[stop-imf] More on the IMF's Poverty Offensive

[Robert Weissman]

It is increasingly clear that the IMF's legitimacy and ability to maintain
a role in long-term and concessional financing turns on its efforts to
proclaim itself a poverty-fighting institution. There is no shame.

Note that the following commentary, just posted on the IMF web site, is
from January 13.

Robert Weissman
Essential Information			|   Internet:	rob@essential.org

AFRICA CAN HARNESS GLOBALISATION
A Commentary 
By Michel Camdessus
Managing Director of the International Monetary Fund
Business Day (South Africa) 
January 13, 2000
Reproduced with permission of Business Day (South Africa) 
Economic growth and poverty reduction can accelerate if continent follows
IMF and World Bank prescriptions, writes Michel Camdessus 
There is an old African proverb that has become more widely known of late:
it takes a village to raise a child. In the new millennium we could say
that it takes a global village to raise that child up from poverty. 
What are Africa's chances of harnessing the benefits of globalisation,
achieving more rapid poverty reduction and faster growth in living
standards? I believe the prospects are good for several reasons:

*	Much of Africa has made significant economic progress in recent
years. Real gross domestic product (GDP) growth averaged nearly 4% a year
in the past five years--a clear improvement from the 1980s and early
1990s--with some countries reaching average growth in the 5%-8% range. Per
capita incomes are on the rise and average annual inflation is in single
digits, sharply down from an average of 40% in the first half of the
1990s; 

*	The world economic environment is improving. The economies
afflicted by the financial crises of recent years are recovering, global
inflation remains low and worldwide growth, which fell to 2.5% in 1998, is
expected to reach at least 3.5% this year; and 

*	The global village has been listening to Africa's plight and is
ready to act, including through a new approach to poverty reduction
recently adopted by the International Monetary Fund (IMF) and World Bank.
This amounts to a unique window of opportunity for achieving the faster
poverty reduction and faster growth. 

Growth in per capita incomes is still far too slow (it remains negative in
several countries) and the depth and prevalence of poverty remain
unacceptable. We are still a far cry from the Copenhagen Declaration
pledge to reduce by half the proportion of people living in extreme
poverty by 2015. 
The proportion of the globe's people living on less than $1 a day is only
just below the 29% estimated in the early 1990s. For economic growth, the
7% that Asia has averaged in recent decades may be a reasonable target for
Africa. 
But the faster progress that Africa needs in growth and poverty reduction
will depend on a new partnership between Africa and the international
community. 
A large part of what Africa needs to do is familiar. It includes: 

*	Pursuing sound macroeconomic policies to boost confidence,
investment and growth in the private sector; 

*	Reforming the financial sector and legal and regulatory frameworks
to remove impediments to efficiency and competitiveness; 

*	Stepping up trade and exchange liberalisation, and price
liberalisation--including removing biases against agriculture and the
diversification of exports--to open up economies to competition and deepen
their integration into the world economy; 

*	Giving a decisive boost to regional integration efforts; 

*	Strengthening public institutions, improving governance and
rooting out corruption; and

*	Increasing the efficiency of public spending to free up more
resources for the poor, including cutting military outlays. 

There are also some important changes in emphasis in the international
community's new approach to poverty reduction. 
One is a greater emphasis on policies that attack poverty directly. 
We have long known that sound economic policies promote poverty reduction.
But we are now much more aware that causation also runs in the other
direction. Policies that benefit the poor directly--such as investing in
health, education and rural infrastructure--also boost growth. 
How are these insights being translated into actions? First, the new
approach puts poverty reduction at the heart of programmes to be supported
by the IMF and World Bank in the 75 poorest countries. The objectives of
the IMF's concessional lending facility for low-income countries have been
broadened to include poverty reduction. this change, the ESAF has been
renamed the Poverty Reduction and Growth Facility. 
To ensure the focus on poverty reduction, the strategy in each country
will be set out in a poverty reduction strategy paper to be drawn up by
the government, with the broad participation of civil society. This will
provide a focused policy agenda, promote government accountability and
foster a national dialogue on economic and social policies. 
Moreover, since the paper will form the basis for the financial support of
the IMF, World Bank and eventually other creditors and donors, it should
ensure better coordination of external assistance and more effective use
of debt relief. To further help the heavily indebted poor countries, most
of which are in Africa, the international community recently agreed to
provide deeper and faster debt relief, which is expected to be available
to more countries (perhaps 36 instead of 29). 
The external debt burdens of these countries, in aggregate, will be cut by
more than half, reducing their debt to sustainable levels and freeing up
more resources for poverty reduction. More is also being done with
technical assistance and training. 
How can the industrial countries help Africa through their own policies?
On the trade front, they should take bolder steps to give exports from the
poorest countries unfettered, tariff-free and guaranteed access to their
markets. 
They should boost aid flows from their current low levels, make
medium-term commitments to aid provision, channel help to countries
pursuing the right policies, ensure that debt relief is truly additional
and not financed out of existing aid budgets, and simplify procedures.
They should also bolster their efforts to help Africa bring peace to its
war-torn regions. 
A good start would include strongly supporting Africa's efforts to build
peace, resolve and prevent conflicts; exercising restraint in arms sales;
ending the provision of export credits for military purposes; encouraging
reductions in military expenditures to below 1.5% of GDP; and joining
international efforts to counter the smuggling of raw materials and
natural resources to finance armed conflict. 
Africa now enjoys a new opportunity to mobilise the international
community behind its growth and development efforts through the new
approach to poverty reduction. Let us join hands in a new partnership--a
partnership in which Africa itself will have to play the pivotal role--so
that history records the dawn of the new millennium as the ushering in of
an African renaissance. 
Camdessus is departing IMF Managing Director.