IMF: Africa Recovers Well from Global Crisis

IMF: Africa Recovers Well from Global Crisis

by / Comments Off / 17 View / 17th March 2010

The IMF is currently engaged in a tour of a number of African countries. The managing director of the institution, Dominic Strauss-Kahn visited the continent from March 7 – 11 2010, highlighting the recovery from the global crisis the continent is making in various regions.

Across the continent, growth of 4.5% is expected this year. In a speech in Nairobi, Strauss-Kahn mentioned the good policy decisions governments had made prior to the recession, helping to inoculate them from some of its more severe effects.

The commitment of the IMF at a meeting last year to work for Africa’s interests during the crisis was reiterated, and the continent’s overall good performance highlighted by the IMF and its partners’ having the confidence to increase financial support. This speech also spoke of the need to plan for the possible effects of climate change, including the idea of creating a $100 billion ‘Green Fund’ which could be used for re-structuring and ameliorating the effects of climate change.

During an earlier February 14 – 17 visit to the continent, John Lipsky, the First Deputy Managing Director of the IMF, speaking in Ghana, detailed the actions taken which had helped many African countries to cope with recession.

Speaking about the continent in general and individual terms, countries were shown to weather the recent crisis better than in the past, and in fact in better shape than a number of other parts of the world. Actions including the rolling out of structural reforms and the strengthening of budgetary and monetary policies were largely responsible for this performance.

African central banks were shown to have strong financial reserve positions, allowing them to deal with disruptions to their balance of payments. Efforts by the IMF and others to aid debt relief had also helped by freeing up resources to support improvements in the business environment, infrastructure and support for those in poverty.

Individual countries received detailed reviews of their performance, as well as suggestions for further development. For example, Angola’s economic developments were in line with expectations, and market confidence had improved, while positive developments in non-oil sector economic activity complemented growth in the oil industry. Further steps to improve debt and finance management, and increase transparency, were suggested.

In Tanzania, the ‘Policy Support Instrument’ program has helped to deal with the effects of the crisis and with disruptions from events such as power outages, floods and drought. This and other programs, combined with sound macroeconomic policies, mean the outlook for the country includes forecasted growth of 6.2% this year. Suggestions included better social security regulation, and improving efficiency in revenue collection and government spending.

Credit for African countries’ recoveries belonged to their governments, according to Strauss-Kahn. Although problems remained to be solved, these were said to be manageable by means of local efforts and help from sources and donors such as the IMF. Strauss-Kahn’s much duplicated contention that ‘Africa’s destiny will be driven by Africans’ is borne out by the continent’s continued recovery and development.