The G8 group of rich nations was under pressure last night to set out plans to make good on its pledge of $20 billion of grants and loans for the North African countries caught up in the Arab Spring revolution.
Tunisia, which was the first state to overthrow its leader as civil uprisings spread through the region, said it welcomed the “good intentions” but insisted it would need a “hefty package”.
The US Treasury declined to discuss detailed timelines but said the G8 and multilateral institutions were engaged in a “very intensive effort” and recognized that the [multilateral] banks had critical work across the whole continent.
“There is no G8 package yet”, finance minister Jalloul Ayed told Emerging Markets, referring to the declaration of support for the affected countries at the summit of leaders in Deauville last month.
Ayed said much work was needed to firm up the headline $20 billion support promised by the G8 Deauville summit. Budget support loans committed by the ADB, World Bank and France “would be disbursed in the next few weeks”, he said.
Speaking from Tunis, Ayed said Deauville produced “some good intentions and declarations of support” – including French President Nicolas Sarkozy’s mention of $40 billion for reforming Arab economies – which included $10 billion from oil-rich Gulf Arab states and $10 billion from other governments - and a $4 billion commitment of World Bank Group (WBG) funds over the next two years. “But this all needs to be better articulated and better defined,” he added.
His comments come in the wake of a warning by African Development Bank president Donald Kaberuka that the speed of economy recovery would depend on the degree of external support.
“It is important that the commitment that was made internationally to support the transition in North Africa is realised,” he told Emerging Markets. “It’s absolutely critical.”
He said he was confident that the outlook for the countries in the MENA region was “quite bright” assuming that the roadmaps that had been put in place were followed.
“That is why we are strong supporters of what is happening here, especially in Tunisia,” he added. “I hope that the Deauville commitments are realised.”
G8 finance and foreign affairs ministers are to meet in Brussels on 12 July to go into details. Tunisia’s wide-ranging structural reforms are estimated to cost $25 billion over the five years from 2012 and “will require some hefty packages”, Ayed said.
Scott Morris, US deputy assistant Treasury secretary for development policy and debt, told Emerging Markets: “Our focus is on working with the banks and governments in those countries to ensure the policy environment is good and the appropriate governance reforms are in place.”
“The critical thing is to make sure that the type of assistance meets their current needs, and that the policy environment and reform commitments are there.”
The concerns over the timescale of the disbursement of the Deauville package amid demands that the G8 and other rich nations open their agricultural markets to exporters from the North African region.
As Emerging Markets reported yesterday, Kaberuka said that the international community must step up its efforts to help the region through a “combination of instruments” including increased European market access to North African goods.
The US also played down fears that the G8’s focus on North Africa would come at the expense of aid pledged to countries in sub-Saharan Africa.
“The US Government continues to feel strongly about the region and keeping it as a priority,” Morris said. “We don’t see a trade-off at all. It is a virtue of these institutions that they are able to work aggressively and quickly to respond to events on the ground in North Africa while taking nothing away from the work that they are doing in some of the poorest countries in Africa.”