## Africa: A Window of Opportunity - Address by Mr. Alassane D. Ouattara

_IMF News, May 12, 1999_

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## Bibliographic details
- Published: May 12, 1999

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### Global economic backdrop and risks
- IMF is looking for world growth of around 2.3 percent this year.
- With sound policies and some luck, growth could:
  - rise above 3 percent next year, and
  - reach 4-4 1/4 percent early in the new millennium.
- Positive developments noted:
  - Asian economies showing signs of nascent recovery.
  - Spillovers from Brazil’s financial crisis to markets elsewhere in Latin America have generally been moderate.
  - Investor sentiment toward the emerging markets has broadly improved.
  - The U.S. economy continues to be remarkably robust.
- Downside risks and unresolved questions that could disappoint global growth:
  - Can the United States achieve the soft landing it needs?
  - How soon can Japan expect to see the long-awaited and expected recovery?
  - Can Europe breathe new vigor into its flagging economic expansion?
  - Can the turnaround in the emerging markets be sustained?
  - Will the uncertainties in Russia be satisfactorily resolved?
- Policy message: there is no room for complacency.

### Recent African performance and outlook
- After two decades of stagnation, Africa’s economic profile has improved markedly in the past four years.
- Growth and income indicators:
  - Average real growth in sub-Saharan Africa—excluding Nigeria and South Africa—has risen from about 1 percent during 1992-94 to about 5 percent during 1995-98.
  - Real incomes have risen: 40 out of 47 African countries now showing increases in their annual per capita incomes.
  - Inflation has been lowered markedly; internal and external imbalances have been greatly reduced.
- IMF projections for Africa:
  - projecting slower growth of about 3-3.5 percent this year, due to sluggish global growth and weak commodity prices,
  - but picking back up to 5 percent in 2000.
- Structural progress:
  - Substantial progress in freeing the private sector from government controls on prices, marketing, international trade, investments, and foreign exchange.
  - Increased market access and groundwork for better integration into the world economy.
- Growth needs and targets:
  - Africa needs growth rates of at least 6-7 percent just to keep up with the expected increase in its labor force.
  - A growth rate of 8-10 percent would be more appropriate to make a dent in poverty over the long run.

### IMF initiatives to help Africa
- Heavily Indebted Poor Countries Initiative (HIPC):
  - Working to provide more debt relief to a broader range of HIPC countries.
  - Emphasis that debt relief must be paired with incentives for strong adjustment and reform, investments in education and health, poverty reduction, and a clear exit from unsustainable debt burdens.
- ESAF (Extended Structural Adjustment Facility) and financing:
  - ESAF’s objective: sustainable development with a focus on poverty reduction.
  - IMF management and staff working to secure full financing of the ESAF and HIPC, including bilateral pledges and contributions from the Fund’s own resources.
  - IMF member countries have indicated willingness for the Fund to play a part through the sale of some gold; commitment to avoid disorderly developments in the gold market after any decision.
- Post-conflict assistance:
  - Special policy since 1995 to provide emergency post-conflict assistance—Republic of Congo, Rwanda, and Sierra Leone were early beneficiaries.
  - IMF Executive Board agreed on steps to improve terms of post-conflict assistance to poorest members, including greater access to Fund resources over a longer period in some cases.
  - Special circumstances of countries with large protracted arrears can be taken into account in arrears strategy implementation.
  - Expectation that many poor post-conflict nations will eventually avail themselves of the HIPC Initiative.
  - IMF stresses the need for international community support for countries with refugee problems and emphasizes that peace is the ultimate solution.
- Training and technical assistance:
  - IMF Institute expanding training activities for African officials and supporting regional training and research institutions (e.g., Macroeconomic and Financial Management Institute in Harare; South African Reserve Bank for SADC members).
  - IMF, African Development Bank (AfDB), and World Bank announced establishment of a regional training institute to be located at the AfDB’s headquarters in Abidjan.

