Transcript of an IMF Press Conference by Ministers of Finance on Africa’s Prospects
September 23, 2000
Saturday, September 23, 2000
Tantely R.G. Andrianarivo, Prime Minister and Minister of Finance and Economy, Madagascar
Abdoulaye Bio Tchane, Minister of Finance, Benin
Luisa Dias Diogo, Minister of Planning and Finance, Mozambique
Katele Kalumba, Minister of Economic Development and Finance, Zambia
Tertius Zongo, Minister of Economy and Finance, Burkina Faso
MS. MBOTO FOUDA: Thank you for coming. I am Lucie Mboto Fouda from the External Relations Department of the International Monetary Fund, and I am delighted to welcome all of you to this press conference today on Africa's economic prospects.
The briefing offers a chance to hear the views of some of the African countries at the center of the debate on poverty reduction and debt relief. We are pleased to have here today the Prime Minister and Finance Minister of Madagascar as well as four other Ministers of Finance.
Let me introduce our guests. On my far right, we have Minister Tertius Zongo, Minister of Economy and Finance from Burkina Faso. Next to him is Mr. Abdoulaye Bio Tchane, Minister of Finance from Benin. And close to me is Mr. Tantely R.G. Andrianarivo who is the Prime Minister for Madagascar and Minister of Finance and Economy. In the middle over there is Mrs. Luisa Dias Diogo who is Minister of Planning and Finance from Mozambique, and Mr. Katele Kalumba, who is Minister of Economic Development and Finance from Zambia.
Mr. Prime Minister, you have the floor for your opening remarks.
MR. ANDRIANARIVO: Thank you very much. And as I am here also as Chairman of the African Caucus, representing French-speaking countries, let me then continue in French, if possible.
[Interpreted from French.] First of all, on behalf of all African countries, and specifically the Ministers who are present with me in this room and here at the head table, I would like to thank the International Monetary Fund and the Executive Board for having organized this press conference. This is perhaps the fifteenth time that I have been at the Annual Meetings, but it is the first time as a Minister. I have had other tasks in the past, but this is the first time we have had a press conference to be able to tell you more about Africa, its prospects and its aims, and also to tell you about the constraints that we have to face up to attain those objectives.
Talking about Africa, I am sure that the journalists are well acquainted or know as much as we do and perhaps more than we do in certain areas. Therefore, I shall be brief in my presentation and I shall refer to the need and the wish that we all have, namely a wish that Africa can play an increasing important role within the globalization trends during this 21st century.
This is why we have the feeling that we are honored indeed, together with South Africa, to be chairing the Board. This is particularly important because it means that we can talk more about Africa during these meetings. This is all the more important because the problems that we face are enormous and numerous. I don't want to talk about problems because we are here to talk about future prospects.
I would like to refer to one conviction across the world, namely that Africa is a continent with very interesting prospects. Therefore, we need to have time and resources to enhance these prospects and to develop the important human and natural resources available in the African continent.
I would also like to underscore the point that Africa is a continent with a whole range of countries. There are more than 50 countries represented at the World Bank and IMF. Statisticians will say that that is more than a quarter of the world representatives vis-a-vis the Bretton Woods institutions. And this indeed is a sign of richness and wealth, and we wish to share our knowledge with the IMF and the international community.
We also would point out that Africa is a continent which is talked about a lot for many reasons, its diversity and also because of the specific problems which exist across the continent. And this is an important point, something which the whole international community and African countries are looking at; for example, the problem of HIV/AIDS and also the impact of that problem in Africa and the need for international solidarity and concerted action. We hear a lot said about Africa in other areas too: several countries and regions in the African continent, particularly in 2000, have been affected by drought and by floods.
We have heard that Africa is a continent where there is a lot of visibility, both political and social. Leaders have taken up the challenge at the highest level with a view to having a more stable Africa in the future so that development prospects will be enhanced and so that the energy of African countries and their partners can be directed essentially toward the development process and poverty reduction activities.
Therefore, in my initial remarks I would like to draw the attention of all those present to the fact that very often we African leaders, whenever people talk about Africa, hide the good things about Africa. And this is why we, our respective governments, are committed to the poverty reduction process. And this is why we wish to mobilize the international community and also development partners and the Bretton Woods institutions so that all efforts can be directed towards attaining positive change. And we hope that this will be directed towards helping Africa, ensuring a better future for all and for Madagascar particularly.
Obviously, I talk about Madagascar even though this isn't my purpose here. Madagascar is one of the 50 African countries which is on the road to growth and development. Obviously, we have difficulties such as Mozambique has and other countries. We have had to face up to natural disasters, and this has had an impact on our growth prospects. Nonetheless, the management and organization which is being implemented to deal with these different calamities means that we are in an ascendant phase as regards economic growth and we are achieving macroeconomic stability. This is a phase when we are opening up increasingly to the outside world. And Madagascar is seizing all development opportunities and partnership opportunities, be it with traditional institutions or with development institutions, for example, the NGOs.
Therefore, we find ourselves in a situation where we can look optimistically at many factors. And we see there are many more reasons for optimism than there are for checking enthusiasm and hindering development optimism. Therefore, we are at a stage of conviction and positive attitude toward the future prospects.
This is what I wanted to conclude. This is the feeling of the Africa group and particularly Madagascar. And obviously, I shall be very happy to answer any of your questions once we have made our presentation.
Thank you very much indeed.
MS. MBOTO FOUDA: Thank you, Prime Minister.
I will take your questions. Yes, sir.
QUESTIONER: I was just wondering if you could talk briefly about the impact that the rise in oil prices has had on your economies. I know some African countries are oil producers, but most are not. And given that the EU, the U.S. and Japan claim that they are suffering great hardship as a result of this rise in prices, I am wondering what kind of impact it is having on your economies and whether you think that OPEC is the solution to this problem, or whether there are other problems with the way oil is distributed that have led to this difficulty.
