Meeting Concludes that Africa's External Debt Problem Be Put in Wider Context of Financing Development


United Nations Economic Commission for Africa (Addis Ababa)

PRESS RELEASE
November 21, 2003 
Posted to the web November 21, 2003 

Dakar 

An Expert Group meeting jointly organised by the Economic Commission for Africa (ECA) and the Republic of Senegal on 17-18 November 2003 in Dakar gathered about 70 experts from around the world, including the African Union, New Partnership for Africa's Development (NEPAD), various United Nations organizations, country authorities, the World Bank, International Monetary Fund, Paris Club and NGOs.

They noted that debt relief is more predictable than bilateral aid; has a longer-term horizon; reduces the transactions costs of managing aid and acts as direct budget support therefore increasing recipient ownership. They strongly encouraged the international community to finance further debt relief as an important way to finance the Millennium Development Goals (MDGs) in Africa.

However, the experts unanimously agreed that debt relief on its own will be woefully insufficient to allow African countries to finance the MDGs. They noted with deep concern that at current trends, Africa will be the only region in the world where the number of poor people in 2015 will be higher than in 1998.

The meeting acknowledged that while the enhanced Highly Indebted Poor Country Initiative (HIPC) had delivered tangible benefits to several African countries, much more remained to be done. For instance, the international financial community was urged to rapidly consider the debts of "semi-HIPC" countries like Angola and Kenya, non-IDA countries like Nigeria and severely indebted middle-income countries like Gabon.

A key recommendation of the meeting was that achieving Africa's development goals should be realised without running into future debt problems. This requires a prudent strategy for future borrowing tailored to country specific circumstances, taking into account the quality of its institutions, and its vulnerability to shocks. Experts urged that resource transfers beyond countries' sustainable debt-serving capacities should be in the form of grants, not debt flows that could lead to future debt problems.

The meeting emphasized that a lasting solution to Africa's external debt problem will require good economic governance and management on the part of African countries. In that respect experts commended the efforts of NEPAD and its African Peer Review Mechanism to encourage each African country to enhance and consolidate progress in that regard.

The lack of a consolidated African position and an effective and unified voice to engage in constructive dialogue with Africa's development partners with regard to debt relief was identified as one of the factors delaying an early resolution to Africa's debt problems. The experts expressed a sense of urgency to end the time when African countries reacted too late to global policy proposals that have vast economic implications for Africa.

To address the present void it was recommended that an ad hoc Technical Committee be established to facilitate timely and competent African responses to emerging global policy proposals on debt relief and financing for development. The recommendations of the proposed Technical Committee should be presented to the African Ministers of Finance, Planning and Economic Development at their next meeting in May 2004 and thereafter to the African Union Heads of State Summit in July 2004.

The President of Senegal, His Excellency Abdoulaye Wade commended the experts for their bold and creative proposals to resolve Africa's debt problem and declared that "it is only through the strength of our arguments that we shall overcome Africa's debt. We must fight an intellectual battle to that end."



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Copyright © 2003 United Nations Economic Commission for Africa. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com).

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