Gabon and the IMF
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Gold in the IMF -- A Factsheet
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Press briefing by videoteleconference|
January 12, 2000
by Michel Camdessus
Managing Director, IMF
in advance of the
Conference of African Heads of State
in Libreville, Gabon
January 18-19, 2000
[TRANSCRIPT PREPARED FROM A TAPE RECORDING.]
MR. IBRAHIM: I welcome you to this multi-site press videoconference of the Managing Director of the International Monetary Fund, Mr. Michel Camdessus.
I would like to invite the Managing Director to make his opening remarks, following which we will take your questions. Thank you.
MR. CAMDESSUS: Thank you all for being with us this evening, and I would like particularly to salute all of you I have already met in your three different countries [Nigeria, South Africa and Zimbabwe].
I take great pleasure today because I am joined by our new Deputy Managing Director Eduardo Aninat, the former Minister of Finance of Chile, somebody who is pretty well known as he has been the Chairman of our Annual Meetings a few years ago, and his contribution to the reflection on problems of development and poverty and equity in distribution of incomes is pretty well known. This is a fantastic strengthening for the IMF, and I'm delighted that he will be with us at our conference in Libreville where we will try to reflect with heads of state and governments from an important number of Sub-Saharan countries on how we can contribute better with new instruments to help your countries in addressing the remaining tremendous challenges of Africa.
Of course, we are hopeful because we have seen during the last few years very significant positive changes in Africa. But it's time now to consolidate these gains. It's time now to recognize that even if per capita growth is positive now in Africa, it is not sufficient to reduce poverty as rapidly as we all want. And at the moment, poverty is present in Africa in truly intolerable proportions.
We have been in a dialogue with your countries throughout these past years, and particularly last year, and you have told us in very clear words that this fight against poverty, this fight for reducing debt is a decisive obstacle to development. These are the issues which must be addressed. These are the issues for which we must prepare a more effective response.
The purpose of the conference in Libreville is precisely to share with you the response to your views. You have told us to try to do better in the response to our reflections on poverty, and to try to be more effective in alleviating the burden of debt on the heavily indebted poor countries. We have been working on that with your governments. We have been working on that with NGOs around the world. We have been working on that with all our membership.
We now see the things better, and we have done our homework, in particular in trying to collect the needed instruments and resources for alleviating debt, and to make this alleviation of debt and new instruments more effective in promoting human development. This is what we are anxious, impassioned, and excited to share with the African countries next week. We don't come with pre-established solutions. We come to listen to your countries and to see with them how to make the best of the opportunities of the moment, and of the new instruments we have in hand for addressing these issues.
I don't want to make my introductory remarks too long. This was only a way of getting started. And I would suggest that without concentrating on any particular country--this is not the purpose of our dialogue today--we reflect somewhat on how to really transform the hopes of this moment, transform the chances of this beginning of a new century into immediate action for reducing poverty, thanks in particular to the reduction of debt.
MR. IBRAHIM: Thank you very much, Mr. Managing Director. Johannesburg, could you please give me the first question?
QUESTION: My question relates to the adaptation of the Poverty Reduction and Growth Facility. Will this be done on a country-by-country basis, or will you have a different facility for the least developed countries?
MR. CAMDESSUS: This will be done country by country after a careful assessment with each country in an open dialogue of the real situation, of the magnitude of the problem to be addressed, and policy framework that will indeed demonstrate to the rest of the world that the country is doing its homework in working to re-establish--or to establish--a solid basis for growth and development.
It will be done country by country and will apply to the 36 poor countries with the heaviest burden of debt. Of course, this relief is sizable, on average, it will amount to reducing by half the burden of the debt of these countries. And the resources we will free that way should, in this dialogue we will have with the countries, be applied to human development spending, adding to the resources the country was already considering to put toward education, health and rural infrastructure. All these are actions that clearly address the priorities in human development.
QUESTION: Are any further gold sales planned to finance debt relief? If so, in what manner will they be achieved?
MR. CAMDESSUS: As you know, we have been extremely attentive in the IMF to the friendly remarks made to us by your government, telling us, "Be careful in selling your gold, to try to solve the problem of the poorest, please don't kill the poor producers of gold by further depressing the gold market."
