IMF head discusses poverty reduction with African leaders

The managing director of the International Monetary Fund (IMF), Rodrigo de Rato, met several African leaders in the central Ugandan town of Entebbe, on Friday, to discuss poverty reduction and the challenges of economic development on the continent.

Presidents Yoweri Museveni of Uganda, Mwai Kibaki of Kenya and Bingu wa Mutharika of Malawi, and finance ministers from Burundi and Rwanda attended the meeting, officials said.

Rato, pointing to a strong global economic recovery, urged Africa to make decisive progress in combating rampant poverty. "We are currently reassessing our outlook for the global economy, and I expect that global growth will increase to about 4.2 percent both this year and next year," he said.

"Sub-Saharan Africa will benefit from stronger global conditions, and is likely to see growth above 5 percent in 2005, supported by improved macroeconomic stability in many African countries, rising commodity prices, and a recovery in agricultural production following severe droughts in 2003," he added.

The IMF head however cautioned that the positive outlook was subject to risk, stemming both from unpredictable weather and an unsteady policy environment. "Africa needs to seize the opportunities offered by the current positive outlook to persevere with reforms required to make decisive progress in combating poverty,"" he said. "Sustained economic growth is a sine qua non for reducing poverty."

He added: "Poverty remains widespread, conflicts are holding back development and the HIV/AIDS pandemic is taking a devastating social toll with serious economic repercussions."

Museveni said the main problems Africa faced included a small fragmented population that had minimised competition and innovativeness, which, he added, was not attractive to both local and foreign investments.

"A small population in a vast continent with plenty of natural resources means that competition between man and man over resources is minimal. This stunts innovativeness of the population and the process of state formation," Museveni said.

Rato had on Thursday met Ugandan businessmen, policy makers and civil society.

"There is no doubt, Uganda has recorded impressive economic growth rates over the last decade. However, (these) impressive growth rates have not benefited the poor. The problem is macroeconomic targets that seem to assume greater significance over poverty targets," the civil society representatives told Rato in a joint statement.

"The IMF should focus more on long-term poverty reduction goals as opposed to the present short term macro-stability and fiscal deficit issues," they said.

Rato said: "If Africa wants to develop, it must be able to sustain its debt. The more governments have to spend on loans, the less money you have for other things."

The Ugandan finance minister, Gerald Ssendaula, told IRIN after the meeting: "Our earnings from agricultural commodities have sharply fallen due to low international prices. We used to earn as much as $400 million dollars from coffee alone, but we earned about $100 million last year."

The IMF head said there was a huge gap between strategies set by world leaders to attain the millennium development goals and source of funding to achieve these strategies. He, however, added that there was some light at the end of the tunnel because the world was at the threshold of more equitable trade, even in controversial sectors like agriculture.