Transcript of the IMF Managing Director and the African Consultative Group Press Conference (April 22, 2012)

IMF News, April 22, 2012

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Speakers: Ms. Christine Lagarde (IMF Managing Director); Ms. Antoinette Sayeh (Director, IMF African Department); Mr. Jean-Baptiste Nthahwa Kuderwa (Acting Chair, African Consultative Group; Minister of Budget, Democratic Republic of Congo); Ms. Lucie Mboto Fouda (External Relations Department).
The Group of African Governors and IMF Management took stock of the economic situation in Africa, its outlook amid global uncertainties, and policy measures needed to protect African economies from external shocks.
Continent-wide growth forecast:
- "about 4 percent."
- For low-income countries: "around and slightly in excess of 5 percent."
- For middle-income countries in Sub-Saharan Africa: "slowing somewhat to 3, 3.5 percent."
- For North Africa (Arab transition countries): "a bit more sluggish to 1.5 to 2 percent."
Noted observation: "in the top 10, there are at least 4 African countries showing double-digit growth forecasts."

Principal external risks identified:
- Increased volatility of commodities, in particular oil.
- Potential resurgence of the European crisis.
- Drought in the Sahel and the Horn of Africa.
- Decline of growth in emerging economies affecting trade and financial exchanges.
Consequences described for vulnerable countries:
- Reduced demand, less aid, less remittance, less exports.
- Risk of declining growth where countries lack preparation or buffers.
- Specific risk to Democratic Republic of Congo (DRC): vulnerability to oil export shocks affecting budgetary reserves.

Policy stance depends on country circumstances; two broad prescriptions:
- Countries with "sufficient reserves and fiscal space" should "ease macroeconomic policies to actually support demand."
- Countries without fiscal room should "strengthen their fiscal position and seek external funding" to rebuild buffers.
Structural policy emphasis:
- "Persevere with and strengthen our structural reform agenda," including governance improvements, business climate, and services to safeguard long-term economic health and jobs.
IMF role and tools discussed:
- Provide both financial and technical assistance to countries needing support.
- Tailor financial instruments and analytical tools (scheduled for the summer).
- Use of the PLL, the Precautionary Liquidity Line, as an instrument "specially designed" for countries at risk of liquidity crises due to external shocks.

Fundraising priority: replenishment of the PRGT (Poverty Reduction and Growth Trust) to finance concessional lending for low-income countries.
Funding need stated by Managing Director: "I will be looking for additional financing of $17 billion. Altogether we need 17 to be perfectly transparent about it, but the more, the better."
- Clarification: "The 17 billion is what we needed between 2009 and 2014, in total, and that's what we're trying to now complete."
Commitments and appeals:
- Encouragement to member countries, including advanced economies, to reinvest their portion of gold sale profits into the PRGT.
- Current commitments reported: "32 countries representing 24 percent as compared to the 90 percent target that I need to hit to make sure that it is properly replenished, have agreed to transfer their portion of the gold sale profits into the PRGT."
- Progress noted during the Spring Meetings: increase from "26" to "32" committing countries; "a large proportion of the countries that have reinvested in the PRGT are in Africa and are low-income countries."

DRC program review:
- Question raised about why the fourth and fifth review of the DRC program "has been stopped" despite "all the indicators are green."
- IMF response: reviews require both backward assessment of performance and forward commitments from a government in place; the recent government transition and appointment of a Prime Minister required delay.
- IMF intends expedited follow-up: "we expect that we will be able to send a mission out to do the work and get us to the Board, we hope, by June."
Conflict minerals / SEC rule referenced briefly during Q&A; IMF Managing Director noted the topic was "beyond the scope" of the African development session and did not offer a detailed response.

IMF to continue tailoring financing instruments and analytical tools for the continent (work scheduled for the summer).
Managing Director's immediate priorities include PRGT replenishment and mobilizing concessional resources.
The IMF emphasized readiness to provide upstream and downstream assistance through enhanced resources and improved instruments.

Transcript of the IMF Managing Director and the African Consultative Group Press Conference, April 22, 2012.