Burkina Faso and the IMF
The Federal Democratic Republic of Ethiopia and the IMF
Republic of Madagascar and the IMF
Uganda and the IMF
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Transcript of a Press Conference by African Finance Ministers|
Tuesday, November 13, 2001
Gerald M. SSENDAULA, Minister of Finance, Planning and Economic Development for Uganda
Jean Baptiste COMPAORE, Minister of Finance for Burkina Faso
Ali GAMATIE, Minister of Finance for Niger
Gaston Edouard RAVELOJOANA, Governor of the Central Bank of Madagascar
Ms. Lucie Mboto FOUDA, External Relations Department, IMF
MS. FOUDA: Ladies and gentlemen, good afternoon. I'm Lucie Mboto Fouda of the External Relations Department of the IMF, and I would like to welcome all of you to this press conference.
As you may know, we have been organizing press briefings for African Governors of the IMF these last two years. This is intended to give you the opportunity to get firsthand information from people who there in Africa struggle on a daily basis against poverty, against debt burden, the HIV/AIDS pandemic, the conflicts.
Maybe before I introduce you the Ministers that we have here this afternoon, I would like to ask you as usual to identify yourselves and your outlet before asking your question.
This out of the way, let me now introduce the Ministers. Let me start to my far right with Mr. Magnus Kpakol, who is adviser to the President of the Republic of Nigeria, close to him is Mr. Ali Gamatie, the Minister of Finance from Niger, and Mr. Jean Baptiste Compaore, the Minister of Finance for Burkina Faso. To my left is Gerald Ssendaula, the Minister of Finance, Planning and Economic Development of Uganda. Mr. Ssendaula is also the President of the African Group of the Board of Governors of the IMF. To my far left is Mr. Gaston Edouard Ravelojoana, the Governor of the Central Bank for Madagascar.
Now maybe could I ask Mr. Gamatie to offer a few introductory remarks, and then we will take questions in the room.
MR. GAMATIE: Well, thank you. I would like to say that we're very pleased to be here, my colleagues and myself, especially given the quality of the level of meetings that we had since we started this morning. We started at the World Bank where there has been a change of office in the committee that represents the African countries dealing with the Bretton Woods institutions, and we handed over to them our position, especially in light of the slowdown in the economy and the impact of the September 11th events on Africa.
As you know, this discussion goes along with the Annual Meetings, and since they have been postponed, there's going to be meetings in Ottawa the 17th and 18th of November, if I'm correct. And in light of that, we are concerned that the policy reforms that have been carried out in Africa and for which we start to see some sign of progress might be endangered by what's going to happen in the next months and years.
Basically what we are here to say is we are doing our share of the burden, we are taking our responsibilities, we are moving from the struggle for life to economic growth We are starting to get some results. This is certainly not the time for the Bretton Woods institutions and the donor community to drop out Africa from their radar screen. And what we mean by that has been spelled out in a memorandum that we gave to the heads of the two institutions. It goes along some points which I'm sure my colleagues will comment on, that goes from access to markets, to the resources for the HIPC Initiative, to the capital investment in our countries, to human resources and staffing, and quotas. So basically it's the message that my colleagues and myself brought to the IMF and the World Bank.
Before taking questions in the room I would like to inform that Mr. Ssendaula, the President of the group, will have the opportunity to offer the concluding remarks to this conference.
QUESTION: Today the World Bank and the IMF announced that basically they are giving HIPC status to Ethiopia and that Ethiopia will receive some debt cancellation in the future. And I was hoping I could get your reaction to that news and if you know or you think there should be other countries that should be considered for debt elimination or debt relief.
Mr. Chairman, the other day, of course, like the gentleman asked, Ethiopia did get the approval of its HIPC proposal. But there are so many countries now that are in the pipeline, but how soon they would come to the Board and when they will be considered definitely depends on how soon they do prepare that proposal, the PRSP or the HIPC program as a whole, the poverty reduction program. That's something that very much depends on the capacity of the countries themselves, on their own programs. It's not really determined by the institutions. But as soon as they prepare them and as soon as they qualify technically in terms of their ratios and so on that they're eligible for this debt relief, I'm sure the Boards of the two institutions will be prepared to look at those programs. But it's difficult for me to say now which countries come next. It very much depends on how these countries make progress on the preparation of their programs.
MS. FOUDA: Maybe, Mr. President, to broaden a little bit the discussion which is focused on one country, could I ask you to develop for these reporters the discussion that you had with the Managing Director this afternoon. Was HIPC part of that discussion? What are the main points of the memorandum that you provided the Managing Director with this afternoon?
