Finance ministers from vulnerable African countries are demanding “explanations” from the IMF and rich nations, as the global crisis threatens economic growth and capital flows to the continent.
Repeated calls by IMF officials to donor countries not to cut off aid are largely expected to be ignored, they fear.
“The world is owed a proper explanation,” Kenyan finance minister John Michuki said. “Surveillance that should have been in place from the IMF applies to big and small [countries] and it seems to have been lacking,” he told Emerging Markets.
“The Article IV [consultations], which is the mechanism to maintain discipline in markets and financial institutions, appears not to have been applied to certain members of the IMF,” he said during a press conference.
The Fund’s 2007 Article IV consultation with the USA, which described its financial sector as “sound and innovative”, has been subjected to scathing criticism by many nations. An IMF board member said the consultation was “nothing to be proud of” and had caused “finger pointing” by critics.
Antoinette Sayeh, IMF’s director of the IMF department, said: “The resilience of Africa’s remarkable growth takeoff of recent years is being put to a test.
“It will certainly be more challenging for profitable projects even to receive funding in Africa, and with declines in commodity prices, those projects, of course, look less profitable than they would have otherwise.”
African officials hope that donor countries will not renege on aid efforts as a result of the crisis, but some are already sounding realistic and pessimistic, even after several IMF officials called on donor countries to keep up their efforts.
The resentment widespread in Africa was expressed by Jean-Claude Masangu Mulongo, governor of the central bank of the Democratic Republic of Congo and chairman of the group of 24 developing countries. “The Paulson plan talks about $700 billion and that has been mobilized within a week, whereas we have had different meetings with the G7 where we heard promises for development aid to help countries in trouble – and those promises have not been recognized,” he said.
Essimi Menye, Cameroon’s finance minister, said: “Aid may not have been cut yet, but we understand that people have to keep the umbrella for themselves before extending it to others that are not protected. Those advanced countries are not going to rush in the African savannah to help us when their own tax payers are not able to pay for this.”
Michuki said: “We hope that what we have agreed so far with the donors in the current budget will remain intact.” But he added: “Who is going to compensate the very innocent countries that are going to suffer from this debacle? On the political front, the world imposes sanctions against countries that are [considered] delinquent. So hopefully during this meeting, we can get proper explanations.”