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You are here:Home>>Vincent Ogboi>>Displaying items by tag: IMF
Displaying items by tag: IMF

 

"Dominique Strauss-Kahn, The former International Monetary Fund chief  who was accused by hotel maid from Africa of trying to rape her in New York hotel is in another sex trouble. Strauss-Kahn will be tried on charges of pimping in the  so-called 'Carlton affair' in France."

 

Former IMF head Dominique Strauss-Kahn will be tried on charges of pimping, prosecutors said on Friday, capping an inquiry into sex parties attended by a man whose French presidential hopes were dashed by a separate 2011 U.S. sex scandal.

 

Prosecutors in the northern city of Lille said investigating judges had determined that Strauss-Kahn, 64, who has been under investigation in the case since 2012, should be judged by a criminal court.

 

The decision came as a surprise after a public prosecutor had recommended in June that the inquiry be dropped without trial.

 

"We're not in the realm of the law, we're in ideology. We're sending someone to court for nothing," said Henri Leclerc, one of Strauss-Kahn's lawyers.

 

Accuser: Nafissatou Diallo maintained her claims the she was the victim of a 'violent, sadistic attack,' despite criminal charges being dropped Nafissatou Diallo, the hotel maid who accused ex-IMF chief  of "violent, sadistic attack," despite the  criminal charges being dropped.


The so-called Carlton affair, named after a hotel in Lille, involves sex parties that Strauss-Kahn has acknowledged attending. He says he was unaware that the women who participated were prostitutes.

 

Strauss-Kahn is charged with "aggravated pimping." Pimping under French law is a broad crime that can encompass aiding or encouraging the act of prostitution. Strauss-Kahn was charged with the more serious form because it allegedly involved more than one prostitute.

 

The crime carries a maximum term of 10 years in prison and a fine of 1.5 million euros ($2 million).

 

The former French finance minister quit his post as head of the International Monetary Fund in 2011 after being accused of raping a maid in New York, a charge that was later dropped. ($1 = 0.7555 euros) (Reporting By Alexandria Sage and Chine Labbe.; editing by Mark John)

 

 

Saturday, 06 April 2013 13:26

Malawi’s Economy and IMF’s Austerity

 

"Déjà Vu All Over Again."  This is the best way I can sum up what is percolating on the beautiful country of Malawi. Remember Africa of 1980s and 90s, when International Monetary Fund (IMF) inundated many cash strapped countries with austerity measures before granting credit lines to them; this is exactly what Malawi is experiencing at the moment.

 

For those who do not know anything about Malawi.  It is a landlocked country in southeast of Africa, with a total population of 16,323,044 and a GDP less than $6 Billion. It is among the poorest country in the world. Malawi sources of foreign exchange are tea and tobacco, with supplementary economic aid coming from donors notably World Bank, African Union, IMF and others.

 

The president of Malawi, Joyce Banda is a powerful and resourceful politician, whose commitment for improving the lives of her people is unquestionable. She was sworn as the first woman president in her country and Southern African region when President   Bingu Wa Mutharika passed away.

 

President Banda was recently invited to the White House by President Barrack Obama and she was showcased as one of the progressive leaders in Africa. In the company of three other African leaders from Senegal, Cape Verde and Sierra Leone they partake in the political economy dialogue at United States Institute of Peace. President Banda was articulate and very knowledgeable on the economic globalization and she pulled all the strings she can to impress United States investors.

 

President Banda has limited options to juggle with in order to improve the economy of her country. The country has no adequate source of foreign exchange and there is nothing much President Obama can do for her country unless to dole out a miniature foreign aid which will not make any difference to her country. Malawi is on her own and IMF is not going to make life easy for her country. Although that signing up to IMF austerity measures has opened up to trickling of liquidity, but the price Malawi is paying may be too high.

 

Trade Liberalization and Tough Austerity Measures

 

Trade liberalization at its extreme may backfire in Malawi, the sudden removal of all trade barriers may encourage the dumping of cheap foreign commodities in the country. Without the protection of emerging industries from outside competitors, there  may be stunting in the springing and germination of industrial growth in Malawi. The ramification will be registered in the increase of unemployment and inflation. Speaking of spike in the inflationary trends, Malawi has experienced a massive increased in the rate of inflation since the inception of structural adjustment of the economy.

 

What IMF could not accomplish in Europe has become quite so easy for her to accomplish in Africa. While IMF is struggling to convince Eurozone financial troubled spots to cut down on spending; Malawi, a meager African country has already embarked on one of the toughest austerity measures you can ever think of.