We have been attentive to this, and the staff of the IMF has been clever enough to find a system that allows us to utilize the increased value of our gold resources and to apply it to debt reduction without any impact in the market. We have done this through bilateral operations with several of our members with whom we are in important financial transactions.
So we will do this job, and indeed we have decided to increase very significantly the amount of IMF gold that will be utilized for this operation. We have almost tripled the resources of gold we are ready to utilize for that, showing to the African countries how determined we are to do everything we can on our own to help alleviate their debt burden. But all of that will take place out of the market and without any possible impact on the price of gold.
So this should be good news for your country, but I must say that we have been extremely grateful for the leadership South Africa has demonstrated in helping us to find solutions while keeping totally unaffected our readiness to utilize as much as possible these gold resources for the sake of the poorest countries.
MR. IBRAHIM: Thank you, Johannesburg. Harare, can I have the first question, please?
QUESTION: There is a perception here in Zimbabwe, Mr. Camdessus--and I think it's important to put the point to you right away--that the International Monetary Fund has [inaudible] because of demands related to military expenditures, demands that are not made on countries like Russia, which is receiving much more funding or financing from the institution, yet it's involved in a war that's very large in terms of scale.
What's your view on that perception?
MR. CAMDESSUS: You are suggesting that the IMF could have a kind of double standard, being lenient on Russia and being tough on other countries, particularly on Africa.
I will tell you that there is not such a thing as a double standard. But let me first start, nevertheless, by telling you one word on why we put such emphasis on trying to reduce to the minimum the expenditure needed for defense needs.
We do that because we know for certain, and the whole international community knows for certain, that war is the worst enemy of development. It was said in the '60s that development is the other name of peace. Today we must say that peace and reduction of military expenditures, which are, by definition, unproductive, are the other name of development.
And so I have endorsed wholeheartedly the plea of the Secretary-General of the UN, Mr. Kofi Annan, to reduce to 1.5 percent of GDP the military expenditures in your budgets, and to try to freeze these military expenditures in real terms for the next ten years with the view of utilizing the resources you would save that way for human development.
This applies not only to Africa, as the Secretary-General was saying, but, in our judgment, to all countries in the world. By reducing military expenditures to the minimum indispensable level, you free resources for health, you free resources for education, you free resources for housing, and you avoid printing money, thus avoiding inflation, which is the most cynical way of taxing the poorest in a country.
So this must be done in African countries and in the rest of the world, and in Russia.
If you look to the evolution of military expenditures in Russia during the time of the programs with the IMF, you will see it going down permanently. And, of course, we know all and deplore the war in Chechnya. But the resources which are devoted to it are not in excess of our program. Of course, they had a bonanza in gas prices, et cetera, which has certainly given them some leeway.
At this very moment, as you know, not for this reason, but for other reasons, our program with Russia is interrupted. What we wish for Russia, as for all countries in the world, is that everything be done to reduce this kind of unproductive spending and to concentrate all energies on peace and development.
MR. IBRAHIM: Now, Harare, the second question?
QUESTION: My question also maybe has something to do with a double standard. There's a perception that the IMF, is influenced maybe by the bigger powers, the U.S. and the U.K., in whatever decisions you want to make. And maybe I could maybe just add one to this: There seems to be a perception here among the business community and other people, other stakeholders, that there is bad blood between the IMF and Zimbabwe. I just wanted to find out what really is the situation and how can this be improved.
MR. CAMDESSUS: Let me take the last question, and let me tell you that there is no bad blood between IMF and Zimbabwe. There is a dialogue, at times a difficult dialogue, as among friends who are not complacent, and we are confronted with very difficult choices. But our relations are good. I have a good and friendly personal relationship with President Mugabe. I salute him. So at this moment, we are working with you.
Recently the authorities have given us a memorandum on the way they see the best solutions to their present difficulties. We are studying this memorandum, and I hope that we will have an opportunity in Libreville to discuss it with the Minister of Finance, who I understand will be there. We want to continue this dialogue.
Progress in Zimbabwe is important for Zimbabwe and for Africa, but the problems are enormous. Inflation is a major concern, and, what I was telling you in general terms about the impact of military expenditure on inflation is a problem of Zimbabwe. This is something which deserves to be discussed and to which we must find solutions.