MS. MBOTO FOUDA: Would any Minister volunteer here? Maybe Mr. Katele Kalumba.
MR. KALUMBA: Thank you. Perhaps one could look at it from a country-specific example maybe to highlight the responses to the situation. In a country like Zambia, where we have been instituting very stringent structural reforms as a result of our participation in the Fund program, we have succeeded in doing some things right, including bringing down inflation from 170 percent in 1990 to 20 percent at the end of 1999.
But it appears now at the time when we are getting into the Poverty Reduction and Growth Facility program that the trend that we have been setting in fighting inflation may be reversed. We are seeing a great amount of pressure on our economy as a result of increases in oil prices. Inflation pressures are emerging. And we think that unless there is global solidarity in addressing the question of oil prices, the countries that are just trying hard enough to get out of the difficulties of adjustment in their economy may face even greater difficulty now than before.
So it is important that the question of oil prices be looked at from not just the oil-producing countries alone. I think the leadership provided by the United States, the United Kingdom and EU countries, which have spoken on the issue, need to be supported, that we need to have greater global solidarity on addressing the question of oil.
A country like Zambia does not produce oil. We depend on imports and we are taking a greater part of our natural resources in bringing in oil now. At a time when we have privatized the mines, it is difficult to get the dividends now into social sector expenses when oil prices have gone up. It is very difficult now. We know that unless we are helped by the global solidarity on oil prices, I don't think we would make very great advances in economic growth in the coming few years.
MS. MBOTO FOUDA: Mr. Bio Tchane has something to add and then the Prime Minister.
MR. BIO TCHANE [Interpreted from French]: Thank you. I would like to endorse the statement made by my colleague. Indeed, we need strong solidarity in this matter, because I come from a region where we are implementing reforms. For five years now we had a strong devaluation of our common currency, and we have brought down inflation from 34 percent last year, and at the end of 1999 inflation was running, depending on the country, between 1 percent and 3 percent.
The recent increase in oil prices and associated products has more or less pushed up threefold the cost of supplying these products in our countries. At the same time, in implementing structural reforms in our country we introduced more flexible mechanisms as regards fixing the price of oil products for the consumer. And there has been a direct link between the pump price and the price on the international markets. And this has meant that many of our countries find themselves in a very difficult budgetary position, because you not only have to finance this increase in oil prices, but you also have to ensure that the population is able to cope with this price increase. Therefore, there are lots of countries which have had to introduce subsidies, considerably high subsidies to cope with this increase in oil product prices.
Therefore, as a result of this, we need to have additional assistance to finance all of this, and we are very happy to note that the World Bank has made proposals to achieve this. World Bank President Wolfensohn announced a few days ago that the World Bank was ready to contribute to the financing of these additional costs which are adding to the difficulties of our countries. And this is why we would be very happy if many countries, particularly the OPEC countries, could make an effort so that international prices for oil products be placed at a level which is acceptable to our countries.
But, at the same time, we are aware that it is a raw material for our countries. It is sold by many countries, including African countries. I am thinking of Nigeria, for example, which is a neighboring country to mine. I know that the majority of the Nigerian population also has tremendous needs, both in the area of health and education and also as regards the availability of public services. And, therefore, this country obviously is quite happy with the increase in oil prices. But I think we need to have solidarity even between the exporting countries, many of which are poor countries, and also the consumer countries which are vulnerable such as ours.
MR. ANDRIANARIVO [Interpreted from French]: Thank you very much. I would like to make a sort of general comment.
The African continent is a continent which exports a lot of raw materials and frequently we say that we need stability as regards exports. Now as regards oil, we are happy for the exporting countries, which have managed to increase their income. When you see this increase up to $35 per barrel, this is a factor. And in Africa too, we also need to have a certain amount of stability, particularly as regards trade.
We would like to have better prices for some of the other commodities that we export. Many countries export robusta coffee. I don't know what is the situation for that coffee at the present time. Therefore, world trade needs to stabilize the cost of raw materials. It is good for the export countries when prices go up, of course, but I think stability itself is more important.
My second comment is the following. It was said that African countries should reduce their poverty. We say that we need to have the basic raw materials to reduce this poverty. This is based on stability, economic and political stability. If prices go up too much--and I would endorse what has been said by my colleagues--in Madagascar we have increased the prices of fuel between 70 and 100 percent over the last two years. Prices have gone up from $10 up to $35. And we have increased our prices in the country between 70 and 100 percent. It is very difficult for the population to bear this, but it is necessary. Nevertheless, it is a brake or a check on our poverty reduction activities and it is certainly a brake on what we are doing.
But if at the same time you are implementing structural reforms, this again has an impact. We are privatizing at the present time, and this is having an impact, because the conditions for privatization are being made even more difficult. When we tell the population about the good effects of privatization and structural reform, this is going to be felt in two or three years' time, but at the present time the population is aware of the increase in oil prices.
The amount of our budget allocated to transport is already low, and it is going to cost more. Therefore, it will have this negative impact on our budget. Therefore, what I think we should bear in mind is that we need to strengthen international solidarity so that prices can be stabilized, not only oil prices, but prices of commodities which are the basis of international trade.
It will be on the basis of this stabilization that we will be able to carry out modernization activities or promote diversification, where necessary. These are the comments I wish to make about oil prices.
MS. MBOTO FOUDA: Madam?
QUESTIONER: We have been talking a great deal about poverty and the rising oil prices. I think we should come back to what the Minister of Benin was saying about the need for solidarity. I wonder whether the tendency toward subregionalization in Africa would be a solution to that. What do you think the impact would be, and what is the position of the IMF and the World Bank on that?
MS. MBOTO FOUDA: Minister Bio Tchane?
