Transcript of a Press Briefing of African Finance Ministers
IMF News, April 14, 2007
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- Published: April 14, 2007
Opening and context
- Washington DC, April 14, 2007
- Participants: Rama Krishna Sithanen (Deputy Prime Minister and Minister of Finance and Economic Development of Mauritius); N'Gandu Peter Magande (Minister of Finance and NATIONAL Planning of Zambia); Antoinette Sayeh (Minister of Finance of Liberia); Athanase Matenda Kyelu (Minister of Finance of the Democratic Republic of the Congo). Moderator: Lucie Mboto Fouda, EXR.
- Format: Each minister gave opening remarks (three to four minutes) followed by a press Q&A.
Liberia — reconstruction, debt, and IMF engagement (Antoinette Sayeh)
- Key developments and status:
- Liberia has been operating under a staff-monitored program with the IMF.
- That program "is now considered to be of upper credit tranche conditionality," although it is "not a Fund-supported program in the standard way" due to the "absence, so far, of financing assurances to clear Liberia's arrears to the IMF and give us access to debt relief."
- Progress was highlighted from discussions at the February donors' meeting and "acknowledgment in the G-7 ministers' communiqué" that clearance of arrears should continue.
- Reconstruction priorities and needs:
- Tackling "monumental reconstruction challenges" including restoring education, infrastructure, health, and other basic services after "some 20 years" of deprivation.
- Urgent need for international support to be "delivered in a much quicker way" to consolidate fragile peace.
- IMF policy engagement:
- Commends IMF management for heightened attention to "so-called fragile states" and advocacy to partners on Liberia's transition.
Zambia — post-debt relief fiscal space, growth focus, and regional effects (N'Gandu Peter Magande)
- Debt and fiscal space:
- Under the HIPC Initiative and the MDRI; "our debt has come down to 600 million dollars from 7.2 billion."
- Result: "a very big fiscal space."
- Development strategy:
- Launched the "fifth national development plan" in February as a "master plan" for the next five years; vision to 2030.
- Priority to use fiscal space to finance infrastructure and growth, support private sector participation and job creation, and attain the MDG.
- Concerns and policy cautions:
- Risks of "free riding" and "newcomers into the credit or the financial sector, trying to hijack the space."
- Emphasis on debt sustainability but a shift in emphasis toward growth and development financing.
- Regional spillovers from Zimbabwe:
- Zimbabwe’s crisis increased demand on Zambia to provide goods and services Zimbabwe failed to supply; some skills returned to Zambia (benefit), tourism near Victoria Falls increased on the Zambian side (benefit).
- No quantified estimate provided for tourism gains; minister noted lack of data on how many tourists diverted from Zimbabwe to Zambia.
Democratic Republic of the Congo — post-conflict recovery and negotiated support (Athanase Matenda Kyelu)
- Political and security context:
- Country experienced several wars; recent elections conducted with international technical support; "more than 45 million dollars were invested by the community."
- Situation characterized as "completely stable" with minor incidents.
- Economic and financial engagement:
- Difficulties completing earlier programs; "laying the groundwork for a negotiation of a new PRGF" expected to be completed by "June and July."
- Negotiations/assistance in progress with World Bank (emergency program of 180 million dollars), African Development Bank, and the EU (European development fund).
- Reform and delivery priorities:
- Transforming potential into wealth and reducing poverty through cooperation with multilateral and bilateral partners.
- Request for flexibility in procedures (e.g., contracting) given post-conflict circumstances.
Mauritius — transition, shocks, and aid-for-trade advocacy (Rama Krishna Sithanen)
- Economic shocks and macro conditions:
- Transition from dependence on trade preferences to global competitiveness.
- External shocks: sugar price decline ("price of sugar is coming down by 36 percent"), textile and clothing competition, and "soaring energy costs."
- Fiscal indicators described: "budget deficit is high, over 6 percent," "debt-to-GDP ratio is quite high at 70 percent," and "massive deficit in the external balance."
- Strategy and reform pillars:
- Four-pronged approach: (1) fiscal consolidation; (2) improve business climate to attract investment; (3) restructure/diversify the economy to build resilience; (4) implement an empowerment program to cushion social impact of globalization.