Now, is the IMF in the hands of the big powers? The IMF is in the hands of its membership. As you know, each country has a voting power that is in proportion to its quota, its share of IMF capital, which is itself determined more or less by the size of a country's economy. On that basis, the United States has 17.4 percent of the voting power. That means that the rest of the world has 82.6 percent. If my countrymen, our friends, our brothers in Europe, were united, it would be even more, something like 30 percent of the capital of the IMF. Nobody says that Europe is controlling the IMF, even if it's a European who is sitting in this chair.
No, depending on the issues, the decisions go in one direction or another. But it's true that the developing countries, when they sit together and they join their forces in what we call here the G-11 group, represent an extremely important part of our membership.
The fact is that, in general, our decisions are not taken by a vote where a majority imposes its solutions on a minority. The kind of wonder in the IMF is that the most significant part of our decisions--and particularly of the most important decisions--is taken by consensus after a long process where people in a dialogue try to understand each other's views and see where the best solution lies. And at the end of the day, all of them coincide in supporting that.
Frequently the Americans suggest good solutions. After all, they are present in many parts of the world. They are very familiar with the international life. But it is not always the case. And many of the important decisions we have taken have been initiated in other parts of the world. This is the most natural thing to observe, but it is worth remembering. The most important decisions, the most critical ones, particularly during the Asian crisis, during the Latin American crisis, the most critical decisions we have taken over whether or not to support this country or another have been always taken unanimously.
MR. IBRAHIM: Now we will move to Abuja. If you could give me your first question, please.
QUESTION: Who initiated this meeting with the African heads of state? Is it the IMF or the African countries that initiated this meeting? As a follow-up to it, how [inaudible] on this debt relief program? Is it through financial assistance or through debt cancellation?
MR. CAMDESSUS: Let me tell you first that what we are trying to launch now in terms of debt reduction and poverty alleviation is not something brand new in a universe where you have had nothing of this kind in place. As a matter of fact, we are operating in a continuum. We have been working with your countries for 50 years, since decolonization and the creation of our institution. And most recently, during the last 15 years, we have been intensifying our work and analyzing with you the problems and discovering more--too slowly, certainly, but discovering with you where the key difficulties lie.
During the last 15 years, we have created here an instrument for loans with zero interest rate, the so-called ESAF, to help you address your adjustment and structural problems. We have been developing very important programs of technical assistance to help your countries in particular with their monetary and governance problems, and now in building central banks, helping them to establish themselves and establish their credibility.
Now, in this framework of dialogue, we have discovered that we have to go further, that if we want to reduce extreme poverty by half, as we have pledged, we must be able to bring the average rate of growth of Africa from 4 or 5 percent to, let's say, around 7 percent and, if possible, more.
How to do that? By a common effort to help your countries in building their institutions, in improving their governance, in opening their economies, in making them more efficient, more productive, and on our side by contributing more effectively to the financing of the operations leading to reduced poverty and leading to the reduction of debt where the burden of debt is so high that it prevents growth from reaching the needed threshold. This is what we are doing.
Of course, a question is there: Who has initiated this? Well, it's a dialogue. It happens that the Libreville conference follows on other meetings we had with heads of state of your countries, that President Bongo [at Gabon], knowing that we had recently adopted all these instruments, wanted to offer us an opportunity to discuss this with your heads of state, to see if all of this is appropriate, see what is the best way of utilizing this to give an extra push to those who wanted to accelerate development in a very open, informal discussion with no pre-established conclusions. We are trying to receive the guidance of your heads of state, for them to have an opportunity to tell us what they don't like in what we do, and then to continue the work.
MR. IBRAHIM: Abuja, now you are next for the second question, please?
QUESTION: What in complete terms is the goal of African countries before the issue of poverty reduction and debt overhang can be resolved once and for all? Thank you.
MR. CAMDESSUS: With poverty reduction, you have a commitment of the international community, developed countries and your countries together, to reduce extreme poverty, poverty of those who are below $1 a day by half by the year 2015. This is the Copenhagen Conference conclusion, and we must strive for that, which implies accelerated growth in a sustainable way with no inflation, in an open integration in the world economy for all African countries.