### Strengthening the global financial system
- Two broad themes for remedying crises:
  - Preventing crises by devising new "rules of the road".
  - Ensuring contagion is contained and human costs limited when crises arise.
- Transparency and standards:
  - IMF strengthened data dissemination standards, especially on international reserves and external debt.
  - Encouraging adherence to the code of good practices on fiscal transparency and working on a similar code for transparency in monetary and financial policies.
  - Increased IMF transparency (reference to IMF website).
  - Benefits of transparency: broader public discussion, enhanced accountability and credibility, and more orderly functioning of financial markets.
- Financial sector strengthening:
  - Encouraging incorporation of the Basle Core Principles into banking regulation; assisting countries to improve supervision and reinforce financial institutions.
- Capital account liberalization:
  - Consensus leans toward more open capital markets as the norm, but the Asian crisis showed the need for orderly, properly sequenced liberalization tied to stronger domestic financial systems.
- Private sector involvement in crisis prevention/resolution:
  - Complex area with progress but many contentious issues; need mechanisms to avoid rush-for-the-exits by creditors and to encourage orderly adjustment.
- IMF financial instruments:
  - Executive Board approved establishment of Contingent Credit Lines—precautionary financing for countries with sound economies but threatened capital market access—to enhance stability.
- Social safety nets:
  - Asian crisis highlighted the need for pre-existing social safety nets.
  - IMF has taken an increasingly active stance on social policies, expenditures, and safety nets, and will continue collaboration with AfDB, World Bank, and UN agencies.

### Five key policy priorities for Africa
- Consolidating macroeconomic stability:
  - Consistent implementation of sound fiscal and monetary policies.
- Ensuring economic security:
  - Remove investor uncertainty; guarantee transparency, predictability, and impartiality of regulatory and legal systems.
  - Emphasize competence, integrity, accountability, and tackling corruption and inefficiency.
  - Release of Letters of Intent and Policy Framework Papers by an increasing number of African countries encouraged.
- Strengthening the financial sector:
  - Mobilize savings, deepen and broaden financial markets, ensure independence and accountability of central banks, strengthen bank supervision, open banking sectors to healthy international competition, establish well-functioning payments systems.
- Speeding up trade liberalization:
  - Simplify and lower tariffs; bind tariffs at the lowest rates in the upcoming WTO trade round; remove nontariff barriers.
  - Industrial countries urged to open markets for African comparative advantages (agricultural products and textiles).
  - Support for proposal that industrial countries grant across-the-board, duty-free access for exports of the least developed countries.
- Deepening regional integration:
  - Simplify complex and overlapping regional arrangements to realize economies of scale, overcome small and landlocked economy disadvantages, and enhance global trade ability.
  - Regional integration should not come at the cost of further overall trade liberalization.

### Closing message and call to action
- The recent crisis period appears to be yielding a brighter outlook—a "light of hope and new opportunities."
- Africa is urged to seize the moment to fully integrate into the world economy so that its people can prosper and flourish in the new millennium.

*Source: Africa: A Window of Opportunity - Address by Mr. Alassane D. Ouattara; May 12, 1999.*

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## References

- [Republic of Congo and the IMF](http://www.imf.org/external/country/COG/index.htm)
- [Mauritius and the IMF](http://www.imf.org/external/country/MUS/index.htm)
- [Sierra Leone and the IMF](http://www.imf.org/external/country/SLE/index.htm)
- [South Africa and the IMF](http://www.imf.org/external/country/ZAF/index.htm)
- [United States and the IMF](http://www.imf.org/external/country/USA/index.htm)
- [The IMF and Good Governance -- A Factsheet](https://www.imf.org/en/about/factsheets/sheets/2023/the-imf-and-good-governance)
- [Heavily Indebted Poor Countries -- A Factsheet](https://www.imf.org/en/about/factsheets/sheets/2023/debt-relief-under-the-heavily-indebted-poor-countries-initiative-hipc)
- [Speeches](https://www.imf.org/en/news/searchnews)
- [PRESS CENTER](http://presscenter.imf.org/)
- [French](https://www.imf.org/external/np/speeches/1999/051299f.htm)
- [https://www.imf.org/en/home](https://www.imf.org/en/home)

_Source: https://www.imf.org/en/news/articles/2015/09/28/04/53/sp051299_