Debt Relief Slowly Curbing Africa Poverty – IMF
International efforts to reduce Africas crippling debt are slowly helping to curb poverty on the continent, but the key to a real breakthrough is stronger economic growth, a top International Monetary Fund (IMF) official said Friday.
The IMFs Africa Director Abdoulaye Bio-Tchane said the 1996 HIPC debt relief scheme had helped raise social spending in the worlds poorest continent even before a major initiative to cancel debt approved by the Group of Eight (G8) rich nations at a summit last year.
– In the last six years we have already seen the resources created by HIPC spent on social sectors. From 1999 to 2005, poverty reducing expenditures tremendously increased, by three percent of GDP on average, Bio-Tchane noted.
After last years Live8 concerts organized by rock stars Bono and Bob Geldof to raise awareness of poverty in Africa, the G8-backed Multilateral Debt Relief Initiative (MDRI) dramatically upped the scale of debt relief.
The impact of the new G8-backed scheme can already be seen, according to IMF studies, with African countries due to boost social spending by on average one percentage point of gross domestic product this year.
Half the nations are earmarking funds for education and health. In West Africa, Burkina Faso, Cameroon and Mali are prioritizing infrastructure outlays, while a drought has forced Rwanda and Tanzania to spend on food imports and power.
– It is fair to say that in each of these countries they have clearly gained from debt relief, said the former Benin finance minister, adding:
– But you need a strong and sustained period of growth to see a real impact on the population. If countries do not sustain their macroeconomic efforts they will not reap the benefits of debt relief.
Sub-Saharan African countries owed some 70 billion US dollar (henved 420 milliarder DKR) to multilaterals as of 2003, according to World Bank figures, or just under a third of their total debts of 231 billion dollar.
The fight against poverty should receive a boost as Sub-Saharan Africas economic growth rate is expected to pick up to around 6 percent in 2007, after falling to around 4,8 percent this year due to the spike in international oil prices.
– To push back poverty, this is clearly not enough, we need a growth rate of at least 7 percent, if we are going to reach the Millennium Development Goal of halving the number of people in poverty, Bio-Tchane said.
Kilde: www.worldbank.org