 

IMF compelled Malawi to devalue her currency Kwacha substantially, and as of today Kwacha (Malawi currency) has been devalued by almost 50 percent. With the devaluation, Malawi Kwacha now floats and was recently reported to be trading for MK400 to $1 US Dollar. Before the floating and being subjected to market forces of demand and supply, kwacha was pegged at MK167 to $1 US Dollar as of first quarter of previous year.

 

The idea for devaluation is to make Malawi products cheaper for foreign buyers. But the danger for Malawi with her currency devaluation is her limited products to export. Malawi does not have arrays of finished products to export and now with devaluation of Kwacha her agricultural products mainly tea and tobacco will bring in lower returns.

 

The Malawi was also asked to rein-in spending by removing subsidies given to the poor masses and to privatize public own entities. Malawi external debt stood at $1.214 billion as of 31 December 2012 and servicing of the debt continues despite structural adjustment and reduction in spending.

 

The bite of the bitter prescriptions by IMF has begun to be felt by the poor masses of Malawi who are mostly subsistence farmers that dwell in rural areas.  The inflation rate stood at 36.4 percent and this is a huge number that it brings Kwacha to its knees, even to a point of insolvency because its value as medium of exchange has been drastically diminished by devaluation and inflation. There be increase in unemployment and prices of essential commodities will soar. All these are already happening.

 

These conditions are too way harsh for Malawians, this is not to say that Malawi does not need any restructuring of her economy but IMF austerity measures may turn out to do more harm than good. The conditionalities for granting of credit lines and attraction of donors may be self defeating due to enormous toil been foisted on the people of Malawi.

 

The shock therapy by IMF may threaten the economic and political stability of Malawi that President Banda pledged to stabilize. And it must be noted that sound macroeconomic fundamental may not be unsustainable when the desperate poor masses are left in the cold.

 

Political stability may unravel when the people become unhappy with the political leaders due to drastic depreciation in the standard of living and undesired scenario may bring about the rise of civil disobedient. And together with sharp rise of criminality may overwhelm the system. And this is not the intended objective that IMF and Malawi policy makers intended in the first place.

 

Malawi needs some form of reforms but shock therapy without adequate palliative measures to cushion its effect, is not the best way to maintain and achieve sound macroeconomic stability.

 

Emeka Chiakwelu, Principal Policy Strategist at AFRIPOL. Africa Political & Economic Strategic Center (AFRIPOL) is foremost a public policy center whose fundamental objective is to broaden the parameters of public policy debates in Africa. To advocate, promote and encourage free enterprise, democracy, sustainable green environment, human rights, conflict resolutions, transparency and probity in Africa. www.afripol.org   This e-mail address is being protected from spambots. You need JavaScript enabled to view it


 

 

 

 

 

 

 

Dominique Strauss-Kahn Settles Lawsuit With Nafissatou Diallo, New York Hotel Maid

Word of a settlement agreement between former International Monetary Fund chief Dominique Strauss-Kahn and a hotel maid who accused him of trying to rape her could bring an end to a saga that has tarnished Strauss-Kahn's reputation, ended his hopes for the French presidency and renewed a debate about the credibility of sexual assault accusers.

 

But it might not mean the end of legal troubles for Strauss-Kahn. He is awaiting a ruling on whether he is linked to "pimping" in connection with a French prostitution ring.

 

A person familiar with the New York case said Thursday that lawyers for Strauss-Kahn and the housekeeper, Nafissatou Diallo, made the as-yet-unsigned agreement within recent days, with Bronx Supreme Court Justice Douglas McKeon facilitating that and a separate agreement to end another lawsuit Diallo filed against the New York Post. A court date is expected next week, though the day wasn't set, the person said.

 

The person spoke to The Associated Press on the condition of anonymity to discuss the private agreement.

 

Details of the deal, which comes after prosecutors dropped related criminal charges last year, weren't immediately known and likely will be veiled by a confidentiality agreement. That could prevent Strauss-Kahn and Diallo from speaking publicly about a May 2011 encounter that she called a brutally sudden attack and he termed a consensual "moral failing."

 

Strauss-Kahn lawyer William W. Taylor III declined to comment. Lawyers for the housekeeper didn't immediately respond to phone and email messages.

 

Diallo, 33, and Strauss-Kahn, 63, crossed paths when she arrived to clean his luxury Manhattan hotel suite. She told police he chased her down, tried to yank down her pantyhose and forced her to perform oral sex.

