I believe that Africa’s needs must be fully reflected in any global response to this unprecedented recession. With similar intentions, leading policymakers and stakeholders in Africa gathered in Tanzania last March to discuss how to work with the IMF on this. Under the leadership of President Kikwete and IMF Managing Director Strauss-Kahn, the participants agreed to build a new, stronger partnership.
More than just rhetoric, these common goals included the IMF seeking more resources for Africa and reacting more rapidly, responsively, and flexibly. While much remains to be done, I think it is a fair to say that we have achieved a remarkable amount on both fronts—more in fact than I could have imagined when I started in my job just a little over a year ago.
As a reminder, the IMF agreed to mobilize $17 billion through 2014 for lending to low income countries, mostly in Africa—trebling our lending capacity to these countries. This goes far beyond the promise given by our Managing Director in Tanzania to seek a doubling of concessional resources. The financial terms of IMF support have also become more concessional, with zero interest until the end of 2011, and will remain more concessional thereafter.
And the IMF has moved quickly to deploy these resources in Africa. Among international institutions, it has an extraordinary capacity to react early to a country’s needs, as I know from my own experience as a policymaker in my home country of Liberia. Indeed, in the first eight months of 2009, we committed over $3 billion in new resources to countries in sub-Saharan Africa, trebling the total stock of outstanding commitments this year alone.
Addressing different needs
Plus, as Hugh explained, the Fund is also working to better tailor this financing to the needs of the countries. Different countries have different needs. Even before the recent overhaul, we had committed this year to quick, upfront, and concessional lending of about $1.5 billion to 8 countries with immediate, shorter-term needs. These countries are generally stable, but have been hurt by falling exports, tourism and capital inflows. Examples include Cameroon ($150 million), Democratic Republic of Congo ($200 million), Ethiopia ($240 million), Kenya ($175 million), Mozambique ($175 million), and Tanzania ($340 million). We are also lending a further $1.5 billion to 8 countries with longer term financing needs—these countries include Cote d’Ivoire ($560 million), Ghana ($600 million), and Zambia ($265 million).
The reforms call for the Fund to respond flexibly as well as rapidly. In four cases, countries qualified for rapid access based on current policy measures. For others, structural conditions have been re-focused on core objectives and will be evaluated on a holistic basis rather than strict compliance with specific conditions. An ongoing review of the debt sustainability framework should take account of the diversity of debt profiles in African countries.
Another critical area lies in helping Africa build more capacity to weather the storm. Strengthening capacity for macroeconomic management in Africa remains critical. Given the effects of the crisis, we have seen a marked increase in requests for assistance related to domestic revenue mobilization, including from the exploitation of natural resources. We hope to meet these increased demands while continuing to focus on improving countries’ budget processes.
Regional technical assistance centers
An increasing share of our capacity building is being delivered through our three African Regional Technical Assistance Centers (AFRITACs). Countries say they like the centers’ proximity, and the fact that all stakeholders play a role. To build on this successful model, we are aiming to raise more funds to scale up the existing centers and establish two new ones, which will enable us to extend coverage to all of the countries in the region. We are also continuing to support capacity rebuilding efforts of post-conflict and fragile states—something important to me given my own experience. This year, the countries receiving intensive and wide-ranging technical assistance include Burundi, Democratic Republic of Congo, Liberia, and Zimbabwe.
Overall, I feel the current crisis is showing the Fund at its best—as a dedicated, highly professional institution that is able to respond quickly to the needs of its members. And I am pleased that, under the leadership of Dominique Strauss-Kahn, the IMF is keeping attention focused on Africa’s needs, even as larger, higher-profile economies dominate the global headlines. Now, we must continue to live up to the high expectations that we have raised for our partnership with Africa.