[stop-imf] WSJ: U.S. to Push Credit-Rating Plan For Indebted Nations in Africa

[Robert Weissman]

U.S. to Push Credit-Rating Plan
For Indebted Nations in Africa

By MICHAEL M. PHILLIPS
Staff Reporter of THE WALL STREET JOURNAL
April 22, 2002

WASHINGTON -- The Bush administration is offering to help smooth the way
for African nations to secure the credit ratings needed for them to tap
private
capital markets.

Securing a sovereign-debt rating, in the administration's view, is a
first step in a long process of edging countries away from depending on
international aid and
toward business-driven growth. Meanwhile, African governments would
benefit from the experience of opening their books to rigorous financial
scrutiny, U.S.
officials argue.

"It's pushing the governments into the private sector, which is where
they're going to have to go ultimately anyway," said Walter Kansteiner,
assistant secretary
of state for African affairs.

Secretary of State Colin Powell and Treasury Secretary Paul O'Neill plan
to make their pitch Tuesday to a gathering here of dozens of African
finance ministers
and central bankers. They will argue that governments could secure more
private investment by giving markets an immediate read on their
credit-worthiness. The
administration has made arrangements with Fitch Ratings Ltd. to pay for
assessments for governments that sign up.

"We believe all nations need to move in a direction where they have
investment-grade debt," Mr. O'Neill said over the weekend.

Realistically, the administration figures there are perhaps a dozen or
more African nations whose budgets are in balance, whose governments are
reasonably
transparent and whose legal systems protect property rights -- and that
therefore might be ready to approach private markets in the
not-to-distant future. Among
them are Ghana, Kenya, Uganda, Mozambique and Mali.

"African markets need to be integrated into the global economy in order
for the African markets to grow in the same way the global markets
grow," said Stephen
D. Cashin, managing director of Modern Africa Fund Managers LLC, a
Washington-based firm with $100 million in private equity invested south
of the Sahara.

Currently, just four of the 48 sub-Saharan nations have sovereign-debt
credit ratings: South Africa , Botswana, Senegal and Mauritius. Last
week, South Africa ,
the continent's economic powerhouse, raised $1 billion in 10-year bonds
from international credit markets, its single largest issue, according
to Maria Ramos,
director-general of the National Treasury.

But even those nations that are successful on international markets warn
that few African nations can follow their example given problems of
economic disarray,
social unrest and inefficient or even corrupt government. Even some
well-run countries are simply too poor to attract much interest in
government debt issues.

"It's good that countries can have alternative access to finance," such
as international capital markets, said Trevor Manuel, South Africa's
finance minister. "On the
other hand, we must recognize that for many African countries it's a
long way off."

Write to Michael M. Phillips at michael.phillips@wsj.com

Updated April 22, 2002