 

The allegation seemed to let loose a spiral of accusations about the sexual conduct of Strauss-Kahn, a married diplomat and economist who had long been dubbed the "great seducer."

 

With DNA evidence showing a sexual encounter and Diallo providing a gripping description of an attack, the Manhattan district attorney's office initially said it had a strong and compelling case. But within six weeks, prosecutors' confidence began to ebb as they said Diallo had lied about her past – including a false account of a previous rape – and her actions after leaving Strauss-Kahn's room.

 

Diallo, who's from Guinea, said she told the truth about their encounter. But the district attorney's office dropped the charges in August 2011, saying prosecutors could no longer ask a jury to believe her.

 

Diallo had sued Strauss-Kahn in the meantime, with her lawyers saying she would get her day in a different court. Strauss-Kahn called the lawsuit defamatory and countersued her for $1 million.

 

Strauss-Kahn's whereabouts Friday were unclear. After his return to France in September 2011, Strauss-Kahn initially kept a very low profile. But in recent months, he has shown signs he is trying to rebuild his professional reputation, giving speeches at international conferences and reportedly setting up a consulting company in Paris.

 

Unconfirmed reports surfaced Wednesday that Diallo was in Paris this week on the invitation of a feminist group. A French lawyer who works with her U.S. defense team, Thierry de Montbrial, told The Associated Press that the reports were untrue. He declined any comment on the settlement.

 

Diallo's lawsuit against The Post concerned a series of articles that called her a prostitute and said she sold sex at a hotel where the Manhattan DA's office had housed her during the criminal case. The News Corp. newspaper has said it stands by its reporting; a spokeswoman declined to comment Thursday.

 

In helping resolve the cases, McKeon averted what could have been an ugly court drama.

 

Strauss-Kahn initially said he had diplomatic immunity, an argument the judge turned down in May. Strauss-Kahn's lawyers had since asked McKeon to throw out part of her claim for other legal reasons. Court records show the judge had yet to rule on that and several other legal issues, and it appeared that a high-stakes step – depositions, or pretrial questioning under oath – had not yet been taken. Depositions can give both sides information and a better picture of how strong the key parties and other witnesses might be in court.

 

While the vast majority of civil cases end in settlements, some legal observers were surprised that the deal between Strauss-Kahn and Diallo came before the legal arguments were resolved.

 

"I really expected it to go a little farther," said Matthew Galluzzo, a criminal defense lawyer and civil litigator who has been following the Strauss-Kahn case closely.

 

Still, the case likely had taken a toll on both Diallo, a single mother of a teenage daughter, and Strauss-Kahn, who has found himself plagued by accusations of sexual misconduct that further sullied his reputation. The Socialist had been seen as a potential leading candidate for the French presidency before his New York arrest.

 

In France, judges are to decide by Dec. 19 whether to annul charges linking him to a suspected prostitution ring run out of a luxury hotel in Lille. He acknowledges attending "libertine" gatherings but denies knowing that some women present were paid.

 

In August, a separate case against Strauss-Kahn, centered on allegations of rape in a Washington, D.C., hotel, was dropped after French prosecutors said the accuser, an escort, changed her account to say she wasn't raped.

 

Soon after Strauss-Kahn's arrest in New York last year, French writer Tristane Banon accused him of attempting to rape her during an interview in 2003, a claim he called imaginary and slanderous. Prosecutors said they believed the encounter qualified as a sexual assault, but the legal timeframe to pursue her complaint had elapsed.

 

The Associated Press does not name people who report being sexually assaulted unless they come forward publicly, as Diallo and Banon have done.

 

Strauss-Kahn has separated from his wife, journalist and heiress Anne Sinclair, who stood by him through the allegations in New York. The two said they were filing a lawsuit this summer against a French magazine, citing invasion of privacy, for reporting they had split, but Sinclair later acknowledged it was true.

 

The New York Times first reported the agreement between Strauss-Kahn and Diallo.

AP

 

Friday, 16 November 2012 17:28

IMF Mission to Mali

Statement at the Conclusion of an IMF Mission to Mali
Press Release No.12/437
November 14, 2012

A mission from the International Monetary Fund (IMF), led by Christian Josz, visited Bamako from November 1 to 14 and reached preliminary agreement on providing support to Mali under the Rapid Credit Facility.

