Listening and dialogue increasingly define IMF relations with African countries and civil society. The IMF has been actively seeking out the opinions of African heads of state, public officials, business and labor representatives, and civil society and has been translating this advice into streamlined conditionality and stronger national ownership of reform programs (see page 19).
For example, the pursuit of national ownership has been central to the poverty reduction strategy paper (PRSP) process, which has just undergone a thorough review. And the IMF and the World Bank are working hard to make the enhanced Heavily Indebted Poor Countries Initiative a success—to provide deeper, broader, and faster debt relief to eligible countries and to strengthen the links between debt relief, poverty reduction, and social policies. There is also greater recognition that good economic advice cannot be separated from an understanding of national political processes and the social dimension of development.
Strength of global economic recovery in doubt
At the time of the terrorist attacks in the United States on September 11, 2001, global economic growth was sluggish, but the slowdown that had begun in mid-2000 appeared to be close to bottoming out. Some major countries—the United States, Japan, and Germany—were in or near recession, but some others—China, India, and Russia—continued to experience robust growth.
The terrorist attacks sparked new uncertainties, but the immediate economic effects of the attacks turned out to be moderate. By early 2002, it seemed that a global economic recovery, led by the United States, was under way. By mid-2002, however, weaknesses in emerging markets, as well as in mature equity markets, indicated increased risk aversion among investors. This sentiment, in turn, raised questions about the strength of the recovery. The financial difficulties experienced by some emerging market economies, particularly in Latin America, meanwhile pointed to the importance of the IMF’s continuing work to prevent and resolve crises.
This annual IMF Survey Supplement describes the institution’s policies and operations against the background of global economic and financial developments. It is updated each year to reflect any changes prompted by world events. The section on the IMF and Africa (see above) represents a new feature of the IMF Survey Supplement. In future years, the feature will continue to showcase areas in which the IMF has devoted considerable attention in the year under review.
Increasingly, the IMF sees that progress in African countries can show the way forward. Notably, African leaders themselves have designed and will carry out the New Partnership for Africa’s Development (NEPAD), a plan to revive the continent and end its marginalization. Under NEPAD, African countries have committed themselves to encouraging peace, democracy, and good governance; designing and implementing action plans to develop the key pro-poor sectors of health care, education, infrastructure, and agriculture; achieving economic integration at the regional and global levels by building a strong private sector and fostering a climate conducive to domestic and foreign investment; and developing more productive partnerships with Africa’s bilateral and multilateral development partners.
The IMF is committed to supporting NEPAD wholeheartedly. Recognizing that the biggest obstacle encountered by African economies striving for sustainable growth often is not lack of political will but lack of capacity, the IMF will set up Africa Regional Technical Assistance Centers (AFRITACs) in Abidjan and Dar es Salaam as part of its commitment. Through the AFRITACs, IMF resident experts and short-term specialists will help West and East African countries build local capacity for economic and financial management. Working closely with the World Bank, the African Development Bank, and donors, the IMF will focus on its core expertise—including macroeconomic policy, tax policy and revenue administration, public expenditure management, financial sector policies, and macroeconomic statistics. These AFRITACs, to begin operating later this year, are the first of five such centers eventually envisaged for the region.
Given its ability to generate income and reduce aid dependency, trade is an important avenue for self-help, which is the cornerstone of NEPAD and a major weapon in the international community’s fight against poverty. Increased and better-coordinated support from rich countries in the form of more generous aid flows is also a major component of the poverty-fighting arsenal. The IMF continues to be an advocate for industrial countries to increase development assistance to poor countries with strong policies and to open their markets by phasing out trade-distorting subsidies and other trade barriers.
The IMF also supports stronger implementation of African regional initiatives as a way to increase access to markets both inside and outside Africa, improve competitiveness, and promote economic growth. NEPAD identifies regional cooperation and integration as key conditions that must be present in order for Africa to develop (see box, page 2).
Implementing the “Monterrey Consensus,” which emerged from the International Conference on Financing for Development held in Monterrey, Mexico, in March 2002, is an important next step in the international community’s efforts to improve living conditions in Africa. The IMF remains committed to contributing to this global effort—through its economic policy advice and financial and technical assistance.