Sunday, November 12, 2006

Africa's Growth Prospects Good, Says IMF

Africa has rare chance to bolster growth, IMF says
Nick Tattersall

In his first visit to sub-Saharan Africa since being appointed the Deputy Managing Director of the IMF, John Lipsky said that Africa’s growth prospects were good because of the combination of a favorable external environment and recent debt forgiveness measures adopted by the West. According to Lipsky, inflation in the region was at its lowest in the past 25 years, while economic growth in the past two years has been the fastest in a decade. Sub-Saharan Africa is expected to grow at 5.4% this year and 5.9% in 2007.

The success of Africa can be attributed in part to it embracing economic reforms in recent times. However, Lipsky cautioned against over-exuberance and stated that further economic reforms were necessary to maintain robust growth. He also noted that the economic growth has not reduced poverty levels appreciably, in part due to stagnant export growth. Critics claim that Africa's export growth has remained stagnant because of developed countries providing domestic farmers with sizable subsidies. They contend that unless Western governments dismantle subsidies, African farmers will not be able to compete with subsidized products and their standard of living will not increase. The current suspended status of the Doha round of talks is not an encouraging sign in this regard.

1. What is preventing the developed world from eliminating tariffs on agricultural goods? What financial incentives might the developed world require to do so?
2. What can multilateral organizations such as the World Bank and the IMF do to boost Africa's export growth and ensure that Africa continues on its path of economic progress?

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