On debt, there is not such a thing as an objective of cancelling the debt of the entire world because this would probably be the end of financial operations in the world and of financing for development.
What we have pledged and what we are trying to do is for the 36 heavily indebted poor countries, the majority, the big majority of them being in Africa, on average to reduce by half the burden of their debt through the reduction of the debt they have with us, with the Paris Club, with bilateral donors. For that, we have created the instrument in the IMF. The World Bank is also extremely advanced in putting in place the needed financing, and the Paris Club is taking the appropriate decisions.
This being said, it must be done in a framework where the policies are appropriate and where any new indebtedness contributes to creating productive investments and then wealth and not only unproductive indebtedness, because at the time you reduce debt, you don't want a new debt to be accumulated that you would have to pardon later on. New indebtedness is welcome provided it helps to generate growth, human development and prosperity in your countries.
So this is the framework in which this reduction of more or less 50 percent of the debt of the poorest is being organized.
MR. IBRAHIM: We will travel now back to Johannesburg. Johannesburg, round two, question one, please?
QUESTION: Mr. Camdessus, my question is not related to the summit, but it's directed to you. Has there been made mention of the person who is going to take over your designation?
MR. CAMDESSUS: I share your curiosity about that. I am eager to see a man of high standing and deep commitment to the international common good appointed for this job. I trust in the community of nations to find this man and he can be sure to find here in the IMF a group of people, among them Eduardo Aninat and all the staff that is with me today, ready to help him to take the helm and to continue serving development in the world. But this being said, I cannot tell you that I--at this very moment, very sincerely, I don't know who this gentleman or this lady will be.
MR. IBRAHIM: Question two, Johannesburg, round two.
QUESTION: I want to find out, when do you hope to see this program up and running, and what type of results do you want to see?
MR. CAMDESSUS: The facility on debt reduction and poverty reduction, will be running right away. We have obtained from our Executive Board unanimous approval for this, the creation of this instrument. These decisions have been taken between October and December last year. The instruments are there, and now we are eager to get started.
But we are very happy to have an opportunity before adopting the first new programs in the next few weeks to hear first the heads of state of Africa and their governments and civil servants tell us how to utilize the facility, and to guide us in getting started in the best possible way.
May I add that as far as debt reduction is concerned, the operations have already started, and that I expect that in the next few weeks, possibly before the end of this month, one or two African countries will be declared eligible and start benefiting from it. Our ambition would be to have three-fourths of the eligible countries be declared eligible this very year. You see that this, in view of the complexity of the calculations and of the negotiations that must take place, this is a challenge. We take this challenge.
But we are extremely happy to have this Libreville conference to be able to tell the heads of state of all these countries that can benefit, "Please don't lose a single day, let's get started, let's do the job. This is real money for your development."
MR. IBRAHIM: Harare, can I have the first question in round two, please?
MR. CAMDESSUS: We are putting pressure on all the countries of the world--European, Americans, Asian, African, all of them--to recognize that in this brave new world, the winners are those who are most courageous in opening their doors to external trade and in dismantling all artificial schemes, subsidies and others, which distort international trade.
A few minutes ago, I was with the Canadian Minister of Trade, and the purpose of the conversation was to join forces in trying to have the Seattle Round of trade negotiations to be started again and to try to make sure that by opening the barriers to the exports of African countries, and particularly of the poorest countries eligible for debt reduction, we are able to give them a real chance for development.
I went to Seattle and I spoke only for three minutes to tell the world, "Look, we are just doing something great in terms of debt reduction, reducing by half the debt of the poorest. If we don't reduce fully the trade barriers to their exports, what we will have done by debt reduction will be just precarious and minimal; whereas if we are at the same time opening up the barriers to trade and reducing debt, then with good policies, proper governance, fighting against corruption--all these reforms you are considering in your countries--we can fulfill the pledge we have made to undertake to truly reduce poverty in the world. But you need both things at the same time: trade openness and debt reduction and appropriate financing.