 

The mission met with Cheick Modibo Diarra, Prime Minister; Tienan Coulibaly, Minister of Economy, Finance and Budget; Konzo Traore, National Director, Central Bank of West African States (BCEAO); and representatives from the National Assembly, civil society, unions, the private sector, and Mali’s development partners. Following the mission, Mr. Josz issued the following statement:

 

“Mali’s economy is traversing a difficult period. Already under stress from the very poor 2011-12 harvest, it was severely affected by the March 2012 coup d’état and its aftermath. Substantial material damages were inflicted on both public and private sector parties. The occupation of the North seriously disrupted agricultural production and trade relations. The deteriorating security situation prompted a sharp reduction of travel to Mali. This hit hard the commerce, hotel and restaurant sectors. The donors’ decision to suspend all budget support and much of their project aid to the government led to a contraction of the construction and public works sector. But mining proved a stable source of growth, and the 2012-13 harvest is turning out well.

 

“Real GDP in 2012 is forecast to shrink by 1.5 percent, following only 2.7 percent growth in 2011. The poor harvest in 2011 and trade disruptions pushed average inflation in 2012 to an estimated 5.9 percent. The government managed its budget prudently by offsetting the loss of revenue by cutting expenditures, especially public investment, and reducing implicit subsidies on petroleum products and cooking gas. As a result, the basic budget deficit (revenue and budget grants minus domestically financed expenditure) is expected to be 1 percent of GDP in 2012.

 

“In 2013, real GDP is forecast to grow again, at 4-5 percent. The 2013 budget exhibits a financing gap of some CFAF 55 billion ($110 million or 1 percent of GDP) which the authorities hope to fill with renewed donor support. Until this support is confirmed, they will freeze an equivalent amount of spending. The authorities are committed to avoiding the accumulation of domestic arrears, in order to maintain the government’s credibility and preserve financial stability.

 

“The government decided to cancel the current arrangement under the Extended Credit Facility (ECF), which covers 2012-14, and which was derailed by the events of early 2012. Instead it is applying for a disbursement of $18 million (CFA 9 billion) under the Rapid Credit Facility (RCF), guided by indicators for macroeconomic performance and for continuing reforms in public finance in 2013. The mission reached agreement ad referendum on the components of such an approach. IMF Executive Board consideration is tentatively planned for early 2013. “The mission would like to thank the authorities for their warm welcome, excellent organization, and frank and fruitful discussions.”

 

 

 

 

 

 

 

Published in Stevie C. Chiakwelu
Friday, 16 November 2012 17:03

IMF reaches $18 million loan deal with Mali

The International Monetary Fund said on Wednesday that it had reached an $18 million loan agreement with Mali.

 

The loan to the land-locked African country comes under the IMF's Rapid Credit Facility, a quick-disbursing fund for poor countries recovering from natural disasters or conflict. Mali descended into chaos after a military coup in March.

 

The agreement is subject to approval by the IMF's board early next year.

 

Mali received a $46 million loan from the IMF last year but cancelled it after soldiers toppled the president and al Qaeda-linked militants seized northern cities.

 

A leading producer of gold and cotton, Mali faces a budget shortfall in 2012, especially since the European Union and the United States suspended aid after the coup.

 

"Mali's economy is traversing a difficult period," Christian Josz, head of the IMF's mission, said in a statement. "Already under stress from the very poor 2011-12 harvest, it was severely affected by the March 2012 coup d'état and its aftermath."

 

The IMF said national income should shrink 1.5 percent in 2012 before rebounding to 4 percent or 5 percent in 2013.

 

The Fund said that the government did well to cut public investment and reduce subsidies on oil and cooking gas, resulting in a "modest" budget deficit.

 

For 2013, Mali faces a budget shortfall of $110 million, but it will freeze spending unless it is able to plug the gap with development aid from donors, the IMF said.

The International Monetary Fund (IMF)  released the October 2012 Regional Economic Outlook: Sub-Saharan Africa. Ms. Antoinette Monsio Sayeh, Director of the IMF's African Department, commented on the report's main findings:

 

“Economic conditions in sub-Saharan Africa have remained generally robust against the backdrop of a sluggish global economy. Most low-income countries continued to grow soundly in 2012, although drought in many Sahel countries and political instability in Mali and Guinea-Bissau undermined economic activity. Middle-income countries, especially South Africa, slowed further, reflecting closer links to European markets. Inflation fell, as pressures on food and fuel prices eased following a surge during 2011.