MR. SSENDAULA: Thank you very much, Madam.
First of all, I think we have to acknowledge that, due to the September 11th incidents, it was not possible this year to hold the Annual General Meetings of the World Bank, and that traditionally, when we hold Annual General Meetings of the World Bank, this is a time when a number of things, a number of activities take place. Among the activities, of course, we elect office bearers for the different bureaus, and as it is, of course, now that we didn't hold the Annual Meeting, we found it as Africa necessary that we should have input in as far as the bureau issue is concerned.
The Africa Bureau currently was run as follows: Madagascar, President; Uganda, Vice President; Ghana, Secretary; and Burkina Faso, also Secretary.
Now, we rotate this bureau office. Now we have for the year 2001-2003, Uganda as President; Burkina Faso, Vice President; Libya, member; and Cameroon, member. Then the other part of the committee is also made up of Democratic Republic of Congo, Gabon, Kenya, Tanzania, Tunisia, Algeria, Malawi, Zimbabwe, Benin, Sierra Leone.
Now, whenever these bureaus are elected, they have, of course, to take over from the previous bureaus. And after taking over, of course, at that time we take the opportunity to prepare what would normally be like a report, as it were, of the outgoing report, the people who are outgoing and those who are coming in.
It was decided that today we meet as Africa Bureau and prepare and present a memorandum to the Bretton Woods institutions because our bureau covers the two, IMF and the World Bank. So this morning, after taking over as the new President of the bureau, together with my colleagues, we met the Managing Director of the World Bank--because the President is on a mission--and during that meeting we presented the Managing Director with a memorandum.
In this memorandum, Africans were highlighting the concerns they have about the current economic position, deteriorating economic position. And among the things that we expressed were on the routines that we had expected the World Bank to perform, the debt relief issue, that is, the HIPC; delivery of debt relief, because all together a total of 23 countries globally have qualified for debt relief. They have reached they call the decision point. Of these, 19 are from Africa. Of the 19, two have reached the completion point, and that's Uganda and Mozambique.
So our plea with the World Bank was to speed up debt relief, that is, to close the gap of the period between the decision and the completion point.
Then we had market share, accessing the markets with our commodities. We also expressed our concern that our commodities, which are mainly primary commodities, agricultural produce, are not having a fair share on the market. The problem is that most of the agricultural produce which get into the markets where Africa also sells its products, those developed world agricultural produce are subsidized.
Then we were talking about issues that relate to the staffing, representation on staff, to having more staff in the Bank, Africans being recruited in the Bank, and also taking up responsible positions.
We also talked about support with more funds to carry out further research into HIV/AIDS drugs, to see whether we can have a vaccine, and also to see whether the price for the drugs could be lower, those which can sustain life.
Then direct foreign investment, we requested more support to get more investors into our economies.
In the afternoon, we had a meeting with the Managing Director of the IMF. As you realize, the Fund deals with policy matters, and we, of course, presented matters that relate to policy, things which relate to the quota, quota of the shares in the Fund, things which relate to the Poverty Reduction Strategy Program. I can say that the meetings with both leaders of the Bretton Woods institutions, have been extremely good. They were very cordial. They are very willing to listen and they have promised to present our case. Because now that the Annual Meetings did not take place, naturally our views are going to be presented at another forum where the rest of the people of the Board will be sitting to discuss matters that relate to the two Bretton Woods institutions.
Now, what is the fate of Africa? We are concerned that there is a reduced flow of aid, that is, all the support that we normally got. Now that there was an agreed position to have debt relief, we believe that the process should be accompanied with grants or loans on concessional terms so that we don't fall into further debts in the future. That is the position that we have been putting across and which has been discussed today with the two bodies.
I am convinced with the assurances given that the two organizations mean well for Africa. They are all keen to see Africa get out of the debt trap, on the one hand, and to also see Africa develop. But the incidents of the 11th of September have had a big impact and they are likely to have a far-reaching impact on Africa. You realize when we talk about tourism to Africa, that is an exportable commodity because it earns foreign exchange. And, naturally, when people cannot effectively travel, there will be limited tourism in Africa. Therefore, there will be less earnings.
Spending generally when the economies of the industrialized countries are slow, obviously we are also going to be affected on our produce which are put on the market as far as trade is concerned. Already we are having a problem that most of our major produce, agricultural produce, were facing very, very low prices. But the position is even made worse after the events of the September incidents, because when the economic transactions are low, naturally the prices are bound to be low.
QUESTION: The Bush administration says it would prefer to provide grants to countries emerging from HIPC as opposed to loans, is this something that countries in the region support, or do they have any preference for loans as provided in the past to this new proposal?