MR. BIO TCHANE [Interpreted from French]: I am not sure the question was addressed to me specifically, but I'll try to answer. In Africa, one of the important things we are trying to do today is to build economies that show a greater solidarity. So on a continental level and also on the level of the subregions, we are in the process of developing organizations. For example, in the Western African countries, we have the economic community ECOWAS. There is also the Economic and Monetary Union for the West African countries which involves eight West African countries, most of them French-speaking.
What is important in this process is to realize that no country in Africa, whatever its size, is sufficiently large to be able to solve all of its problems on its own. In spite of globalization, I think we see throughout the world that countries are seeking a regional identity. Look at NAFTA, for example, in North America, and the European Union. It is a worldwide trend.
So we are trying to create greater economic and political solidarity, not only amongst the governments but amongst the people of the different regions. That I think is what is important, and in the long run, that should lead to greater solidarity within the entire African Continent. We have already held a number of meetings where we have been able to discuss this. Just a few weeks ago in Togo, for example, our countries agreed to promote greater solidarity and greater African unity.
I think if we had more political solidarity, we will feel the effects economically as well. In developing subregional organizations, particularly in Western Africa, we already have a number of economic mechanisms that we are developing. At the same time, I think it is important to note that the World Bank and the IMF are now beginning to understand, I believe, that we want more united and more solid economies. We have discussed this with the authorities of the World Bank, and we have exchanged views on our experience, because I think neither the Fund nor the Bank have the most appropriate instruments to help us to progress. The World Bank doesn't necessarily have the instruments we need to implement the policies they advocate.
A moment ago, the Prime Minister was speaking of the HIV/AIDS issue. If we really want to come to terms with the HIV/AIDS issue in Africa, we will need not only national programs but also regional and continental programs, because people travel about; they don't stay in one place. How can you combat HIV in one country like Benin, with 6 million inhabitants, for example, when next door you have Niger, for example, with a much larger population. People travel about; people communicate with each other.
So I think it is essential that the World Bank and the Fund and other institutions that provide funding should join us in our regional integration movement, because we need the type of instrument that is appropriate to the policies we want to put in place.
MS. MBOTO FOUDA: Next question.
QUESTIONER: I have a question for the Minister from Mozambique and maybe to some of your colleagues if they also want to comment.
As far as the IMF's program to Mozambique was concerned, there was a lot of controversy over the whole idea that it included a cut in the sugar tariffs. Given closed markets in Europe and the United States, is it appropriate that the IMF is asking countries in Africa to lift sugar tariffs as a condition for lending?
Then, as a second question if I may, do you agree with the comments from Jubilee 2000, from Oxfam and others, that HIPC debt relief is not actually helping half as much as it ought to be?
MRS. DIOGO: Thank you very much.
On sugar tariffs, we have solved this problem some weeks ago after a long period of discussion. The sugar tariffs issue is related to the problem of listening. We had the problem of cashews because we didn't manage to have a good discussion with the World Bank. They didn't listen, and we had the problem that we had to close the factories. Now we are liquidating a great part of them.
On the sugar policy, we managed to discuss and did listen, and this issue has been solved.
On the issue of Jubilee 2000, we think that this is a process. Five years ago, we couldn't talk about the HIPC Initiative. Now we are talking about the enhanced HIPC. We believe that if we continue working on this initiative, we can improve it.
So I think Jubilee 2000 is doing a very good job in terms of showing what should be improved in the process, because it is a process, the process of understanding, the process of solidarity, the process of solving the problems in order to avoid worse problems for the future. If we don't solve this problem of debt in those countries, we are going to have many more problems than we have now.
So I think Jubilee 2000 should continue working in the way they are working and exert pressure in order to improve the HIPC Initiative.
MS. MBOTO FOUDA: Minister Zongo would like to add something on this very specific and very sensitive issue of HIPC, and then, Minister Kalumba.
MR. ZONGO [Interpreted from French]: Thank you.
Just a quick comment on poverty reduction. As the speaker was saying in her question, we seem to be far from the mark as yet, but I think it is essential to note that at least the initiative has been taken. A number of years ago when we talked about multilateral debt, no one would have believed that anything would have been done, and it was a taboo subject. People didn't even talk about it. Nowadays, we do talk about it, and we even have a facility to do something about it. I think that's an important thing in itself.
Secondly, the way debt is being dealt with has brought the institutions to deal more with the whole issue of poverty than in the past, because up until now, we kept talking about economic stability and macroeconomic indicators. But nobody lives on a diet of macroeconomic indicators. Nobody lives on a diet of inflation rates or bringing down the unemployment rate or establishing a balanced budget. That doesn't give you any nourishment. People live on concrete results. We need to see the concrete results of economic reform. We need to see the benefits that that brings into people's daily lives. And I think we have to realize that it is not enough just to establish a balance. You need to have good fundamentals. It is not enough to continue to say that the fundamentals are looking good, the macroeconomic conditions are good. We have to deal with people's daily lives and what they have to eat.
I think it is important now that we are stressing debt reduction and poverty reduction, which means that implicitly, we all recognize that the stabilization policies we have been working on have not produced the expected results, and I think that is important. There is an awareness there, and I think there is an awareness that we have to do something about the most underprivileged portions of the population.
Also, the HIPC Initiative, I think, has led the institutions to show a bit more humility, because nowadays, I think people realize that if we want to improve the situation of the population, development efforts have to be country owned. Consequently, poverty reduction strategies have to be based on policies which are worked out by the government of the country itself. And if you look at the Bank and the Fund, you will find that they say that they do not approve the programs; they examine them, they assess them, but the programs have to be adopted by the countries themselves. And I think that's a very good thing; it's a very good process.
As these policies are developed, obviously, it is going to be a participatory process, and that means that our governments can become involved in ownership on two levels. First of all, the government itself feels that it is in command, and secondly, the population has a sense of ownership.