 

“The near-term outlook for the region remains broadly positive, with growth projected above 5 percent a year in 2012–13. Strong domestic demand, including from investment, is expected to support growth in many low-income countries, but a weak external environment, particularly in Europe, will continue to be a drag on middle-income countries’ growth. With global commodity prices projected to remain soft and domestic climatic conditions improving, inflation is expected to decline to about 8 percent through end 2012, and about 7 percent through end 2013. The recent surge in international cereal prices is likely to exacerbate food insecurity in some places, and could be a threat to inflation if it intensifies.

 

“Downside risks have increased. Further deterioration in the world economy could quickly spill over into slower growth in sub-Saharan Africa, potentially reducing the regional growth rate by about 1 percent a year. The impact would be most severe in countries where exports are undiversified and policy buffers low.

 

“Policy settings should reflect country-specific conditions. For now, policymakers should rebuild fiscal and external buffers where these remain low. In the event of a significant global downturn, with knock-on effects on sub-Saharan Africa, pro-cyclical fiscal contraction should be avoided provided that wider fiscal and external deficits can be financed. Monetary and exchange rate levers should be utilized where policy space is available.

 

Ms Sayeh also drew attention to key messages of the two background papers in the Regional Economic Outlook on potential economic spillovers from Nigeria and South Africa and on structural transformation in sub-Saharan Africa: “1) There are important trade, investment, and financial linkages between South Africa and other countries in the region, especially those which are members of the Southern African Development Community and the South African Customs Union; Nigeria’s financial linkages with countries further afield are growing as Nigeria-based banks expand throughout the region. 2) During the last 15 years, albeit at different speeds and following different paths, most countries in the region have experienced some degree of structural transformation, with a shift of workers from lower to higher average productivity activities and sectors. Depending on resource endowments, labor skills, and logistical and infrastructural features, some sub-Saharan African countries may find it easier to follow the Asian structural transformation path through manufacturing, whereas others may transform through services, and still others through agriculture.”

 

Source: IMF Press Release No. 12/390

 

 

 

 

 

The Executive Board of the International Monetary Fund (IMF) concluded the 2011 Article IV consultation with Nigeria

Background

Economic growth remains strong in Nigeria, with non-oil real gross domestic product (GDP) estimated to have grown at 8.3 percent in 2011 and overall real GDP at about 6.7 percent. Inflation slightly declined to 10.3 percent in December 2011 (year-on-year) from 11.7 percent a year earlier, in response to monetary tightening by the Central Bank of Nigeria (CBN) and moderation of food prices.

 

A modest fiscal consolidation took place in 2011. The non-oil primary deficit (NOPD) of the consolidated government is estimated to have narrowed slightly from about 34.6 percent of non-oil GDP in 2010 to 32.9 percent in 2011, mainly due to expenditure restraint at the federal government level. Higher oil prices helped shrink the overall fiscal deficit from 7.7 percent of GDP in 2010 to about 0.2 percent of GDP in 2011. Monetary policy was tightened substantially in 2011 in response to high inflation and strong foreign exchange demand. The central bank has gradually increased its overnight deposit rate by 900 basis points since September 2010 and tightened regulatory requirements. In November, it adjusted downward its soft band around the naira-US dollar exchange rate, and depreciation pressures on the naira have since abated. Financial soundness indicators point to continued improvements in the health of the banking system.

 

Growth is projected to remain robust in 2012 and inflation is projected to increase temporarily as a result of the increase in gasoline prices. The main downside risks to the short-term outlook are a further deterioration in the global environment and an exacerbation of current violence in northern Nigeria.

 

Executive Board Assessment

Executive Directors commended the authorities for countercyclical policies that have supported economic activity in challenging circumstances. Directors considered that the medium-term growth outlook remains favorable, although subject to external downside risks. Accordingly, they emphasized the continued need for policies to safeguard macroeconomic stability, diversify the economy, and make growth more inclusive.

 

Directors supported the authorities’ strategy to rebuild fiscal buffers through a better prioritization of public expenditure, continued subsidy reform, and improved tax administration. Efforts in these areas will also provide the necessary resources for targeted social programs and needed infrastructure. Directors endorsed the use of conservative oil price assumptions in the preparation of the budget but noted that only a comprehensive tax reform will reduce the budget’s dependence on oil revenues over the medium term.