MR. SSENDAULA: Of course, I already mentioned it in my address. I said we definitely welcome more grants and aid. And if we have to get loans, they should be on concessional terms. And what do we mean by concessional terms?
One, we are not expected to pick up for commercial loans, and if we picked up loans at all, when we talk about concessional terms, we are talking of loans whose rate of interest is below 1 percent, which is 0.75 percent, and loans whose period of grace is 10 years with a repayment of 40 years.
Mr. GAMATIE: I guess your point is the preference for the Bush administration to provide grants to countries who are emerging from the HIPC. What they're saying is when you go through the HIPC process, it means that you have been under a program of policy reforms, which means that the country has taken responsibility in trying to make changes in its own economy. That's why you cannot press policies like privatization or export-led programs.
What we are saying is we're willing to help if you have a track record. It comes down to that, because to go through the HIPC process, it means that you have a track record of good policy. This means that you do your share of the bargain and we'll help you. That's what the Bush administration is saying.
I don't think somebody's going to blame a country who says I'll help those who are willing to help themselves. The point is once you set the criteria and saying that we're going to help you if you do this, when you get to this point, deliver. We have no problem with criteria such as the one the Bush administration is putting forward. Our message is: okay, fair enough, but if we do our share of reforms, you have to do yours. And as we said this morning, if you look around the world, I don't think that there is any other continent where there has been greater reforms like we have experienced in Africa in the last five years.
But at the same time, we are watching a decline in the flow of aid coming to Africa. So there is an issue of being credible from the international community in fulfilling the commitment when they say you should have good governance, you should fight corruption, have sound, good economic policy, then you will qualify for HIPC. But once you've done that, then sometimes the response is not there.
As Finance and Economic Ministers from Africa, we have no problem in saying that we are willing to take responsibility, we are willing to do our share of the burden, but, please, once we get there, do what you said you are going to do.
MR. COMPAORE: Let me add just a little bit to what my colleague just said. When you talk about the question of aid, I think the issue here is that we want the message to be out that Africans are realizing that they cannot grow just depending on aid; that while aid is important, the question of market access is even more pivotal. And so in our discussions with the Managing Director of the IMF today, the importance of having market access was very well underscored. We will have to utilize some aid because there's a question of mobilizing all the available resources, making sure, that we're leaving no stone unturned in trying to address the challenges that we face.
That also recognizes that obviously in the past we may not have done quite as adequately as might have been expected. And so you would recall you'll also see that what's happening is that almost throughout Africa, economic management is coming under increasing discipline. We are recognizing that you have to be more prudent, you have to use due process, you have to exercise a lot of discipline, and you have to be efficient--which was another issue that the Managing Director emphasized. And African countries are very aware of that and are incorporating that into their programs.
But I think ultimately, as we face our macroeconomic challenges in trying to attain particular objectives, we cannot at all forget the importance of the availability of infrastructure or the removal of constraints and bottlenecks. It will be very difficult for Africa to grow at the speed, that is needed if basic bottlenecks are not removed, for example, if basic infrastructures are not in place. I cannot say this enough. The fact that if you don't have roads, particularly in the rural areas, you will have difficulties getting your agricultural product to the marketplace. If you don't have steady electricity, if you don't have water supply, it will be difficult to achieve the kind of good targets we are looking for.
And, again, you cannot reduce poverty if you don't have significant economic growth, and we are talking about growth at well above 5 percent, certainly well above the rate of population growth.
So while aid is important and we look at that, we want to set the context clear; that is, we need much more than aid. Aid is needed, but a lot more has to happen. I think most importantly investment flows into Africa and market access are the things that complement aid and will help Africa get to the higher level.
MR. COMPAORE: I would like to add to what the previous speaker said regarding how you choose countries for these resources. Of course, these countries are committed to the stabilization program and poverty reduction programs, and there's also the fact that the HIPC Initiative at the outset was to help save on debt payments, to promote social sectors of the economy. These sectors affect the majority of our countries, perhaps up to 80 percent of the population. So it's quite normal for those countries that are undertaking the poverty alleviation process receive resources to help them, but these are to be in significant amounts. As the Chairman said, they can be concessional. It's not sufficient what's being obtained now, and with the September crisis, obviously this is all the more obvious. So we need more mobilization of funds because we not only want the contribution from the HIPC Initiative to be increased, but the catastrophic nature of the poverty struggle just doesn't involve savings to be made to be reinvested. It's a program which goes beyond that. It goes to all sectors because we need to raise growth. And if we imagine that 80 percent of our population are able to double their output or production in one year, you can see how beneficial this would be and how beneficial it is to support this sector of our countries.
