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US Recession
US recession to impact Africa says IMF Chief
By Lea-Lisa Westerhoff
ABUJA - The US recession will have a "significant" impact on growth in the world’s poorest continent Africa, International Monetary Fund (IMF) chief Dominique Strauss-Kahn said.
"Lower growth rates in the US and in Europe translates into less trade and therefore lower exports for other countries. The crisis also has an effect through less traditional channels, such as stock markets and investment flows," Strauss-Kahn said during a visit to the Nigerian capital Abuja.
"When the crisis first hits, the impact will be significant and it’s a pity, notably for those African countries which need growth more than others and which for the past five years have seen growth they never had in the past."
"Interrupting that sort of growth is even more harmful than interrupting the growth of a developed country," he said.
Strauss-Kahn said the subprime crisis slow growth but urged African authorities to adopt sound economic policies to limit the damage, such as reserving part of their resources for long-term investments.
He said the IMF must seek to prevent countries giving in to panic and ditching policies that have spurred high growth over the past five years.
"Our teams are there to help governments and central banks determine what type of fiscal and customs policies to put in place," the IMF boss said.
"The difficulty is real but we must avoid having it lead to throwing the baby out with the bathwater and to coming back to the situation of 10 years ago where we couldn’t get African economies off the ground."
Asked whether development aid is still pegged to good governance, Strauss-Kahn replied: "There’s no point in pouring water onto sand.
When a country is badly governed and there is corruption, the money is wasted and serves no useful purpose."
Asked whether the current crisis in Kenya might make the IMF suspend its programmes there, he said: "We haven’t reached that point yet. We hope that in the weeks or the months to come political solutions will be found".
"If the conflict were to escalate then we would have to consider to what extent our programme could continue but I don’t think we’ll reach that point," he said.
2008 Copyright The Times
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