But I must here acknowledge that many African countries, in the framework of their programs with the World Bank and ourselves have already lowered their barriers to international trade, and at times more rapidly and more decisively--I would say more honestly--than a number of industrial countries. These examples must be kept in mind, and we are committed on our side to help these countries who opened their barriers, to help them with our financing and our technical support. But we also must continue telling the industrial countries that they have not completed their work only by reducing their claims on the poorest countries. They must complete this effort at debt reduction by trade openness.
MR. IBRAHIM: Question two from Harare, please?
QUESTION: Lately, dissenting voices have been heard within the IMF and the World Bank as well, criticizing our approach to the whole concept of development, for instance, the emphasis on the low inflation--the single-digit inflation--and the unnecessary emphasis placed on free markets because there is belief that there is a role for the state to play in guiding the market, there is room for the state to intervene. What I'd like to know is: Are we likely to see a paradigm shift within the IMF?
MR. CAMDESSUS: Thank you very much. There are plenty of things said about our programs, and many things which are based on things which have possibly occurred in the past, but which I believe are not as precisely accurate today.
Yes, the IMF is for low inflation. Yes, the IMF and the World Bank are for free markets. Yes, the World Bank and the IMF want to help your countries to modernize the state, to have smaller but better government. But we want to do that why? First, because, as I was telling one of your colleagues a minute ago, because inflation has never generated development, and it has always been the most cynical form of taxation--a way through which the poorest are taxed and the rich in the society escape this form of imposition.
Yes, we are for free markets because we know that the free markets are the winners; they are those who export and grow more and, through the stimulation of competition, improve their conditions. And we know also that when the state is ruled by good principles of governance, limits its intervention to where it has only the possibility of doing a good job, then the countries have resources for doing what is needed and for pushing development.
But, of course, this must be done in each country with due regard to the local possibilities and the local circumstances. You cannot in all countries, as it was done in Brazil, reduce inflation from the thousand percent level to the single digit in one year or two. You cannot open all trade barriers right away without due consideration to the very fragile economic or industrial situation. You must do that with proper phasing and proper international support.
And the same thing for the modernization of the public service. It takes time, but because it takes time, it must be started right away. And in discussing programs with your countries, the discussions are exactly about that. We agree on the objectives: low inflation, free trade, good governance. The way we go there, we try to determine that in a dialogue with your governments.
MR. IBRAHIM: We move on now to Abuja. Abuja please, question one, round two.
QUESTION: I would like you to discuss the economic policies of the present government in Nigeria and tell us whether the environment is favorable to IMF poverty alleviation and debt reduction efforts?
MR. CAMDESSUS: We are in very close contact and exchange with President Obasanjo's government. I am personally involved in that and with a very close dialogue with your President, I must tell you that we admire what he wants to do. We admire his efforts in reforming the administration of the country, in restoring honesty and good governance in all sectors of public life, and, indeed, his efforts to keep deficits low, to get rid of obstacles to the proper working of the economy. We are quite determined to support his efforts with all our means, directly with our financing, indirectly through our influence on the Paris Club and on the creditors of your country, to make sure that the internal efforts of the country are supported by the international community and, indeed, trying to create for your national effort the proper external environment that you need.
In the present circumstances, I must tell you that I see this moment truly as a window of opportunity for Nigeria. I visited Nigeria, as you know pretty well, not long ago. I met all segments of the society. I heard your impatience, and particularly the impatience of women's organizations in Nigeria, for this new start of your country to create a better future for the children.
Let me tell you how committed we are to that and how delighted I am to have occasion in the next few days to meet again with President Obasanjo and his government, and to have other countries in Africa benefiting from his inspiration.
MR. IBRAHIM: Question two from Abuja, please?
QUESTION: How best can a government implement an unpopular policy which is good for the economy but has a very high social cost, especially for the poor? For example, deregulation of the petroleum sector in Nigeria.
MR. CAMDESSUS: It's true that there are measures the government must contemplate that in the very short term are very harsh and can have immediate negative short-term impact on the population and even among the poorest segments of the population.
What I see with pleasure is how committed the government is to try to alleviate the plight of the poorest and to try to shelter the poorest as much as possible against the temporarily negative consequences of the needed measures.
But I must tell you that in the longer run, measures that are harsh in the short term, such as the deregulation of the petroleum market, are indispensable for the country and will generate, first, normality and, second, prosperity in the country.
