Speech

Remarks at a Luncheon for African Central Bank Governors
Anne O. Krueger
First Deputy Managing Director, IMF
Dubai, September 23, 2003

1. It is a great pleasure for me to be here today with you. The Managing Director had wished to attend this luncheon himself and follow up on some of the issues you discussed with him yesterday. However, his schedule did not make it possible. He asked me to express once again his appreciation for the exchange of views you had yesterday.

2. Our gathering provides me with a unique opportunity to go beyond issues of relevance to your individual countries, and to focus on the broader perspective of the continent. I can tell you at the outset that prospects for stronger growth in Africa are quite encouraging, as African leaders have continued efforts to make peace and democracy a reality, and to put in place economic and financial reforms needed to stimulate private-sector-led growth and achieve the Millennium Development goals. Indeed, I see progress both on the political and economic fronts, underpinned by your own efforts and by the support of the international community. However, we have to bear in mind that this progress has to be consolidated if Africa's development challenges are to be addressed.

3. On the political front, NEPAD is a clear demonstration of the spirit of self-confidence and of a willingness of the continent to take responsibility for its own actions and for its future. What we need now is for the principles embodied in NEPAD to be transformed into policy actions and successfully implemented.

4. On the social and economic fronts, the number of countries that can be qualified as strong performers continues to increase each year, and most of these, I am pleased to say, have been supported by IMF programs. The gains, however, remain fragile, particularly in light of the weakness of the global economy, and this serves as a reminder of the need to sustain reform efforts.

5. Thanks in part to the HIPC initiative, significant reductions in debt service payments can enable more and more resources to be used to improve the delivery of social services. The benefits of this should show up in real improvements in social conditions throughout much of Africa in the form of better access to education, health and sanitation. We might also have seen significant increases in life expectancy were it not for the high, and in many countries rising, incidence of the HIV/AIDS pandemic and other infectious diseases.

6. We have to be realistic, however, and recognize that much more needs to be done to raise growth and reduce poverty. Let me say again that achieving macroeconomic stability is a prerequisite for durable growth. It is not, of course, enough. From my contacts with African policymakers, I sense a widespread appreciation of the role that the private sector must play in successful economic development. But this cannot happen if markets are not allowed to operate. Governments have to work hard, therefore, on improving institutions and governance by providing fair and transparent legal systems in which property and land tenure rights are secure and enforceable. Governments also need to make sure that the private sector is supported by the necessary economic infrastructure, such as transport.

7. It is also important for Africa to pursue trade liberalization policies, in order to promote growth and poverty reduction in the continent. Over the past two decades, trade regimes have become more liberal in a number of African countries., but more needs to be done to reduce important tariffs and non-tariff barriers which, on average, remain high in Africa compared to other developing countries. Over one hundred years of experience elsewhere tells us that the benefits of greater regional as well as global integration are not just theoretical, but that they are very real in terms of job creation and improved living standards.

8. I also think that there may be opportunities for Africa in the area of regional cooperation that have not been fully exploited. Scope remains for lowering trade barriers between African countries and for harmonizing macroeconomic policies.

9. The IMF has always stressed the need for industrial countries to match their words with their deeds in the area of trade liberalization, and we continue to support this following the WTO meeting in Cancun. We hope very much that all participants in the Doha round will work hard to inject fresh momentum into the negotiations, so that real progress can be made by the time senior officials meet in Geneva in December.

10. Trade reforms, particularly in agriculture, will have a direct and beneficial impact on growth and poverty reduction in Africa. Together with the World Bank, we in the Fund will support countries engaged in trade reforms that generate temporary balance of payments needs. This was the essence of the message I delivered at the Fifth WTO Ministerial Conference in Cancun, Mexico.

11. We can and will do more to improve the quality of our work in the Fund. We are, for example, working better to align PRGF-supported programs with national budgets and the PRSPs. We will also do more to provide, when needed, additional debt relief through topping-up, to help cushion adverse short-term effects of trade liberalization, and to support countries in their efforts to better manage the impact of economic shocks. More generally we will follow up on the August 2003 discussion of The Role of the Fund in Low-Income Member Countries with a discussion of how the Fund can better tailor its financing and other instruments to the diverse needs of low-income members; and we will consider options for Fund concessional financing for low-income countries over the medium-term.

12. I also think that we should work together with the World Bank to help improve the functioning of financial systems better to meet country needs. To support this we are working on plans for a further expansion in our capacity-building program, with the possibility of technical assistance centers (AFRITACs). Eventually, of course, we would like to see many more African countries gain access to foreign capital markets.

13. I remain particularly gratified by the strong expression of support in Africa for the Fund to remain closely engaged in helping countries raise growth. It is indeed reassuring to know that the service we provide is appreciated and that, with your cooperation and leadership, it is delivering results.

Thanks you very much.