IMF Managing Director Dominque Strauss-Kahn discusses on the upcoming conference with a group of African ambassadors and diplomatic representatives at IMF Headquarters in Washington,last week. The conference,to be held on March 10 and 11, in Dar es Salaam,will focus on the continent's recent economic successes and on the impact of the financial crisis on Africa.(By courtesy of IMF)
STAFF WRITER, 6th February 2009 @ 02:31
TANZANIA will next month host a high-level conference scheduled to discuss the impact of the global financial crisis on the African continent. The conference being jointly organised by the International Monetary Fund (IMF) and the government of Tanzania, would be held in Dar es Salaam from March 10-11.
IMF Managing Director Dominique Strauss-Kahn said over the weekend that the theme of the conference is: "Changes: Successful Partnerships For Africa's Growth Challenge." He said the objective of the conference is to discuss the impact of the financial crisis on Africa and, at the same time, learn from the continent's successful economic experiences in recent years, especially in terms of macroeconomic stability and growth.
"The focus of the current financial crisis has been on the advanced and emerging economies, but the impact on Sub-Saharan Africa will be equally severe. "The crisis will affect African countries, but the region is in much better shape to weather the crisis than in the past, thanks to several years of responsible economic management," the IMF chief was quoted as saying in a statement made available to 'Business Standard'.
The conference is expected to attract finance ministers and central bank governors from all over Africa, prominent academics, the private sector and civil society. President Jakaya Kikwete and Mr Strauss-Kahn, would be among the key speakers at the conference, where strategies to strengthen the partnership between Africa and the IMF, are to be discussed.
"It will be an opportunity to assess what we have learned from past successes as well as what needs to be changed while going forward," Mr Strauss-Kahn said. In its World Economic Outlook (WEO) report released on Wednesday, IMF said growth in the world economy will fall to its lowest annual rate since World War II in 2009.
It said overall global growth will fall to 0.5 per cent this year with the world's most advanced economies -- in North America, Europe, and East Asia -- leading the plunge. The Fund said world economic growth should bounce back to three per cent in 2010, but warned that the possibility of a more severe decline of greater duration cannot be dismissed, according to the IMF's WEO for 2009.
"The uncertainty surrounding the outlook is unusually large," the report asserted. "Downside risks continue to dominate, as the scale and scope of the current financial crisis have taken the global economy into uncharted waters." One measure of that uncertainty was the steep downward projections of the new estimate itself, compared to the previous WEO issued by the IMF nearly two months after the collapse of the investment firm, Lehman Brothers, which sharply accelerated the crisis.
Average growth rates for all advanced economies will fall well into negative territory at minus two per cent on average, according to the WEO. Worst hit will be the newly industrialised Asian economies -- South Korea, Singapore, Hong Kong, and Taiwan -- whose combined growth rate will fall to minus 3.9 per cent, but Britain and Japan, at minus 2.8 per cent and minus 2.6 per cent, respectively, will not be far behind.
As for the United States, where most of the so-called "toxic" assets responsible for the ongoing financial crisis originated, the IMF predicted a negative 1.6 per cent growth rate this year before a revival to plus 1.6 per cent in 2010. Developing countries will also suffer due to the contraction of credit and demand brought on by the crisis, although their growth rates overall should remain in positive territory.
Sub-Saharan Africa should grow at a 3.5 rate this year, down from 5.4 per cent in 2008, while Latin America's growth in 2009 will be substantially more anemic, at just 1.1 per cent, down from 4.6 per cent last year. The latest report comes as governments around the world are trying to stimulate their economies in ways that will overcome the credit crunch resulting from the insolvency of banks or their reluctance to lend money at such an uncertain time.
According to a second report released by the IMF, global bank losses from toxic US assets may reach 2.2 trillion dollars, up from a 1.4 trillion-dollar estimate issued just three months ago. US President Barack Obama has spent much of his first week in office lobbying Congress for an 825-illion-dollar economic stimulus package that he hopes will restore the flow of credit and pull the economy out of what many have called the worst financial crisis since the Great Depression.
Some experts, however, say it is unlikely to be sufficient given the depth of the crisis and the rapid growth in unemployment, which could go as high as 10 per cent by next year, according to recent estimates.
The IMF, which is itself trying to carve out a bigger role as a source of quick lending to countries affected by the crisis, stressed in its report that efforts to date have only addressed the immediate threats to the financial system and "done little to resolve the uncertainty about the long-term solvency of financial institutions." It called for countries to set up public agencies to dispose of bad debts held by financial institutions in a definitive manner.
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