Apart from that, yes, the fact that we talk about poverty reduction is a good thing in itself. But what have the concrete results been? What are the hopes for the future? The questions remain. We haven't yet solved the problems of funding this initiative. It is still an issue. We don't know where the money is going to come from. The initiative has led to the development of a global framework that everyone agrees on, and the development of national policies which we all agree on. But we still don't know exactly how things are going to work in practice because all the donors have their own ideas. But there is only one single country-owned policy.
So to be brief, I think the intention is good. We still have some problems with implementation. We may be a bit discouraged. But nonetheless I think we have already achieved something. We have to go a bit further. I think we have a good basis for establishing a partnership which is more aimed at the needs of the population. And now it is up to all of us to ensure that our people live in greater security.
MS. MBOTO FOUDA: Minister Kalumba?
MR. KALUMBA: I'll try to be brief.
First, I'll ask Ministers of Finance not to be ambivalent about all that Jubilee 2000 is doing. I think they're doing a great job. They are forcing issues on the agenda, which is allowing institutions such as the Fund and the Bank to think seriously about what the general population out there thinks of issues of poverty, issues of debt.
I think we acknowledge that, yes, the enhanced HIPC Initiative or Framework is a good thing, but more needs to be done. Out of the 20 countries that have been on the list eligible for HIPC, only one so far has reached completion point--Uganda. That is a very slow pace. I don't think we should allow that to continue. I think the activities of governments should be complimented by activities such as those of Jubilee 2000.
Secondly, I would like to just say that I think we need to reduce loan conditionalities. There are too many conditionalities, including now, we have learned, first, a three-year track record under the HIPC program in order for you to reach decision point. That track record, in the face of what we are just talking about here--oil shocks and all kinds of shocks, conflicts, AIDS and so on--most governments are finding very difficult to maintain a consistent record for three years in order to be eligible for reaching the HIPC decision point.
Two, the cumbersome and long participatory process. Yes, participation is good. But we need to be able to examine whether the preparation of Poverty Reduction Strategy Papers has not been made too complicated, too cumbersome and too costly, and perhaps become a delaying strategy for most governments to reach completion point.
I know that my colleague from Benin is very good at advocating most of our positions, so I'd like to stop here, but I want to applaud what Jubilee 2000 is doing. I am sorry that I am not where they are and that I am here.
MS. MBOTO FOUDA: Thank you.
QUESTIONER: I would like to ask whether the African delegation here or the IMF is raising the issue of support for the Financing for Development Conference, which the UN is organizing, and the (inaudible), because I think it is very important that here at the level of the IMF, the matter be raised, because I have been observing the (inaudible), and it is very weak in terms of support for the 46 least-developed countries, of which a majority are African countries.
So are you going to put some pressure on the IMF to support those two conferences and strengthen your delegations at the United Nations?
MS. MBOTO FOUDA: Would Mr. Kalumba volunteer for this, also, please?
MR. KALUMBA: Chair, let me confess I don't have information on that question.
MS. MBOTO FOUDA: Does one Minister here have information on this?
MR. ANDRIANARIVO [Interpreted from French]: It is true that a number of international organizations are dealing with development nowadays. There is the World Bank Group, the IMF, and obviously, the United Nations organization as well. And I think that I'm not the only one who finds that we often receive visits from experts who come to see us and suggest what we can do to reduce poverty.
There seems to be a great deal being done to mobilize resources of the institutions, whether they be the Bretton Woods institutions or others. The HIPC funds don't all come from multilateral banks. You have to find resources also within the specialized agencies of the United Nations, whether it be the World Health Organization or the Population Fund or whatever. So there is a great deal of effort involved in mobilizing funds.
What is important for us is to ensure that all of these efforts by the different international organizations should be consistent and to ensure that we, for our part, will be able to use the will to do something about poverty reduction in a rational fashion so that additional resources will be made available in order to enable us to implement our programs, because we have developed programs, but now what we have to do is to find the funding necessary to implement them so that they can bear fruit.
So we need a great deal of consultation and cooperation amongst the different international organizations, and also, the organizations must better understand what is being done by our respective governments. Obviously, the PRSP is a vehicle for mobilizing resources, but there has to be an awareness of the different development programs put in place. That's what I wanted to say, not just about the United Nations, but about all the international organizations in general, whether it be the World Trade Organization or the specialized agencies who are promoting women or health or children. In all cases, all of these efforts must be coordinated.
QUESTIONER: We heard two questions ago about conditionality and some changes in that. Can you give us some specifics on how you would like to see conditionality from the IMF change? Are there specific things that you would like to see added? Are there specific things that you would like to be taken away from IMF programs?
And a related question--in the U.S. Congress, there is a push now to move the PRGF, the concessional loan facility, out of the IMF and into the World Bank. Do your countries support that?
MS. MBOTO FOUDA: Could Minister Zongo take these questions, please?
MR. ZONGO [Interpreted from French]: Thank you.
I would like to try to answer a part of your question regarding conditionality. In fact, we should only speak of conditionality in the context of development, but not in the way we do use the term. The objective of the IMF and the World Bank is the first thing we have to define--what exactly is their support intended to do. It is intended to support development.
So, rather than setting conditions, what we should be doing is asking ourselves how do we define development. "Develop" means an improvement in people's living conditions, and that should be our number one objective.
So what is important is to ensure that national governments have a clear view of the road they want to follow in order to improve the welfare of their citizens, and together we must be able to set development objectives.
Our concerns with our partners should not be privatizing such-and-such a company or cutting a certain number of jobs in the public service or whatever. Our objective should be to ensure how we can measure the results of our efforts, how they are going to improve the living conditions of our citizens.
