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| Africa’s debt levels not a concern: IMF official |
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Sunday, October 04, 2009
ISTANBUL: African economies should recover fairly quickly when the global economy gains strength and debt levels in the region are not troubling, the International Monetary Fund’s (IMF) top official for Africa said on Saturday.
In an interview with Reuters, IMF Director for Africa Antoinette Sayeh said that in countries where debt or high inflation is not a problem, fiscal and monetary policies should remain supportive.
To prevent deterioration in debt levels, which has already risen in the region, fiscal policy will need to shift once a recovery has been established, she said.
“We need to be careful because we’ve already seen some deterioration of debt sustainability indicators in some countries,” Sayeh said on the sidelines of the IMF and World Bank meetings here.
“Some of the debt ratios are not looking as good as they did but we expect growth to resume in the next couple of years, so they have not deteriorated to levels that are worrying us,” she said.
“We think at least for 2010, countries need to look at their budgets in the perspective of the recovery not yet fully underway.”
In a report, the IMF said countries in debt distress include the Democratic Republic of Congo, Zimbabwe, Guinea and Liberia. Others with high debts are Central African Republic, Gabon and Burkina Faso.
The Fund has forecast that growth in Sub-Saharan Africa this year will rise by just 1.1 per cent before strengthening to 4.1 per cent in 2010 and 5 per cent in 2011.
Sayeh, a former Liberian finance minister, said a recovery in Africa would depend on a strong rebound in global trade, higher commodity prices and a pickup in worker remittances.
“I don’t think trade numbers are showing a significant recovery in exports yet, but by next year we’re anticipating that will be coming back,” Sayeh said.
The IMF report said there are also questions over whether the subdued growth prospects for the global economy might delay Africa’s recovery. There are added problems with droughts in east Africa and flooding in West Africa.
“The outlook is certainly not without risk and it will just have to be managed depending on the pace at which the global economy recovers. If it doesn’t recover to the extent that we’re expecting, then we’re in for a long haul,” Sayeh added.
The Fund has said that a global economic recovery has begun, led by China and India, but it has cautioned that the rebound will be sluggish, especially in advanced economies. Both China and India have sharply increased trade and investments in Africa, which could aid Africa’s recovery.
The IMF report said South Africa’s recovery is likely to be slow with growth expected to reach just 1.7 per cent in 2010 before rising to 3.7 per cent in 2011.
Sayeh said she did not think the South African rand was too strong despite its gains against a weaker US dollar. “We don’t have a sense that it is too strong or out of whack,” she said when asked about the strong performance of the currency in recent months.
The rand has gained about 20 per cent against the US dollar so far this year, gains that South African Reserve Bank Governor Tito Mboweni has repeatedly said could lead to imbalances in the economy.
Asked about Zimbabwe, Sayeh said there were discussions with the authorities on clearing a portion of the country’s multilateral debt, which would help it win financing from the IMF and WB.
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ISSN 1563-9479 