MR. RAVELOJOANA: My Nigerian friend has already addressed most of what I was going to say. I thank him for that. But I would like to focus on these questions that have been brought up with the heads of the two institutions this morning and this afternoon.
Africa is fighting poverty. It is seeking a position that would be fair and just and which would respect human dignity in the international scene. And it's in this perspective that all these questions arise.
Aid and debt relief and the HIPC Initiative is important, especially in these difficult times, but I would emphasize the importance of market access. This was raised earlier. What we are asked to do usually in our structural reforms is to adopt measures of a general scope, for example, liberalization and opening up economies, as a general matter for immediate implementation; whereas, the counterpart from the other side, opening their markets, is limited, however, to the types of products or in terms of time taken to implement them.
We find today this is very encouraging for us. For my country in particular, we have benefited from this, but we want these questions of market access to be expanded in a reasonable length of time so as to make sure there will not be just a balance but sufficient encouragement to support the efforts we have made.
The heads of these institutions agree to this approach as it seems to them and to everyone in the world balance we maintain peace, but it is not desirable or realistic to leave Africa behind.
QUESTION: Again, most of the demands I heard that your Excellencies actually presented today to the IMF and the World Bank, we've heard them before. What I'm trying to hear is what's new. What brings you to Washington today? And what's different from before?
MR. GAMATIE: That's exactly one of the points we discussed today. It's not only this meeting. This brings us back to what is called the new partnership between Africa and its partners.
You might recall that there have been two initiatives that have been launched recently: the PRSP process and the HIPC Initiative. Now, the PRSP process is a critical one because for the first time, it is designed as to give the African countries the opportunity to choose their own strategy. We have been given the floor, I should say, for the first time, and this process is starting.
Now, it says country leadership, donors coordination. These seem like words, but they are very important. It means that we are going to say what are the key areas in our countries. Donors coordination, it's recognize now that if there has been coordination among donors, the flow of aid going to Africa would be much more effective by 50 percent. This is a lot of money. Then to make it sustainable, you come in with the HIPC process because the debt burden is too big.
Now, we started working on these initiatives which have started to produce some results. As he said, 19 countries just came to the decision point of the HIPC. But then you have to go to the completion point, and there is a time period in between these two.
Along with these two initiatives, the IMF is working on new guidelines for operating in our countries along the whole issue of streamlining conditionality in Africa. So there is a change in the way these institutions are doing business with us, and there is a change in the way we're taking care of our own business in terms of good governance, in terms of democracy, in terms of opening up our market, in terms of regional integration.
You've never had these conditions at the same time in Africa as of today. But there is a risk. The risk is now that we started to move, there is a concept, there is a strategy. We know where we want to get. We know how to get there. Now that we are at this point, there is a slowdown in the world economy, and then you have the events of September 11th.
We are not here to discuss a new strategy or a new partnership or a new way of doing business, but we're saying, don't drop Africa out of your radar screen because we are going to lose the progress we have made during the last five years. We're going to lose that and it's going to take a long time to recover.
So we have to do that in two ways: number one, to keep the track of what we're doing; and, number two, to make sure that the side effects of what's happening is not going to make it much more difficult to us. So if you do that in the combination of the PRSP process, all that has been said, access to markets... (inaudible) ...produce first, and then you will have the access to markets, good governance, all these are in the framework.
But the point is there is much more going on in Africa right now that did not get the attention it should from the media. But, believe me, work is going on, and the IMF knows it, the World Bank knows it. And we are here to make sure that we can keep on doing this work.
MR. SSENDAULA: I think we are ending on a very interesting note from one of our journalists here. This is really becoming rhetorical. While you have been here several times, you are saying the same thing. What is new? What brings you to Washington this time around?
Well, what brings us to Washington is very obvious: one, this is the seat of the main Bretton Woods institutions, which institutions came into being to address the problems that befell then those countries, you know, at that time. And, of course, it has continued to be the main mover of policies. So, naturally, we had to gather here and to let them know that, in spite of the September 11th incidents, we had carried out all the necessary reforms, don't drop us.
Why do we have to put that across? At the time of the end of the Cold War, there was also that concern. Now that the Cold War is finished, what is going to happen? Isn't most of the aid going to go to Eastern Europe? Isn't all the support going to go to Eastern Europe? And certainly no doubt we have been slow in that process, and we have, of course, to make our position clearer and clearer in good time.
