment and small arms and by joining in international efforts to prohibit the smuggling of raw materials and natural resources to finance armed conflicts. But most importantly, I believe that part of the "internal dynamic" in favor of peace and development is also based on rapid, convincing progress in poverty reduction; this will reduce the tensions at the source of so many conflicts. Let us work together to this end.

* * * * *

President Bongo, Excellencies, Ladies and Gentlemen, permit me a moment of personal reflection, based on my many years of association with this continent, both during my time at the Fund and in my country. Today I sense in Africa a renewal of hope about the future, tempered with realism. Many countries represented here today have passed through an exceptionally difficult period during the past two or three decades. But this experience has hardened Africa's resolve and improved its capacity to seek solutions to its own problems. Your presence here demonstrates your determination that the solutions should be primarily African, in a partnership for development with the rest of the world. In the past two decades, the IMF has become progressively better equipped to respond to the specific needs of Africa, and the new PRGF is a further major step in that direction.

I feel confident and optimistic about the strategies and partnerships to be discussed during this conference. Yes, we can make substantial progress in the monumental task of reducing poverty and placing Africa on the road to growth and prosperity. Yes, we can do it; yes, we must find the means to honor our pledges. Yes, we must respond to this call from so many ordinary people throughout the world, as President Mandela so admirably reminded us on January 1, 2000: "the simple opportunity to live a decent life, to have a proper shelter and food to eat, to be able to care for their children and to live with dignity, to have good education for their charges, their health needs cared for and to have access to paid employment."

Mr. President, the seeds of a new renaissance in Africa are being sown. We are at your disposal to make it a reality for the people of Africa. Thank you.



1Some portions of the speech were delivered in French and other portions in English.

2See Attachment.



ATTACHMENT

Key International Pledges for Sustainable Development

Reducing extreme poverty
The proportion of people living in extreme poverty in developing countries should be reduced by at least one half by 2015. (Copenhagen)

Universal primary education
There should be universal primary education in all countries by 2015. (Jomtien, Beijing, Copenhagen)

Gender equality
Progress towards gender equality and the empowerment of women should be demonstrated by eliminating gender disparity in primary and secondary education by 2005. (Cairo, Beijing, Copenhagen)

Infant and child mortality
The death rates for infants and children under the age of five years should be reduced in each developing country by two-thirds the 1990 level by 2015. (Cairo)

Maternal mortality
The rate of maternal mortality should be reduced by three-fourths between 1990 and 2015. (Cairo, Beijing)

Fight against hunger
Reducing the number of undernourished people to half their present level no later than 2015. (Rome)

Reproductive health
Access should be available through the primary health-care system to reproductive health services for all individuals of appropriate ages, no later than 2015. (Cairo)

Environment
There should be a current national strategy for sustainable development, in the process of implementation, in every country by 2005, so as to ensure that curent trends in the loss of environmental resources are effectively reversed at both global and national levels by 2015. (Rio)


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