Deregulation has a purpose, which is to modernize and to get all these unacceptable things to disappear and to lay the grounds for a more normal situation and for the economy to grow.
MR. IBRAHIM: We will go now back to Johannesburg for round three.
QUESTION: The planned sale of gold, how much will be sold off market, and when will the sale start?
MR. CAMDESSUS: As I told you already, these operations are not sales. They are off-market transactions with all the central banks of the system. They will involve 14 million ounces of gold, and so will provide a significant part of the total alleviation of the debt of 36 countries by more or less half.
The other part of the financing will come from 91 countries accepting to help us in this operation by either giving us directly from their budget the needed resources or by placing at our disposal, or giving us, resources they had here, in special reserves in the IMF.
All of that together will allow us, without impact on the gold market, to provide this debt alleviation we are talking about.
MR. IBRAHIM: Going to Harare now for your question for round three, please?
QUESTION: In Zimbabwe, we have monopolies, yet the IMF insists on market forces and no price controls. How do you expect the government to deal with that situation?
MR. CAMDESSUS: It's a very difficult situation indeed. You have these monopoly situations. They have been there for a long time. Behind monopolies, you frequently have vested interests, situations that, to say the least, lack of transparency and generate inefficiencies in the economy with the local producers receiving less money for what they produce than they would in a framework of market rule, and the state frequently having to intervene in less than optimal ways due to this situation.
Together with the World Bank, we are trying to help your government in finding the best way of dealing with that, and already significant progress has been made in several sectors.
We believe that this will take time, but I would like to make the point that trade liberalization, which is also something that will have to be contemplated and is being contemplated in your country, will increase competition, even in countries such as yours where there are monopolies. The pressure of this competition should be a powerful instrument in progressively moving to a much more normal functioning of your economies.
But I recognize it's complicated. It must be done with the full support of the World Bank and the proper technical assistance and, indeed, with the appropriate time, but without losing time.
MR. IBRAHIM: We move now on to Abuja. Your question for round three, please?
QUESTION: I would like to know whether there's an agreement among all member nations that constitute IMF for this debt relief or reduction, because there is a view that Nigeria in particular is a rich nation so they will not qualify for any debt reduction.
MR. CAMDESSUS: Well, of course, if you could reduce the debt across the board, it would be extremely nice for everybody. But the question is: would it really contribute to an improvement of the situation and durable development?
Let's imagine that ten years ago this had been done and nothing else changed. New debt would have substituted for the old debt, and today we would be in exactly the same situation.
So in the partnership of the international community, we believe that there is something better to do, namely, for the industrial countries to go for very significant debt reduction when the burden of the debt is very high, but in the framework of a program, where the countries pledge and demonstrate that they will get rid of the factors in their life which generate unproductive debt, and provided they pledge that the resources they will spare, thanks to the alleviation of debt, are being devoted to human development, which is the best thing you can do in a country.
So there is an agreement in the international community for doing that, while nobody believes that across-the-board debt reduction without any kind of program of conditions could do the trick. So there is an agreement on that. Industrial countries are ready to make the important sacrifice this implies, but the challenge for you is to utilize these resources for growing even better than expected.
MR. IBRAHIM: We'll move on to Harare. A question from Harare for round four?
QUESTION: How much does the IMF understand the economies of the countries with which it deals in its programs?
MR. CAMDESSUS: We do everything we can to understand our members. Remember, please, that we are a cooperative institution, that we are all countries of the world together trying to address together the problems of each individual country.
We have been in a dialogue with your country since the very day your country became independent. Since that time, every year our people, our staff here, have traveled and visited your country several times a year, spending every time one, two, three weeks in analyzing the situation.
We have developed this dialogue. You have helped us to understand you, and we try to help you to understand the rest of the world and the complexities of all these problems. The dialogue is intense.
We don't pretend to understand you 100 percent. Every day we make progress, as you make progress in understanding the rest of the world. But we talk. We exchange information. We tell each other everything we know, and we are in this common effort to find the best solution.
So here we are, but, believe me--and talk, please, with your friends in the Ministry of Finance or in the Central Bank and ask them if they have the impression that we are not really attentive to every economic or social or human development in your country. I would be surprised if they were not to tell you that they have real good friends in the IMF and in the World Bank.