 

Directors highlighted the importance of improving public financial management, including a stronger framework for managing Nigeria’s oil wealth. They welcomed the establishment of a Sovereign Wealth Fund (SWF) and underscored that a rules-based approach to setting the budget reference oil price would strengthen the budgetary process and the operations of the SWF. In this regard, Directors recommended that outlays from the SWF’s infrastructure fund be integrated into the budget and medium-term expenditure plans.

 

Directors noted the monetary authorities’ commitment to further reduce inflation but considered that a pause in the tightening cycle is at present warranted. More broadly, they agreed that a monetary framework better focused on a clear inflation objective should help anchor inflation expectations and support disinflation. Greater exchange rate flexibility will also facilitate the pursuit of price stability.

 

Directors commended the authorities for their actions to resolve the recent banking crisis. The modalities of operation of the asset management corporation should continue to make sure that fiscal risks and moral hazard are minimized. Directors supported the central bank’s focus on strengthening supervision and the regulatory framework, including by addressing remaining deficiencies in the Anti-Money Laundering/Combating the Financing of Terrorism regime. They also agreed that a Financial Sector Assessment Program update will help take stock of the progress so far and provide a road map for remaining reforms in the financial sector.

 

Directors concurred that wide-ranging reforms are needed to make growth more inclusive. They welcomed the authorities’ initiatives to improve the business climate and reform sectors with high employment potential, particularly agriculture. Directors encouraged the authorities to persevere with planned reforms in the energy sector under appropriate social safeguards.

 

 

NOTE:

Under Article IV of the IMF's Articles of Agreement, the IMF holds bilateral discussions with members, usually every year. A staff team visits the country, collects economic and financial information, and discusses with officials the country's economic developments and policies. On return to headquarters, the staff prepares a report, which forms the basis for discussion by the Executive Board. At the conclusion of the discussion, the Managing Director, as Chairman of the Board, summarizes the views of Executive Directors, and this summary is transmitted to the country's authorities.

 

IMF Executive Board Concludes 2011 Article IV Consultation with Nigeria

Public Information Notice (PIN) No. 12/20

February 28, 2012

 

 

 

 

 

 

 

IMF leader Christine Lagarde: IMF able to boost crisis funds

Washington - Global finance chiefs pressed Europe on Saturday to take advantage of newly increased financial buffers and make the lasting reforms needed to tackle its debt crisis, which is threatening the world recovery.

 

A day after advanced and emerging countries agreed to double the firepower of the International Monetary Fund to help contain Europe's debt crisis, the IMF's governing panel said the 17-nation euro area must make more cuts to government debt burdens, push bold economic reforms and stabilise financial systems.

 

Debt problems will resurface and growth will stumble unless these steps are taken, the head of the IMF's governing panel, Singapore's finance minister, Tharman Shanmugaratnam, warned.

 

An uneasy calm returned to world financial markets after the Greek crisis subsided but the IMF is concerned that without strong action fresh tensions will erupt, sapping global growth.

 

The IMF panel said the outlook was one of “moderate growth globally, and the risks remain high.” While it said all advanced economies must take further action, it singled out the euro area as crucial to revitalising strong growth.

 

The euro area, the world's second-largest economic bloc, already has slipped into a mild recession, weakening its major export partner China and other parts of emerging Asia, while growth in the United States remains sluggish.

 

Unless stronger growth is restored and investor confidence returns, the IMF and finance chiefs from around the globe said the world will not break out of a vicious debt-driven cycle.

 

“What was really critical in all our minds was to get back to normal growth over the medium term and preferably sooner rather than later, in other words within two to three years,” Tharman told a news conference.

 

“If we don't get back to normal growth, if we don't get GDP back to its potential levels, then fiscal sustainability is not possible either,” he warned.

 

The United States piled the pressure on Europe to take advantage of the breathing space provided by building financial firewalls against financial contagion.

 

“The success of the next phase of the crisis response will hinge on Europe's willingness and ability, together with the European Central Bank to apply its tools ... flexibly and aggressively to support countries as they implement reforms,” US Treasury Secretary Timothy Geithner told the IMF's panel.

Christine LagardeIMF Managing Director Christine Lagarde

But in what participants said was an intense discussion, Germany pointed the finger back at the United States, the world's largest economy. The US budget problems are worsening and could reach the boiling point at year's end when expiring tax cuts and plans for deep budget cuts could throw the economy into recession. Yet, a presidential election in November has resulted in political stalemate on budget plans.

 

“We understand the political constraints but there is no way around it and there is urgency,” said German Finance Minister Wolfgang Schaeuble.