We have carried out the reforms as agreed with the Bretton Woods institutions, and we are saying to them that there is economic slowdown, what do we do? We are observing that we are not playing on level ground because agricultural produce, they go into markets and they compete with produce which are produced following subsidies. I think we shall have to make this point time and again until it ends.
So if you are conveying the message, this message of subsidized commodities, agricultural commodities, has to be emphasized. It is a very unfair approach because we find ourselves almost competing with civil servants. I want to be very clear about this, because if I am going to produce the same commodity and my friend is subsidized to produce it and we've got the same market, the other one takes the advantage over me and will obviously offer the same commodity for a lower price.
So for you to be coming back to me and saying, look, but I'm seeing you to be lazy, you are not producing, why should I be spending all my resources on you, I'm also saying, look, let's open the market clearly. Don't bring your commodities when they are subsidized so that our commodities can compete in the market. We had to come and deliver that message, and we feel it's important that it gets delivered.
We want access to the markets. That message is equally important. We want to take an effective share of global investments because we have carried out the necessary reforms. Our economies have been liberalized. I could tell you in most countries the currencies are freely convertible. We have created a conducive environment for investment. We had also to come to Washington to let the Bretton Woods institutions know that we should be supported to see more investments flowing. Of course, this has ever been done by the same Bretton Woods institutions. They did it for the East Europeans, and they have come out--some of them, which have not had problems of wars, have certainly been able to come out.
So, again, it was right that we get here, and that's why we are rightly here.
We have also come here to let the world know that the UN target for ODA was expected to rise to 0.7 percent, but the current level now is only 0.24 percent. And this was also in a good spirit because there must be a market in which you sell. If I don't have purchasing power, I will never buy. You make many of these things--unless you sell them amongst yourselves. But if I'm going to be a market, I must have purchasing power. And with this aid, we have been able to carry out reforms on infrastructure and so on, and the rest of our productive site, so that we are able to develop purchasing power.
So if we are going to be a market for finished goods, then we must have resources; so even our unfinished goods must have a market, too. We are also talking about adding value as part of the investments we expect on our commodities. That's why we are calling on the Bretton Woods institutions to help us to identify investors in our economies.
We are grateful that, of course, as we go on repeating these things, there has been some bit of response. One, the European Union, for example, came up with everything can be exported to the European Union markets except arms. Now the problem is the other element of subsidy.
Here in America, we have come up with a goal which is encouraging. It started with certain commodities. So we request that they help us to provide room for more. So these are important matters.
So we are looking at the market access, adding value to our products, and then, of course, accessing markets more, and then more assistance. Here we are not saying that we shall live on grants and the aid all the time. We need this as a stop-gap. We need this because we need to get there. But we are saying we are left behind, and I think it is in the interest of our friends who have gone in front, because if you're a bad neighbor, the rest of the people will live in your neighborhood. For the rest of the world to grow and leave Africa behind undeveloped, they will certainly feel embarrassed more all the time. So they need to take us with them, and that's why we are saying that we are carrying out the reforms. We feel it is right. When they tell us this is not supposed to be done, we are appreciating and these are conditionalities. We are not objecting. We are only saying they should be uniform and consistent.
Another issue of concern is the big drop in our prices, in the prices of our produce, which we have mentioned before. We continue to appeal that the drop really is killing and is very unfortunate, because when you compare prices of cocoa, coffee, tin and, you know, other minerals, even just taking an assessment of one year--or less than a year, June of last year I presented a budget of my country. At that time the price of coffee was $1,100 a ton, and the price today is $436 a ton. Now, can you expect me at the end of the day to be in a position to balance the budget in a situation of that nature? And yet the price of the processed ground coffee in the one-kilo pack by Nescafe has not dropped in the supermarkets in the United States or anywhere else.
So this is an actual global trade disparity, because the same would have happened to the tin of Nescafe in the grocery. But why has the drop paid--why has the price paid to the farmers? Maybe because the people who are behind this processing of coffee and the buying of coffee know that it comes from the undeveloped world and they don't care. That's why we end up in a situation like that. Otherwise, under normal circumstances, the two should have corresponded because the powdered coffee comes out of the same coffee bean that is grown by an ordinary Ugandan or a Cote d'Ivoire farmer or any other farmer elsewhere. But the price, as you can imagine, has dropped from 1,000 to 430-something. So how can you expect someone to balance a budget?
I want to thank you, ma'am, for organizing this press conference to make it possible for us through these people to get the African voice heard. I hope they will do us a favor and put out what we have said so that the world over can hear the African voice. We are going to be more coordinated as Africa to try to press further for the demands that I have put across to you. We shall be repeating them until we get a solution.