Press Release No. 05/88

A group of African Governors of the International Monetary Fund met today with the IMF Managing Director, Mr. Rodrigo de Rato, in the context of the 2005 Spring Meetings of the IMF and World Bank.

During the meeting, African Governors sought to hear from Mr. de Rato his vision on a number of issues of critical importance to the African membership. On their part, the African Governors wanted to register their many concerns and interests, bringing the following points to the attention of Mr. de Rato:

1. The Governors believe that the progress in streamlining Fund program conditionality remains short of expectations and that there is a tendency to impose politically sensitive and legally protracted prior actions, which makes it difficult to keep programs on track. Regarding staff-monitored programs (SMPs) and emergency post-conflict assistance, African Governors expressed the need for increased flexibility in their implementation so as to allow quick graduation and eligibility for the Poverty Reduction and Growth Facility (PRGF) and the Heavily Indebted Poor Country (HIPC) Initiative for countries that can establish a quick track record. They also emphasized the principle of equal treatment between the membership as regards Fund's recommendation of an SMP.

2. On the Fund technical assistance programs, the Governors expressed concerns about the possible introduction of cost recovery measures. Technical assistance should be one of the public goods that the Fund provides to the membership, along with surveillance. Imposing fees for these services runs counter to the cooperative spirit of the institution and the Fund's own objective of supporting countries to develop capacity.

3. The African Governors regretted that additional funds have not been raised yet to extend the AFRITAC program to other regions in Africa, as agreed when this initiative was launched 3 years ago. They think that there should be no link between the evaluation of current AFRITACs and the setting of new ones.

4. The African Governors shared the view that, as the pace of mobilizing resources for the Millennium Development Goals (MDGs) has so far been unsatisfactory, all recently proposed initiatives, such as the International Financial Facility (IFF), the mechanisms described in the Landau Report, and the Japanese proposal on the Role of International Financial Institutions in Private Sector Development in Africa, deserve full consideration. The Fund should play a more active role in promoting these initiatives.

5. Concerning global trade, African Governors noted that developed countries have not responded to the calls by developing countries and multilateral organizations to remove agricultural subsidies and other trade-distorting policies. Here again, the Fund needs to take a more active role on the issues pertaining to trade liberalization in the context of the Doha Round negotiations. Following the elimination of textile quotas, the Governors also called on the IMF to stress the need to provide increased access for African products in world markets so as to allow African economies to adjust and enhance their competitiveness.

6. Concerning the debt issue, the African Governors noted that countries that have reached the completion point are falling back into the debt trap due to external shocks, and that topping-up is becoming more common. They called for a framework that will allow for a complete write-off of external debt at the HIPC process completion point, and for the Fund to support the G-7 consideration for a write-off of all debts of low-income countries (LICs) to multilateral institutions. They also underscored the necessity to pay closer attention to the needs of middle-income countries, many of which exhibit similar characteristics as LICs, particularly on social indicators and unsustainable levels of external debt.

7. The African Governors shared the view that Fund-supported programs need to be revisited. They observed that PRGF programs have given much emphasis on social sector spending, which they think is important, but the designation of priority sectors has often excluded sectors such as energy and agriculture, which are crucial towards sustaining growth and hence achieving the MDGs. Also basic infrastructure, the maintenance of physical capital, and the formation of human capital have not been given due consideration.

8. On diversity within the Fund, the African Governors noted that while the institution has a clear policy on promoting diversity and fighting discrimination among its staff, this policy has not been adequately implemented. For instance, the African representation at the upper levels of the staff remains considerably low and this calls for urgent measures to improve the situation.

9. On the question of voice and representation, the African Governors felt that there is too much imbalance in the composition of Fund quotas and hence inadequate participation by the African membership in the decision-making process of the institution, which could be improved by increasing their shares of quotas, representation in the Executive Board, and strengthening the offices of African Executive Directors.

10. Finally, the African Governors noted that the Fund's image in Africa is declining, especially given that people are not seeing poverty declining following implementation of PRGFs and also benefiting from the HIPC Initiative. It has also been difficult for the authorities to implement reform-based policies, as they are perceived as policies imposed by the IMF. To close this image gap, it is important that the Fund promote outreach and dialogue with the broader African populations, including parliaments, global and local media and civil society organizations.

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