If we agree on the framework and we agree on the objectives, then we should set indicators that we can use to measure the outcomes. I don't see how indicators should be different from the World Bank or the IMF or the African Development Bank, for example, and I don't see why they should impose different conditions, because the result we are working for is the same.
If we can agree on the result, on the outcome we want, then we should agree on the conditions. If we all agree on the outcome, then the question is how to measure it. How do you measure the impact of what we do on the living conditions of our populations? So we really shouldn't be talking about conditions at all. We should be talking about the conditionality. There should be only one conditionality, that is, what can we do to improve the well-being of our population.
Now, in order to achieve that, the government has to have a clear and consistent framework with clear objectives, with a transparent management system, a reporting system. It has to be a participatory process. But on the part of our partners, it requires that they should not be putting themselves in our position, and they should not be telling us what is good for us. They should not be telling the recipients what they have to do in order to achieve certain results. It should be worked out in partnership. We should ensure that everyone is contributing within a single framework. And as time goes by, we should no longer see the World Bank come and send missions to our countries and build roads or whatever, because that won't have any meaning. We shouldn't be seeing France or whatever country coming to build schools in our countries. That should become a thing of the past, because building roads and schools is a national priority. What we need is to build our infrastructure. So we have to change the procedures, we have to change the machinery within the institutions. As long as we haven't done that, we won't be able to talk about ownership, and as long as we don't have ownership, there will always be conditionalities, and people will say development is not something that you achieve through decrees. It is a process that people believe in.
So that is what I wanted to say about conditionalities, and I think that with our partners within the framework of the PRSPs, if we can agree on the objectives, then I think we will be able to reformulate conditionalities so that there will only be one conditionality that will apply.
MS. MBOTO FOUDA: Minister Bio Tchane has a comment on this.
MR. BIO TCHANE: [Interpreted from French.] Just very briefly. In fact, there were two questions there. My colleague, Mr. Zongo, has answered the first question and I would simply like to add one thing to what he said on that. I don't think any of us here or any of our colleagues intend to say that we should eliminate all conditionality.
I think we all agree that we need to ensure that our policies are successful and in order to know that, we have to measure the results. I think we all agree on that. We also have to ensure that those who use the money that the taxpayers of our partner countries are contributing should know that the money is going where it is intended to go, where it is needed.
But I think we've all agreed to put in place a new strategy and this new strategy is twofold. The first thing is that we need to go further in our national consultations. We must involve the entire population so that we achieve true country ownership of our programs, but that also means in turn that all of our partners who help us in carrying out our development plans should participate together so we don't want conflicting conditionalities. And that's what we really talk about when we're talking about conditionalities.
What we want to avoid is that there is any conflict amongst different conditionalities and that is certainly not an easy thing because many people want to see their little flag flying in front of what is being done. So it's a problem.
And that's what we're talking about when we say we need greater convergence. It must be shared among all of our partners and that is something we are working towards.
Secondly, and this is in response to the second part of your question. On the position of the American government, this regards the relations between the two institutions, we as African governments are perfectly clear. We want universal institutions. We want an International Monetary Fund and a World Bank which are universal. We want to feel comfortable when we come to attend meetings such as this one.
We want to be considered as equal partners. I believe that the day will come when we as Africans will be able to be considered as partners on an equal footing with everyone else. And that is what we are working towards.
But if we want to get there, we have to be aware of what brought the International Monetary Fund to create a certain number of mechanisms such as the Structural Adjustment Facility and the Enhanced Structural Adjustment Facility. It was an analysis of the implementation of these facilities and their failures that brought about this rethinking, and that is the responsibility of both the donors and the beneficiaries, and that is what brings us today to these new strategies we are in the process of implementing and the new facility.
So if you analyze the situation and arrive at the conclusions that we have come to, then you can't say that the IMF should stop doing its funding activity, should stop becoming involved in a certain number of fields so that those fields should be reserved for the World Bank.
If we were to go along with that school of thought--and I think some of the things that are said in the Meltzer Report are quite correct--nonetheless I think we have to say that there are things we do not agree with. If we want institutions such as the International Monetary Fund and the World Bank to be universal institutions--in other words, institutions where all the countries of the world can feel comfortable because they're all working in everyone's interest--then that way of seeing things must be reflected in the instruments of these institutions.
All of the countries that are members of the IMF at one point of time or another have needed instruments adapted to their needs. When we speak of what the IMF does in its interventions, even in the developed countries a few years back, we were discussing the crises, for example, that were a result of public policies put in place by their governments. For example, the Asian crisis has shown what the situation was.
So I think even when the IMF intervenes in developing countries, there's a need to adapt those interventions to the level of development of the country concerned. That's the way we see things. Thank you.
MS. MBOTO FOUDA: Mr. Kalumba, please.
MR. KALUMBA: Thank you. Again, I'll try and be brief. The questions are very specific. What are the specific conditionalities we would like to be in or out? I'm interested in the ones to be out. First, I think that asking countries to have a three-year track record before they reach the decision point on the HIPC Initiative is too long. It must be reduced.
We have to be interested not so much in terms of the number of years one has been on the program, but what they have done in the program. It is possible for a country to do some very important structural reform measures in one year and get them right. You don't have to count how many years it took them to do that.
I think the question of a three-year track record can be reduced and must be reduced, I think, to allow more countries to access. We should be interested in the quality of the effort and results achieved by a country in its economic program, not necessarily the period just taken. I think that should be removed.
Secondly, I think I'm getting very concerned about the increasing emphasis on governance issues in Bretton Wood institutions, particularly the Fund. Governance issues are very, very tricky. They're like moving targets. Unless we are very specific about what it is we're talking about when we say governance issues, I would be very uncomfortable with that as a conditionality in any of the programs with the Fund or the Bank.
I think we must, if we're talking about corruption, specify that as one issue and define what we mean when we talk about corruption. I have seen in bilateral relations where if I don't want to give you the money, all I need to do is announce there are governance problems and I walk away.
