IMF chief warns Africa to prepare for Europe fallout
22 December 2011, 10:23
Niger - Many
countries in sub-Saharan African are less prepared to deal with an
economic shock now than they were during the 2008 food and fuel crisis
and the global financial turmoil that followed, IMF chief Christine
Lagarde said on Wednesday, urging developing nations to build up their
Lagarde was speaking during a trip to Niger, one of the world's
poorest countries and Africa's newest crude oil producer, during which
she met President Mahamadou Issoufou and praised his development plans.
Lagarde's December 18-22 trip to Africa, which also included a
visit to OPEC-member Nigeria, comes as concerns grow over the impact on
developing countries of Europe's sovereign debt crisis through a
possible drop in global trade, workers' remittances and investment.
She said many African countries were able to weather the 2008 and
2009 economic shocks well, maintaining health, education and
infrastructure spending and recovering quickly to growth rates enjoyed
int he mid-2000s.
"In short, they built up macroeconomic buffers and put their
economies on a fundamentally stronger footing. This enabled most
countries to maintain critical social and infrastructure spending when
the crisis hit," she said in a speech to Niger's National Assembly.
"But, for many countries in the region, my main worry is that
their capacity to absorb further shocks is less than it was three years
ago," she added. "This would be even greater cause for concern if the
global slowdown turns out to be more pronounced this time around."
She said a sustained growth slowdown in advanced countries could cut into demand for Africa's exports.
"It may also inhibit private financing flows, remittances, and
possibly aid. This is not a welcome thought for Niger. Aid flows are
important and remittances have already been disrupted by the upheaval in
Libya," she said.
She said Niger, a top uranium supplier to former colonial master
France and which began pumping oil earlier this year, could use its
resource revenues to "promote more broad-based and inclusive growth" but
needed to avoid pitfalls suffered by many other countries.
"There is the hard truth that relatively few countries have managed
natural resource wealth well. Although, Niger has an advantage. You can
benefit from the experiences of others," said Lagarde, a former French
She said Niger needed to ensure transparency, invest its revenues
wisely, and diversify its economy to avoid the shocks associated with
volatile commodities markets.
An IMF country mission in November forecast GDP growth could reach 14 percent in 2012, thanks in part to oil revenues.