Maravi

IMF tips Africa to tackle longer-term challenges

IMF tips Africa to tackle longer-term challenges
By Simon Willson
Tue 09 Mar. 2010, 21:30 CAT

WITH recovery getting under way, Africa should now address longer-term challenges to the continent’s future, including governance issues and climate change, to be able to press ahead with the region’s economic transformation, IMF managing director Dominique Strauss-Kahn has said.

Strauss-Kahn who visits Zambia today assessed the impact of the global economic and financial crisis on Africa.

While noting that the turbulence had struck Africa through many different channels, he said that; “all across the continent, we can see signs of life, with rebounds in trade, export earnings, bank credit, and commercial activity.”

The IMF now expects growth of around four and half per cent in 2010.
“In short, I think that Africa is back - although a lot depends on a global recovery that is in its early stages,” he said.

The IMF chief is on a trip to Kenya, South Africa, and Zambia to meet political, business, and civil society leaders and assess the impact of the global economic and financial crisis on Africa.

“The twin challenges for Africa are to revive strong growth and reinforce resilience to shocks,” he stated in the speech on March 8 that set the scene for a panel discussion involving Kenya’s Prime Minister Raila Odinga, Finance Minister Uhuru Kenyatta, environmental activist and Nobel Prize winner Wangari Maathai, rock star and political activist Bob Geldof, and Transparency International’s Akere Muna.

“The first place to start is with macroeconomic policies,” the former French finance minister said.

Strauss-Kahn said that because many African countries had undertaken good policies before the global economic crisis, this had helped to inoculate them against a more severe downturn - strengthening budget positions, reducing debt burdens, holding down inflation, and building comfortable reserve cushions.

At the same time, he emphasised that there was no room for complacency regarding Africa’s economic outlook.

“This is not the time to rest on our laurels,” he said. “Africa remains highly vulnerable to economic dislocation from many different sources. Think about swings in commodity prices, natural disasters, or instability in neighbouring countries. Think about the risks that come from relying heavily on remittances, aid, and financial flows.”

He noted that because debt positions had improved dramatically, many countries had been able to use the budget to counteract the crisis, including preserving social spending.

“A major lesson from the crisis is that countries that sowed in times of plenty were able reap in times of loss. Policy buffers must therefore be rebuilt, to allow for future countercyclical responses, with fiscal policy and with reserves. Social safety nets must be strengthened - this is the first line of defence against adverse shocks. We should also beware that widening income inequality - across regions or segments of the population - can aggravate tensions and make shocks more destabilising.”

Labels: DOMINIQUE STRAUSS-KAHN, IMF

posted by MrK @ 6:05 AM