AfDB Group President Attends Paris Club Meeting
The African Development Bank (AfDB) Group President, Donald Kaberuka, will, on June 25, 2009, address the Paris Club Meeting which will be held on the theme: “The Global Crisis and its Implications for Emerging and Developing Countries”.
He will discuss issues relating to challenges facing low income countries in Africa. It took African countries a decade of reforms to reach a growth rate of 5%, but the financial crisis is hurting the continent’s growth prospects. Growth in Africa is expected to decline to 2.3% in 2009 from 5.5% in 2008.
The impact of the food crisis coupled with the impact of the current financial crisis may create an additional 3 million unemployed, 28 million vulnerable jobs and 27 million poor in Africa.
On June 25, 2009, within the context of the crisis, the key challenges facing the continent include averting a growth collapse (protect engines of growth; maintain infrastructure investment); positioning Africa to grow (faster) after the crisis (sustain infrastructure; minimize macro imbalances (including debt); protecting the poor and preventing a developmental crisis (build social safety nets; protect employment).
African governments have deployed a range of policy instruments in response to the crisis, including fiscal stimulus packages, targeted assistance to sectors, capital and exchange controls, new regulations in the banking sectors, and expansionary monetary policies. Some countries have financed counter-cyclical expenditures via the issue of treasury bills and bonds. But the scope for doing more is limited.
The AfDB is supporting African governments in their efforts to find ways of overcoming the crisis. In this regard, the Bank has convened several meetings to discuss the global crisis. The AfDB welcomed the decision by G20 leaders in London to increase resources to boost global liquidity and support external payments.
In this regard, development banks can capitalize on their comparative advantage in intermediating the new resources to enhance the consistency between development financing and national development goals. Given its experience, the AfDB is able to target assistance based on country-specific needs. The AfDB will also play a catalytic role in enabling public-private partnerships finance large-scale infrastructure projects. The Bank’s emphasis on the private sector will promote economic resilience .
The AfDB has set up new facilities to assist its regional member countries to address the impact of the crisis, namely:
- The Emergency Liquidity Facility - US$ 1.5 billion (current pipeline: US$ 880 million)
- Trade Financing Facility – US$ 1 billion
- Accelerated Resource Transfer to ADF Countries - ADF active portfolio disbursement ratio: 33%.
- Enhanced Advisory and Advocacy role: knowledge generation; crisis monitoring and policy advice; advocating for a greater African voice.
However, to respond to demand from its regional members countries, the AfDB has to expand its capital base. The Sixth General Capital Increase is underway and will be submitted for consideration earlier in 2010 than in 2013 as initially planned.