I think that we should exercise ourselves fully so that we can define specifically what we're talking about in this instance.
The second area I think I want to address myself to is it's always dangerous to talk about or against the Congress especially when it's the U.S. Congress. So I'll be cautious. We need the Fund in Africa. That's really the bottom line of it. At a time when Africa is faced with serious issues of poverty, of stagnation in terms of growth, the projections are that the global economy is going to grow too fast or robustly in the next few years. Except Africa. Africa's growth appears to be stagnating and this is not the time when you need to be asking key players such as the Fund to walk away from the continent. I think it's immoral. Thank you.
MS. MBOTO FOUDA: Next question.
QUESTIONER: I was just wondering if anyone could mention a specific failure in the past with conditionalities or a specific condition that the IMF needs to think about phasing out when it says it's streamlining conditions. Also, during the meetings, Mr. Kohler and Mr. Wolfensohn have said that they would like to see an increase in ODA, in foreign aid, I was wondering how the decline in foreign aid levels is affecting our countries and what needs to be done about it?
MS. MBOTO FOUDA: Minister Bio Tchane would like to start maybe on this one?
MR. BIO TCHANE: [Interpreted from French.] Yes, thank you. We are going to take up the most interesting part of this matter, which is the last part of your question. I said earlier that I believe in an African renaissance because I think a lot of good things are happening in Africa. Unfortunately, frequently, we don't see them because what you see most frequently are the bad things, bad policies and the bad results of our policies.
There are a lot of success stories in Africa, nonetheless. And if we do have these good things happening in Africa, and there are many governments today which are implementing courageous economic policies, structural reforms which are being implemented, and there are results which are indeed successful results. These policies need to be supported and sustained by the international community.
They need to be supported because at the same time we face difficulties that call for a lot of resources. We were talking earlier about HIV/AIDS. The resources which are needed to combat this scourge in Africa, fighting at the same time such things as malaria, well, the resources required are enormous. And at the same time we notice that there is a decline in foreign assistance, and this fall off in foreign assistance comes at the same time many countries have increasing budget surpluses. This is what we're talking about.
And this is something that we wish to draw our partners' attention to because we need to have assistance, not necessarily generous assistance, but assistance that will support our policy, these courageous policies that governments are implementing through different strategies with the support of institutions such as the Bank and the Fund and they can indeed bear witness to the fact that these policies are being implemented transparently.
And this is why with support, which my colleagues said earlier, my colleague from Zambia, that is, we wish to ensure transparency. We didn't want to run behind what other people are doing. We want to ensure, we want to know what resources are available because our people need to have accountability from us as regards what we're doing. People need to know that resources being used are the right ones and being used properly, be they domestic resources or resources from our partners. We need to ensure that they are being used properly and not ending up in someone else's pocket.
And therefore, we are going to do what we have said and we are going to increase accountability as regards these resources. But these resources need to be increased today, because the needs are growing and we need to have more generous resources to cope with them.
This is what I wanted to say about the second part of your question. My other colleagues, I am sure, will wish to take the floor on this.
MR. ZONGO: [Interpreted from French.] Well, thank you very much, indeed. A direct answer to your question. You're talking about the conditionalities which have failed, particularly IMF conditionalities. I would like to look at this particular point and see how the institutions are going to react to it.
Well, the problem that we have today is the problem of poverty reduction, and both the Fund and the World Bank, everyone, agrees that we need to reduce poverty. When we look how we're going to reduce poverty, we have to have growth. Growth means that we need to create wealth because if you don't create wealth, you can't reduce poverty. To create wealth, you have to invest.
Therefore, we find a problem and it would be interesting to see how the Fund is going to react to this problem. If you look at our countries, you look at investment which is wealth producing. It's true that there is private investment on the one hand, but it's also true that public investment in our countries represents the major part of total investment.
It's also true that the growth rates which we have attained so far are a considerable five percent. All studies show that these are rates which are not going to be able to push back poverty with any great speed. We need to have higher rates of growth and more sustained rates of growth.
It's quite simple. If investment has to be financed largely by public funds, there is going to be a problem. What sort of arrangements are we going to reach with the IMF? Are we going to establish our objectives, growth rates of eight percent, and if you're going to have eight percent growth rates, you need to have such and such a percentage of investment.
This is what the public sector has to do, and this is what the private sector can do. Now if we are going to say that an eight percent growth rate is the starting point, this is going to establish the policies that are going to be implemented. We're not going to talk about what sort of deficit we're going to have and what expenditure is involved.
We need to see what sort of expenditure is required to ensure that we have a growth rate which will push back poverty. This will mean that sometimes we need to have greater deficits than the Fund can accept, but they're useful deficits because they are going to make it possible to finance investment that should push up the rate of growth.
Therefore, if you look at the PRSP, we have to see whether the IMF is going to agree to upending the approach. We need to look at deficits and accept that it may be a useful deficit which could increase the rate of growth. This may be a possible approach, but I think we need to have a new discussion about this growing issue which exists within the IMF.
MS. MBOTO FOUDA: Minister Diogo, please.
MRS. DIOGO: Thank you very much.
First, on the issue of conditionality, I would endorse what my colleagues have said, and then add one point. I think the main issue is related to the contradiction between ownership and imposition in terms of conditionality. When we talk about ownership, we are talking about consultation, responsibility from the government. And when there is conditionality, we have imposition.
So it is difficult to have both things being done simultaneously. The IMF asks for conditionality in terms of the PRSP being ready before HIPC is delivered in terms of the completion point, and at the same time asks for ownership and responsibility from the government. So something is wrong on this. We need to have one unique approach on this issue of conditionality.
