Journal Issue

African finance ministers’ press conference: Africa needs debt relief, aid, and market access

International Monetary Fund. External Relations Dept.
Published Date:
January 2001
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Question: Today the World Bank and the IMF announced that they are giving HIPC [Heavily Indebted Poor Countries] status to Ethiopia and that Ethiopia will receive some debt relief in the future. What is your reaction to that news, and should other countries be considered for debt relief?

Ssendaula: I will ask Girmai Abraham, World Bank Executive Director for Africa, to answer this question.

Abraham: There are many countries in the pipeline, but it is difficult to come up with an exact number. How soon they would come to the Executive Board and be considered for HIPC eligibility will depend on how soon they prepare a poverty reduction strategy paper (PRSP). That is something that depends on the capacity of the countries themselves and is not determined by the Bretton Woods institutions.

Question: Was the HIPC Initiative part of the discussion you had with the Managing Director of the IMF? What are the main points of the letters that you presented to the heads of the IMF and the World Bank?

Ssendaula: In the letter to the President of the World Bank, we highlighted the concerns of African countries related to their deteriorating economic position. A main issue is the delivery of debt relief. We urged the World Bank to speed up the process of debt relief by closing the gap between the decision point and the completion point. We also expressed our concern that our commodities, which are mainly primary commodities, do not have a fair share of the market because they cannot compete with subsidized goods. We also pointed out that Africans were underrepresented in the World Bank and urged the Bank to recruit more Africans. We mentioned that more funds are needed to carry out further research into HIV/AIDS drugs and to see whether we can have a vaccine. Last, we requested more support to encourage more investors to invest in our economies.

In the afternoon, we met with the IMF’s Managing Director. As the IMF deals with policy matters, we highlighted matters that relate to policy such as quotas and the PRSP framework. The meetings with the heads of both institutions were extremely useful and cordial. They listened carefully and promised to present our case to the international community. They are keen to see Africa get out of its debt trap and to see it develop. However, the September 11 events have had a large impact on Africa. For instance, when people cannot effectively travel there will be limited tourism in Africa and, therefore, fewer earnings. Also, when spending by the industrial countries slows down, the demand for our commodities will drop. We already have the problem that most of our major agricultural commodities are facing very low prices.

Question: The Bush administration says it would prefer to provide grants, as opposed to loans, to countries emerging from the HIPC Initiative. Is this something that countries in the region support?

Ssendaula: We definitely welcome more grants and aid. And, if we have to get loans, they should be on concessional terms.

Gamatie: When countries go through the HIPC process, it means that they have been undergoing a program of policy reforms. The country has taken responsibility for trying to make changes in its own economy and has established a track record of good policies. What the Bush administration is saying is that if countries do their share, they should be helped. However, the flow of aid to Africa continues to decline.

Compaore: While aid is important, the question of market access is even more pivotal. That being said, more aid is needed to mobilize all the available resources. We recognize that in the past we may not have done quite as adequately as might have been expected, and we have not been as prudent and disciplined with our resources. African countries are very aware of that and are incorporating that into their programs.

Kpakol: Those countries that are undertaking a poverty reduction strategy should receive resources to help them, but these are to be in significant amounts. What is being provided now is not sufficient, especially in light of the September 11 events.

Ravelojoana: Aid and debt relief are important, especially in these difficult times. However, I would emphasize the importance of market access. We want these questions of market access to be resolved in a reasonable length of time so as to make sure that there will be not only be a better balance but also sufficient encouragement to support the efforts we have made.

Question: Does something new bring you to Washington today? What is different from before?

Gamatie: We are not here to discuss a new strategy, a new partnership, or a new way of doing business. What we are saying is, do not drop Africa off your radar screen because we are going to lose the progress we have made during the past five years. There is much more going on in Africa right now that has not received the attention it should from the media. We are here to make sure that we can keep on doing our work.

Ssendaula: We want to let the two institutions know that, in spite of the September 11 attacks, we have carried out all the necessary reforms. But we still need support.

We want more access to the markets. We want a larger effective share of global investments because we have carried out the necessary reforms. Our economies have been liberalized and we have created a favorable environment for investment. We have come to Washington to ask the Bretton Woods institutions for their support in attracting more investments.

We have also come here to let the world know that the UN target for official development assistance is expected to rise to 0.7 percent of GNP, but the current level now is only 0.24 percent of GNP. We are not saying that Africa should live on grants and aid for a long period of time. We need aid to reach a sustainable level of growth. It is not fair for the rest of the world to grow and leave Africa behind undeveloped. They need to take us with them.

I want to thank the IMF for organizing this press conference and for allowing us to voice our concerns. African countries will be more coordinated in their message and we will be repeating it until we get a solution.

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