 

Japan, with a staggering debt-to-GDP ratio of 230 percent, also needs a credible budget plan, he said.

 

Europe presents the most urgent challenge and was the only economy singled out for policy advice by the IMF panel.

 

The two-fold action of piling a further $430 billion into the IMF and European leaders' decision three weeks ago to finance their own $1 trillion bailout fund has erected defenses designed to contain the crisis by assuring investors there is money to back any country that runs into financial trouble.

 

At the same time, the IMF panel stressed that budget consolidation must be balanced to avoid overly harsh cuts that undermine growth and make the deficits even worse - a tricky act that Italy and Spain currently are facing.

 

“There has been a big discussion about how to make it possible to have fiscal strengthening and growth,” said Italy's deputy finance minister, Vittorio Grilli. While the timing matters, fiscal tightening must come first, he said.

 

The panel, made up of finance ministers who advise the IMF on policy, called upon major central banks to help by keeping interest rates low and monetary stimulus in place, as long as growth remains weak and inflation under control.

 

The message came ahead of a Federal Reserve meeting on Tuesday and Wednesday, at which US policymakers will review whether additional bond buying may be needed to support growth. A call by the IMF for lower euro zone interest rates met resistance from some ECB policymakers in Washington. Germany in particular is concerned that loose monetary policy will stir inflation and is no panacea for budget cuts.

 

The IMF committee called on its members to ratify “expeditiously” a 2010 plan to increase representation of emerging economies on the IMF's executive board, reflecting their growing clout in the world economy. Brazil said this was an essential condition for it to provide the IMF funding.

 

But voting reforms are unlikely to get approved by the IMF's October meetings because the US Congress is unlikely to agree in the current highly partisan climate.

 

“I did not hear any clear announcement from the US that they will be able to deliver before the annual meetings (in October),” Schaeuble said, adding that Europe will have agreed by then.

 

That would add to tensions between the United States, which had insisted upon the reforms, and emerging markets.

 

Britain said its $15 billion contribution would only become available once the 2010 IMF reforms were completed, which it did not expect to happen before the US elections. - Reuters

 

 

 

 

 

IMF: Africa, Isolated From Europe's Woes, Set For Solid Growth

 

(Dow Jones)- Sub-Saharan Africa is set for robust growth in 2012 thanks to limited exposure to the economic turmoil emanating from Europe, the International Monetary Fund said in its updated barometer on the world economy.

 

The IMF's World Economic Outlook forecasts that gross domestic product will grow by an average of 5.4% across sub- Saharan Africa in 2012, revised downward from its previous forecast of 5.8% growth this year.

 

"The diversification of exports toward fast-growing emerging markets has reduced the region's trade exposure to Europe," IMF officials wrote. They added that exports to the euro area have fallen to one-fifth of Africa's total from two-fifths 20 years ago.

 

The IMF forecasts that South Africa will grow 2.7% this year, up from a forecast of 2.5% growth in January. South Africa--the continent's largest and most developed economy--faces the strongest headwinds from Europe due to its importance as an export market, the IMF said. The revised growth reflects signs of a more stable recovery in the U.S. and Asia, which are also major destinations for the country's goods.

 

Intense exploration and production of oil and gas resources will drive the continent's fastest growing economies, the IMF said. Oil production in Angola will push GDP growth to 9.7% this year, the highest on the continent, and to 8.8% in Ghana and 7.1% in Nigeria. Oil and gas production will push growth to 6.7% in Mozambique.

 

In East Africa, monetary tightening to combat inflation is expected to have a negative impact on growth. Uganda is expected to grow 4.2% this year after 6.7% growth in 2011, and Tanzania is expected to grow 6.4% after 6.7% growth in 2011.

 

With growth prospects for the continent looking solid, the IMF urged African officials to tighten budgets and rebuild central bank reserves to be ready for future global economic shocks.

 

 

"Budgetary discipline will also help generate the room needed to refocus spending on priority areas such as infrastructure, health, and education," the IMF said.

 

-By Patrick McGroarty, Dow Jones Newswires; +27 82 258 2355; This e-mail address is being protected from spambots. You need JavaScript enabled to view it

 

 

On February 22, 2012, the Executive Board of the International Monetary Fund (IMF) concluded the 2011 Article IV consultation with Nigeria. Public Information Notice (PIN) No. 12/20 February 28, 2012

 

Under Article IV of the IMF's Articles of Agreement, the IMF holds bilateral discussions with members, usually every year. A staff team visits the country, collects economic and financial information, and discusses with officials the country's economic developments and policies. On return to headquarters, the staff prepares a report, which forms the basis for discussion by the Executive Board. At the conclusion of the discussion, the Managing Director, as Chairman of the Board, summarizes the views of Executive Directors, and this summary is transmitted to the country's authorities.