And I think it is the main problem because to have the PRSP ready as a condition will not put the government in the position of a responsible institution. And this PRSP will be ready and forgotten. If we don't put it as a conditionality, the government will be updating, and the IMF can advise the government during the time of implementation about the adjustment to be made in this document, instead of making some preconditions.
On the ODA funds, I think this is a very problematic issue. At this moment, African countries are preparing the PRSP in order to reduce poverty in their countries, and we see the ODA in terms of grants going down and the loans going up. So there is another contradiction on the approach because those countries are supposed to have more grants than loans.
For example, in Mozambique since 1998 we see the grants going down and the loans going up. If we don't have a very good management policy in terms of debt, we are going to have another problem in terms of sustainability of debt. So I think this is very important and compromises the implementation of the PRSP. If the ODA funds in terms of grants or concessional loans do not increase, we are going to have problems in terms of implementation of the PRSP, because the PRSP requires additional funds from the donor community.
MS. MBOTO FOUDA: Mr. Prime Minister, please.
MR. ANDRIANARIVO [Interpreted from French]: I shall very brief on conditionalities. Perhaps we should talk about the adjustment of conditionalities rather than conditionalities that have failed. If we reduce the time to reach the HIPC decision point--that is reducing it from three years down to two years--this is not a reason for saying that we failed over the three-year term. If we reduce the time between the decision point and completion point to a flexible period instead of three years, it doesn't mean to say we have failed in the previous system.
The most important thing which is noted by the international institution is that the instruments need to be used quickly so that you get maximum efficiency. This is the main conditionality which we would like to see and which we have discussed with our partners.
The second point, so that aid can be effective, we have to look at the principle of conditionality so the resources that support the initiative that are switched to another area are going to make aid more effective. Therefore, it is clear that this initiative with the more flexible conditionalities should be accompanied by ODA that is also sustained. And this is why we agree entirely that in twenty years we should not need funds to fight poverty. Therefore, perhaps we should talk about funds for supporting both creations because this is what our wish is. I share what has been said by the Prime Minister.
It is very important for us to move as quickly as possible from these poverty-reducing instruments and everything be done to improve wealth. And, therefore, what is important is the implementation of these instruments. It is not a question of saying that things have failed when we move into another system. What we must say is that we have to draw lessons from our experiences.
MS. MBOTO FOUDA: We are going to take questions very quickly.
QUESTIONER: Last year the outgoing Managing Director of the IMF, Michel Camdessus, made a very eloquent appeal about the damage that conflict was doing to Africa's economic prospects. In particular, he named the international arms trade as being a key element in that. I wanted to ask the members of the panel what they would like to see the IMF, the World Bank and the Finance Ministers attending here to do in concrete terms about the arms' trade and the exacerbation of conflict in Africa.
And specifically, I would like to ask the Minister from Burkina Faso how his government responds to the fact that it has been named in different UN reports for trading conflict diamonds for arms both with UNITA in Angola and with the RUF in Sierra Leone.
MS. MBOTO FOUDA: Minister Zongo, please.
MR. ZONGO [Interpreted from French]: I think it is a very good question because you cannot talk about development without looking at the essential conditions which are essential for development. And the main condition is peace.
I think the question that you have asked is of prime importance. It is an important question because efforts have been made in Africa. This has been recognized, although, unfortunately, the fact is that you still have areas of tension which are a source of disaster and they are a cause of difficulties for our countries.
As regards the problem of arms or weapons, I think we need to be completely clear about this issue. The arms trade, when you look at our countries, you cannot find many countries that produce weapons. You won't find any, in fact. We know who produces weapons. We know who sells weapons. We know those who accuse others of selling weapons, and we know the people who call for the sale of weapons, but not only those who call for the sale of weapons but those who are producing weapons.
Those who talk about the weapons trade are those that produce those weapons. Therefore, we could talk about hypocrisy. It is too strong a word, but I think that people aren't awfully honest when they talk about this arms' trade. If we want to stop the arms' trade, we know where to stop it. Those who produce weapons, if they don't sell them, they will not be in the arms trade. That is the first point.
The second point: we are convinced that conflicts in Africa should, first of all, be solved within the African context itself, because when you look at the conflicts in Africa and the way in which these conflicts have been solved, you have never seen the development of a dialogue to solve those conflicts. You can never win a conflict through arms. Normally and always, conflicts can be settled, but they never last.
What is important is solidarity, and solidarity is a question of integration--integration of our people, integration of our populations so they can create this solidarity amongst themselves.
Now once you have solidarity, people are much more aware of what other people are doing, and this is very important. And it is important that the international community give the means to African countries to solve their own problems.
The other point which I think is important, as you said, you said that Burkina Faso was being credited twice in reports. I think that here again the international community is involved. When you have structures which are in charge of managing and settling issues, there are countries that feel which over and above the structures created by the countries, there are parallel circuits where other voices are made to be heard.
In Burkina Faso, we have this advantage. We can quote numerous conflicts in the subregion where Burkina Faso has acted as a mediator and has brought together those involved in the conflict to talk. Burkina Faso has always said that no conflict can be won through arms and fighting. You need to have discussions and dialogue. But we also have people who encourage and do everything possible to avoid a dialogue. And when you hear these accusations against Burkina Faso, we have always called for proof to be given. Burkina Faso is going to bring light to the Surveillance Committee and the Security Council knows that the committee went to Burkina Faso. They have seen what they want to see. They have looked at the arms dumps and they have done precisely what they wanted to do and they prepared the report.
The international community knows that the U.S. sent a military mission to Burkina Faso. They implemented their program, and we know that there are bodies which can settle these matters. And we want to associate our efforts with those of these bodies and we want to have things done as transparently as possible.
But Burkina Faso is very open. We received all of these missions from the UN Security Council. We had the American mission and we can say that we want to ensure there is peace and everything that we have done in the sub-region so far, we shall continue to do, because we cannot ourselves be a country that is asking the international community to support us, to leave behind our underdevelopment and at the same time not be a country which works to solve problems of conflict.
