African Consultative Group Meeting: Statement by the Chairman of the African Caucus and the Managing Director of the IMF

Mr. Samura Kamara, Minister of Finance and Economic Development of Sierra Leone, and Mr. Dominique Strauss-Kahn, Managing Director of the International Monetary Fund (IMF), co-chairs of the African Consultative Group, issued the following statement after the conclusion of the Group’s meeting in Istanbul today:

"We met to discuss the impact of the global economic crisis on African countries and our joint response. The global economic slowdown is exacting a heavy toll on African countries, hit by declining world trade, falling commodity prices, and faltering financial flows. Decisive efforts, by African policy makers and the international community, are needed to ensure that the remarkable gains of the past decade are preserved and the continent returns to strong and sustainable growth, the basis for durable poverty reduction.

"We discussed the economic policy response in African countries. While individual circumstances differ, prudent macroeconomic policies and structural reforms over the 8-10 years preceding the crisis have provided room for fiscal policy to play a stabilizing role in many countries in 2009 and, where feasible, policies should continue to be supportive in 2010. As evidence emerges that the global economic recovery is gaining traction, the focus of economic policies will need to shift to medium-term considerations to preserve the hard-won gains on debt sustainability. We agreed that an economic recovery in sub-Saharan Africa in step with the rest of the world is achievable, but that considerable uncertainty remains about the timing and vigor of the economic upswing.

"We reviewed the implementation of the joint commitments made in Tanzania earlier this year to strengthen the partnership between Africa and the IMF. African Ministers welcomed the reforms of the IMF’s lending facilities for low-income countries to close gaps and tailor support to countries’ diverse needs. They also welcomed the increased concessionality of the IMF’s financing for low-income countries, including the interest relief through end-2011. Ministers welcomed the sharp increase in IMF financial support to Africa as well as the recent general SDR allocation, and urged the international community to ensure that sufficient concessional resources are provided to boost the IMF’s lending capacity on a long-term basis. We agreed that it will be important for the IMF’s new framework for assessing debt sustainability and setting debt limits in IMF-supported programs to strike the right balance between providing borrowing capacity to address critical financing needs, including for infrastructure development, and maintaining sustainable debt levels. In this regard, we emphasized the critical role of additional long-term concessional development assistance from the international community."