- Aid for trade and regional integration:
- Advocacy for IMF and World Bank engagement in "aid for trade" beyond trade rules—addressing supply-side constraints via trade-related infrastructure (airports, ports, roads, ICT).
- Noted social costs of adjustment (example: in one sector "30 percent of people have lost their job and 85 percent of those who have lost jobs are women").
- Calls for "additional and predictable resources" to support regional integration and operationalize aid-for-trade modalities; noted EU commitment of "2 billion euros, 1 billion from the commission and 1 billion from member states."
- Specific Mauritius initiatives:
- Proposals to donors and AfDB meeting on removing obstacles to regional integration; negotiation of economic partnership agreements within an aid-for-trade framework.
World Bank leadership, governance, and standards
- Views on President Wolfowitz and Bank leadership:
- Minister Sayeh: Described Wolfowitz as "a visionary" for championing post-conflict and fragile states; thanked his advocacy and Bank support for Liberia (arrears clearance, country office, technical assistance).
- Deputy Prime Minister Sithanen and Minister Magande: Acknowledged Bank support and technical assistance; emphasized the importance of following rules and due process in any Board action and maintaining governance, transparency, and accountability.
- Minister Matenda: Advocated for partnership based on mutual respect and urged flexibility in Bank procedures for post-conflict countries.
- Institutional governance process:
- Ministers stressed the role of the Board of Directors in operational decisions and the necessity of due process; shareholders/governors should not prematurely interfere with Board procedures.
Zimbabwe and regional integration (SADC)
- Impact on the region:
- Zimbabwe’s political and economic crisis creates regional strain but has not fully disrupted regional cooperation; capacity-building and institutional engagements continue.
- SADC and other regional processes remain active; ministers emphasized dialogue and SADC engagement for resolution.
- Tourism and migration effects:
- Zambia reported tourism increases around Victoria Falls and some migration of skilled farmers from Zimbabwe to Zambia; effects largely described qualitatively.
China and South-South cooperation
- General perspectives:
- Ministers view China (and other emerging partners like India, Brazil) as an important complement to North-South cooperation; South-South ties bring finance, appropriate technology, and proximate market/access options.
- Specific country points:
- Liberia: China provides assistance beyond finance (e.g., support for University of Liberia), collaboration with other partners (U.S.), and concessional finance potential—though Liberia currently refrains from large borrowing while resolving debt issues.
- Mauritius: China involvement includes investment projects (example: planned "trade and development center" in Mauritius) and concessional finance; South-South cooperation seen as beneficial for regional trade competitiveness.
- Zambia: Historical Chinese involvement dating to 1967 (railroad line and other support); contemporary Chinese investments in mining and processing (copper) seen as an opportunity for technology transfer, employment, and downstream processing (e.g., cable manufacturing in the copper belt). Zambia emphasized the need to ensure mineral resource exploitation benefits domestic development.
Aid effectiveness, health, and education financing (OXFAM question)
- OXFAM proposal: a percentage of multinational and bilateral aid should go directly to general health care and education; limits on aid spent on wages should be eliminated.
- Ministers’ responses:
- Deputy Prime Minister Sithanen: Agreed broadly that excessive administrative/consultancy capture of aid can undermine objectives; supported more direct investment in education and health and investing in skills, training, and reskilling to support labor market integration and development.
- General endorsement across ministers for increased, effective investment in education and health to build human capital and meet development objectives.
Cross-cutting policy messages and recommendations
- Prioritize rapid, predictable delivery of donor support for post-conflict reconstruction (Liberia cited as an urgent case).
- For countries with newly created fiscal space post-debt relief (e.g., Zambia), prioritize using space for infrastructure and growth while guarding against free riding and unsustainable borrowing.
- Advance aid-for-trade programs that finance supply-side infrastructure (ports, airports, roads, ICT) and provide predictable resources to support social adjustment costs of integration.
- Maintain high standards of governance, transparency, and accountability—apply these standards consistently across institutions and countries.
- Support flexibility and procedural sensitivity when engaging post-conflict countries to ensure timely program delivery and capacity support.
- Leverage South-South cooperation (China, India, Brazil, etc.) as a complement to North-South assistance, focusing on appropriate technology transfer, concessional financing, and regional trade facilitation.
Transcript of a Press Briefing of African Finance Ministers, April 14, 2007 — International Monetary Fund