This is what I wanted to say. I would like to ensure that the journalists here this morning look at those countries which produce and sell arms and perhaps, once and for all, we should talk to arms' producers, asking them to stop selling weapons which are used to create destabilization of regions.
MS. MBOTO FOUDA: Minister Diogo.
MRS. DIOGO: Thank you very much.
On the assistance of conflict and post-conflict countries, I think that it is important to account with this contribution from the World Bank and IMF. I am saying this based on the specific experience of Mozambique.
When there is a brake on the finance for infrastructure and other means for the country during the conflict period, it is difficult later on after the agreements to restart again with those institutions. So if this assistance continues in the country, it can speed the process of recovering after the peace agreements in those countries.
And I think that the main part of the conflicts in Africa are caused by poverty, and it does not make sense for the World Bank and the IMF to leave those countries during the conflict period because the main cause of those conflicts are the poverty issues. So to have this assistance during this period of time and immediately after the conflict, it is very important because it speeds the process of recovery.
MR. KALUMBA: Thank you, Madam Chair.
I think we have to be honest as Africans. We need peace in Angola; we need peace in the Congo; we need peace in Sierra Leone. The wars must stop, not only between Africans fighting themselves but friends outside Africa helping Africans to fight themselves. I think that must stop, too. There's no beating about the bush about that.
We need to, wherever there is an indication that somehow we are helping each other to continue these wars, we must help to stop. It's costing us too much in terms of lives, in terms of our opportunities for economic growth. We need peace in Africa to grow. Thank you.
MS. MBOTO FOUDA: Thank you. Mr. Bio Tchane, please.
MR. BIO TCHANE: [Interpreted from French]: Thank you, Madam Chairman.
I think we are coming to the end of this press conference, and I would like to say a few words about someone who hasn't come to this meeting, and we should say a few words also about these institutions.
I wanted to say that, when you say thank you to someone, you should also say thank God. I think we should take this opportunity to pay homage to Michel Candessus, who is no longer here with the institution, and we should like to say that we feel he's a true friend of Africa and the developing countries. He's a true humanist. This is the first time that we are meeting since he left the institution. I think it's fair to pay tribute to him, and I would like to do this on behalf of my colleagues this morning. Thank you.
MS. MBOTO FOUDA: We have five minutes to handle two questions, so very quickly, the gentleman over there. Thank you.
QUESTIONER: It's about political conditionality. As the Minister from Mozambique pointed out, a lot of these programs for reducing poverty depend on bilateral aid to accompany Fund and Bank support. But the bilateral aid often has much tougher political conditions. Particularly we know the Europeans now, bound by a commitment to democracy and so on.
How do the African governments feel about the level of political conditionality, specifically to issues such as freedom of the press, human rights, and multiparty free elections, tying aid money to public [inaudible]
MS. MBOTO FOUDA: Minister Kalumba.
MR. KALUMBA: Freedom of the press is not alien--should not be alien--to Africans. It should not even be a conditionality because it must be intrinsic to the democratic development of the African Continent.
Plural political parties, pluralism in the political life, and democratization should not even be a conditionality but be an intrinsic part of African policies.
Where there is a will on the part of our partners to see that these things are institutionalized in the constitutions for Africans, there is a way of making that happen other than using a "carrot and stick" approach. I think that's what makes it difficult perhaps for most African governments to come to terms with what should be essentially intrinsic dimensions of their own political development.
I think most African governments do accept the fact that they have to democratize, that they have to increase their level of participation, that they have to have a free press for people to speak out. You should have been in Lusaka a few months ago when I was asked to bring civil society into our negotiation with our partners in the CG. I wish we had Jubilee 2000 here, too. We didn't use it as a condition.
But we accept the fact that our people need to be involved in decisions, in the decision-making process, so that they hold us accountable but they also know what it is we have committed on their behalf.
I think these things are important, but they should not be used in a "carrot and stick" way. That's really what I have difficulties with personally.
MS. MBOTO FOUDA: Yes?
QUESTIONER: I would just like to know how you can push for greater representation for African countries within the IMF and World Bank in which competing voting rights are extremely low?
MS. MBOTO FOUDA: Mr. Prime Minister, please.
MR. ANDRIANARIVO: [Interpreted from French]: Thank you. I would like to answer these two questions as they are political in nature. The first concerns two conditionalities in regards to democracy. Our governments or heads of state have answered this question in the dialogue which they've had with these institutions. I'm not talking just about the IMF, but together with the other institutions. There have been meetings between the heads of state and the leaders of those institutions so, therefore, there's an ongoing concern about strength and cooperation.
As regards the World Bank and the IMF, we have a framework for dialogue that makes it possible to discuss these political issues. Therefore, sometimes these conditionalities come from people who don't know the countries where they wish these conditionalities to be applied. They call for freedom of the press when it has existed for years, and they call for democratic pluralism when several parties already exist. So the dossier can be accepted and it's good to include mention of these conditionalities.
Therefore, we are prepared to have a dialogue and prepared to show that we, too, are very much in favor of democratic principles. We would like to develop them. It is in this spirit that we would like to see Africa be treated as others in the institutions. Both the Bank and IMF would like to assure that these are institutions where we can have a dialogue, where Africans can be heard, and there is recognition of our diversity.
In this regard, on African representation in these situations, our position is clear. Africa should be well represented within the IMF and other institutions. Diversity should be represented, too. It is also clear that this is what we are asking, that the budget share allocated to Africa in the different departments should also be increased so that activities may be more effective.
Therefore, our position is clear. The world needs to have an Africa which is strong and, therefore, actions should reflect these needs in the international institutions.
MS. MBOTO FOUDA: I would like to thank you all for coming this afternoon.