Mr. Alejandro Izquierdo, Ward Brown, Mr. Brian Ames, and Shatayanan Devarajan
Poverty is a multidimensional problem that goes beyond economics to include, among other things, social, political, and cultural issues (see Box 1). Therefore, solutions to poverty cannot be based exclusively on economic policies, but require a comprehensive set of well-coordinated measures. Indeed, this is the foundation for the rationale underlying comprehensive poverty reduction strategies.1 So why focus on macroeconomic issues? Because economic growth is the single most important factor influencing poverty, and macroeconomic stability is essential for high and sustainable rates of growth.2 Hence, macroeconomic stability should be a key component of any poverty reduction strategy.
Internal conflict and wars have seriously affected Africa’s development and caused immense suffering to its population. One of the bloodiest wars since World War II took place in the Great Lakes region. The Democratic Republic of the Congo (DRC), the third-largest country in Africa, had the sad privilege to be the main battlefield of the conflicts, which involved seven neighboring countries. This war, which some labeled as the “Third World War,” directly or indirectly affected about 100 million people. However, since early 2001, under the leadership of its new president, Joseph Kabila, the DRC has made remarkable progress in moving from conflict to reconstruction.
This year looks set to be another encouraging one for most sub-Saharan African economies. Reflecting mainly strong domestic demand but also elevated commodity prices, the region’s economy is set to expand by 5¼ percent in 2011. For 2012, our baseline projection is for growth to be higher at 5¾ percent, owing to one-off boosts to production in a number of countries.
The collapse of the expenditure control system and revenue collection, and the resulting monetization of an uncontrolled budgetary deficit, were identified as the primary source of the vicious circle of hyperinflation and falling currency that plagued the Democratic Republic of the Congo (DRC) economy until the end of 2000.