MR. IBRAHIM: Abuja, your question, please, for round four.
QUESTION: When funds are stolen from the government treasury, the regular man on the street feels the hardship more. And with your poverty eradication program you have been talking about, how is the IMF going to help the regular person on the street from this kind of situation, especially in Africa?
MR. CAMDESSUS: The man in the street in your country, but also in many countries in the world, including mine, has every reason to be concerned and worried about the use that is made of the public money. In your country, the problem of corruption, of misuse of money, of people able to empty the coffers of government or oil company for their own purposes has been at certain moments a very serious problem, and the man in the street must be reassured about that.
And we on our side support the efforts of your President and of your government who have truly undertaken major efforts to clear the deck and to establish transparency where you had all forms of under-the-table transactions, which were another way of misusing the too scarce resources you have.
So we help your government to establish the proper procedures, to simplify the procedures, to make them transparent, for you to know where the money comes from and where it goes. It is complicated. It will take time. But what we see being done encourages us very much, and you can be sure that our effort, and indeed the effort of all the international community dealing with you, will be supportive of these efforts.
MR. IBRAHIM: Since we have no further questions from Johannesburg, I will just go back quickly to Harare to check whether there is any further question.
QUESTION: As a follow-up to the previous question where you wanted to find out whether you understand the economies of the countries you are dealing with, Zimbabwe's position is that inflation is going high and maybe the economic environment is not that good. And the perception is that maybe the IMF has a lot to do with the problems that we're having now because it is being said that the government is [inaudible] to what the IMF is prescribing to the government. And now the IMF is insisting that the government own up, and what happens is the economy is still getting less and less and the people are suffering.
Wouldn't the IMF want to find a compromise to such a problem? Because the blame will now fall on the IMF and the government, and yet the people will be suffering.
MR. CAMDESSUS: We have been working with your government for a pretty long time, and I must recognize that we are eager to put together with your government a satisfactory compromise.
All programs, as a matter of fact, are compromises between what you would see as the optimal solution from the point of view of, let's say, the good economics and what a government can do effectively at a given moment in time in a very complicated environment such as you have now in Zimbabwe.
We are ready for that, and we are working hard for that. The difficulty is to make sure that there is enough in this compromise, there is enough in this new program, even if it is optimal, to weather the bad trends.
You have a very dangerous trend toward more and more inflation. You have a dangerous trend toward too high public expenditure. You have still structural problems that prevent the country from growing at the level you need to grow to really make a difference in alleviating poverty.
So we need to find a way of achieving a package where you will have enough sound monetary policy, enough good budgetary discipline, enough key structural changes for you, the Zimbabweans, and for the international community to perceive that now something is changing for the better--not necessarily on the path, with the speed the IMF would like, but, nevertheless, a distinct step in the right direction. And the art of establishing a compromise is to arrive there, because if you have just a few measures that indeed do something but don't change the trends in the right direction, then the international community will say, Why are we spending money for such a limited result?
So we are working to find where the optimal compromise, in view of the situation, can be found.
MR. IBRAHIM: Now we go to Abuja for our final question, please. Abuja?
QUESTION: What can the IMF and the World Bank do to assist civil society, who can assist directly the efforts to reduce poverty?
MR. CAMDESSUS: I'm delighted you put me this question because one of the key changes we are introducing now in our methods is precisely to suggest to governments to base our programs, which means our financing and the financing of the World Bank, on a program, on a strategy paper, which would be established by your government with our assistance as needed, but in an intense dialogue with the civil society and, of course, with the elected bodies of your public administration and government.
This is what we want to do. We suggest with great urgency to your governments that they open this dialogue, to invite contributions from civil society. We believe that they have something to tell us, to tell you, about the needed priorities, and because we believe that if a program is established that way and then monitored in its implementation by the public, by the civil society, the chances of sustainability, the chances of maintaining the effort long enough, will be increased.
So this is what this new facility is all about. The debt reduction, the new facility for poverty reduction and growth will be based on this kind of document established with the participation of civil society. And I know pretty well that in your country the civil society is quite well represented, well organized, and we look forward for their contribution.
IMF EXTERNAL RELATIONS DEPARTMENT