 

Public Information Notices (PINs) form part of the IMF's efforts to promote transparency of the IMF's views and analysis of economic developments and policies. With the consent of the country (or countries) concerned, PINs are issued after Executive Board discussions of Article IV consultations with member countries, of its surveillance of developments at the regional level, of post-program monitoring, and of ex post assessments of member countries with longer-term program engagements. PINs are also issued after Executive Board discussions of general policy matters, unless otherwise decided by the Executive Board in a particular case.

 

Background

 

Economic growth remains strong in Nigeria, with non-oil real gross domestic product (GDP) estimated to have grown at 8.3 percent in 2011 and overall real GDP at about 6.7 percent. Inflation slightly declined to 10.3 percent in December 2011 (year-on-year) from 11.7 percent a year earlier, in response to monetary tightening by the Central Bank of Nigeria (CBN) and moderation of food prices.

 

A modest fiscal consolidation took place in 2011. The non-oil primary deficit (NOPD) of the consolidated government is estimated to have narrowed slightly from about 34.6 percent of non-oil GDP in 2010 to 32.9 percent in 2011, mainly due to expenditure restraint at the federal government level. Higher oil prices helped shrink the overall fiscal deficit from 7.7 percent of GDP in 2010 to about 0.2 percent of GDP in 2011. Monetary policy was tightened substantially in 2011 in response to high inflation and strong foreign exchange demand. The central bank has gradually increased its overnight deposit rate by 900 basis points since September 2010 and tightened regulatory requirements. In November, it adjusted downward its soft band around the naira-US dollar exchange rate, and depreciation pressures on the naira have since abated. Financial soundness indicators point to continued improvements in the health of the banking system.

 

Growth is projected to remain robust in 2012 and inflation is projected to increase temporarily as a result of the increase in gasoline prices. The main downside risks to the short-term outlook are a further deterioration in the global environment and an exacerbation of current violence in northern Nigeria.

 

Executive Board Assessment

 

Executive Directors commended the authorities for countercyclical policies that have supported economic activity in challenging circumstances. Directors considered that the medium-term growth outlook remains favorable, although subject to external downside risks. Accordingly, they emphasized the continued need for policies to safeguard macroeconomic stability, diversify the economy, and make growth more inclusive.

 

Directors supported the authorities’ strategy to rebuild fiscal buffers through a better prioritization of public expenditure, continued subsidy reform, and improved tax administration. Efforts in these areas will also provide the necessary resources for targeted social programs and needed infrastructure. Directors endorsed the use of conservative oil price assumptions in the preparation of the budget but noted that only a comprehensive tax reform will reduce the budget’s dependence on oil revenues over the medium term.

 

Directors highlighted the importance of improving public financial management, including a stronger framework for managing Nigeria’s oil wealth. They welcomed the establishment of a Sovereign Wealth Fund (SWF) and underscored that a rules-based approach to setting the budget reference oil price would strengthen the budgetary process and the operations of the SWF. In this regard, Directors recommended that outlays from the SWF’s infrastructure fund be integrated into the budget and medium-term expenditure plans.

 

Directors noted the monetary authorities’ commitment to further reduce inflation but considered that a pause in the tightening cycle is at present warranted. More broadly, they agreed that a monetary framework better focused on a clear inflation objective should help anchor inflation expectations and support disinflation. Greater exchange rate flexibility will also facilitate the pursuit of price stability.

 

Directors commended the authorities for their actions to resolve the recent banking crisis. The modalities of operation of the asset management corporation should continue to make sure that fiscal risks and moral hazard are minimized. Directors supported the central bank’s focus on strengthening supervision and the regulatory framework, including by addressing remaining deficiencies in the Anti-Money Laundering/Combating the Financing of Terrorism regime. They also agreed that a Financial Sector Assessment Program update will help take stock of the progress so far and provide a road map for remaining reforms in the financial sector.

 

Directors concurred that wide-ranging reforms are needed to make growth more inclusive. They welcomed the authorities’ initiatives to improve the business climate and reform sectors with high employment potential, particularly agriculture. Directors encouraged the authorities to persevere with planned reforms in the energy sector under appropriate social safeguards.

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