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International Monetary Fund. External Relations Dept.

Over the next decade, African countries are expected to be the largest beneficiaries of increased donor aid, which is intended to improve their prospects of achieving the Millennium Development Goals. To help these countries assess the macroeconomic implications of increased aid and respond to the associated policy challenges, the IMF has published a study by its African Department: Macroeconomic Challenges of Scaling Up Aid to Africa: A Checklist for Practitioners.

Mr. Gonzalo Salinas and Patrick A. Imam
The growth literature has had problems explaining the "sub-Saharan African growth dummy" in cross-country regressions. Instead of taking the usual approach of focusing on long-run growth and assuming that sub-Saharan countries have homogenous parameters in growth regressions, we concentrate our analysis on episodes of growth turnarounds (identifying growth accelerations, decelerations, and collapses) and use only West African countries in our sample. The driving force of growth turnarounds are estimated by analyzing external shocks, political and institutional changes, economic reforms, and indicators particularly relevant to the region. Using probits for a group of 22 Western African economies for the period 1960-2006, we find that growth accelerations are most clearly associated with external shocks, economic liberalization, political stability, and closeness to the coast; decelerations occurred during short-lived regimes and when corruption indices weakened; and collapses are linked to external shocks, falling domestic credit, and proximity to the coast. We then identify policy implications.
International Monetary Fund. External Relations Dept.

The IMF expects sub-Saharan Africa’s GDP to grow by 5.4 percent in 2006, the third straight year of growth above the 5 percent level, Managing Director Rodrigo de Rato told a news conference in Lusaka, Zambia, on March 16. But he warned that growth needs to be even higher if Africa is to meet the Millennium Development Goals (MDGs) and urged African leaders to ensure that increased aid flows were used effectively.

Yongzheng Yang, Mr. Robert Powell, and Mr. Sanjeev Gupta

Abstract

Over the next decade, African countries are expected to be the largest beneficiaries of increased donor aid, which is intended to improve their prospects for achieving the Millennium Development Goals. This handbook will help these countries assess the macroeconomic implications of increased aid and respond to the associated policy challenges. The handbook is directed at policymakers, practicing economists in African countries, and the staffs of international financial institutions and donor agencies who participate in preparing medium-term strategies for African countries, including in the context of poverty reduction strategy papers. It provides five main guidelines for developing scaling-up scenarios to help countries identify important policy issues involved in using higher aid flows effectively: to absorb as much aid as possible, to boost growth in the short to medium term, to promote good governance and reduce corruption, to prepare an exit strategy should aid levels decrease, and to regularly reassess the policy mix.

International Monetary Fund. External Relations Dept.

26-27 IMF-World Bank workshop for parliamentarians, Malabo, Equatorial Guinea