INTRODUCTION

1. Mr. Chairman, I share the concern that we are facing unprecedented circumstances in the global economy and that the situation requires immediate attention from global economic policy makers. I therefore commend the organizers of this meeting including you Chair and the Fund's Executive Board and management and I particularly thank the Canadian authorities for hosting us. But before commenting in more detail on the situation we face in Africa, I would like first to commend the Canadian Prime Minister on his announcement that he will visit Africa before assuming the G-8 Chair. I find this particularly encouraging given the concern we have in Africa that we are being left on the margins of the ongoing globalization process and our voice is not being heard as much as it should in many of the important international forums, including the Fund. We therefore welcome and look forward to Mr. Chretien's visit.

   STRENGTHENING THE GLOBAL ECONOMY

   The outlook, risks and vulnerabilities

2. The events of September 11 have further clouded the outlook for the global economy, which was undergoing a sharp slowdown even before then. These events, and the ongoing increase in unemployment and poor corporate results are having a knock-on effect on business and consumer confidence in the US. In the euro area, growth is faltering at a fast pace and more job cuts are in the pipeline, notwithstanding the progress made in implementing structural reforms. Japan seems to be sliding back into a deep recession. The major downside risk remains that all these developments are seriously eroding the promise which the globalization process has offered. Contagion can spread quickly and this is what we are experiencing. This is compounded by the synchronization of business cycles in all the major economic centers. Emerging markets are reeling from these adverse developments in industrial countries, though some of them, to be sure, found themselves with large imbalances.

   The policy response of the international community

3. We reckon that the foregoing requires more intensive policy dialogue at national, regional and international levels on what course of action needs to be taken. The fact that countries are affected differently underscores the importance of strengthening ownership and transparency in policy formulation in our institutions if the international community is to find ways to avert a global recession.

4. One key factor that raises hope is that the global slowdown is occurring at a time of low inflation and strong fiscal positions in major industrial countries, leaving room for both monetary and fiscal easing. We welcome that the US authorities have been very proactive in this regard and we encourage them to persevere on this path. In Europe, there is further need for both monetary and fiscal easing and a deepening of structural reform. Japan is in a much more difficult situation and a comprehensive package of structural reforms are needed in the fiscal, monetary, corporate, banking and other areas in order to steer the economy out of recession. Regarding emerging markets, there is no room for complacency and urgent measures are needed that could contribute to reducing imbalances and country risk and to enhancing access to capital markets. I welcome the establishment of a Capital Markets Department at the Fund and express the hope that it will give particular attention to capital market access issues.

   Sustaining poverty reduction in low-income countries

5. The ongoing slowdown in the world economy, which has been exacerbated by the events of September 2001 are having far reaching implications for low income countries, and here let me focus on the African continent. These events have significantly and adversely altered Africa's economic and social prospects. The prices of our major exports, which were already declining, are now declining even more sharply, making it difficult for many countries to exit from heavy debt burdens and to attain external viability, notwithstanding the fact that the very sharp reduction in oil prices due to the global slowdown has been a major positive for many low income African economies. The significant erosion in consumer and investor confidence have weakened our domestic capital and stock markets and we are experiencing capital outflows and significant decline in foreign direct investment which could be particularly serious for African economies if the global slowdown was deep and protracted. The glut in the international telecommunications market and low equity prices in other sectors have disrupted our privatization programs, which had become an important additional source of development finance. The impact has also been very severe on the tourism sector, which had become a major employer and foreign exchange earner for many African countries. In addition, the cost of insurance has increased sharply following the September 11 attack. Consequently, the balance of payments and domestic currencies in a number of countries have come under severe pressure, raising the specter of inflationary pressures and, in the process, complicating our policy response to the looming recession. The ensuing situation has also imposed serious resource constraints in our fight against the alarming spread of HIV/AIDS and other pandemics as well as with recurring droughts and floods. We cannot overemphasize the implications of this on the social fabric, deepening poverty and the potential for accentuating social tensions and conflicts in our member countries. Moreover a significant and protracted global slowdown will hinder efforts by African economies to diversify through export growth and greater integration into the world economy.

6. These developments have come at a time when many of our countries had begun to reap the fruits of many years of economic reform and to benefit from debt relief under the enhanced HIPC Initiative. In light of this, we believe that an urgent, systematic, comprehensive and far-reaching set of responses needs to be prepared by African countries, in close partnership with our international development partners, including especially the IMF to address the consequences of the global slowdown for our economies and for the longer term, to address Africa's development challenges.

7. On our part, let me underscore that the ensuing situation has reinforced our commitment to reform and development, good governance and conflict prevention and resolution, and to persevere with prudent macroeconomic policies and deepening of structural reforms, with a view to ensuring that resources are used for development and poverty alleviation. Our first line of defense to the current situation is to adjust our macroeconomic policies accordingly, knowing very well that markets will not tolerate those who fail to adjust. However, and as you also acknowledge, we can only do so much by way of contracting domestic demand and depreciating the value of our currencies, particularly if the situation continues to worsen. We therefore consider that the Fund and the international community should respond quickly to complement our efforts.

   Enhanced market access needed

8. Given that most low income countries rely heavily on primary exports, which have now been hit hard by depressed global demand, the call for improved market access for African exports cannot be overemphasized. We are very concerned that trade protection and subsidies in the advanced industrial countries remain excessive in areas such as agriculture, labor-intensive industrial products as well as services, where developing countries have a comparative advantage. Moreover, manufactured exports from developing countries are subject to tariff escalations by industrial countries, where the degree of protection increases as the level of processing improves, and this has and continues to inhibit diversification of Africa's exports towards higher value-added products. While we welcome recent initiatives by a number of industrial countries to institute preferential access schemes, we are of the view that these schemes remain complex, non-transparent and represent only one element of the necessary response. In addition, both tariff and non-tariff protection in key sectors in advanced industrial countries need to be reduced further to provide a sustainable basis for our exports to compete and for our economies to begin to benefit from the promise of globalization. We would emphasize that enhancing market access to the poorest in particular, would provide significant economic benefits to these countries at little cost to industrial countries. Further steps are also needed by the advanced industrial countries to transform their preferential access schemes into substantial improvement in the level and range of actual exports from Africa to these industrial countries.

   Need to further expedite delivery of debt relief

9. With the sharp decline in commodity prices, many more countries will be left with debt burdens above HIPC thresholds for debt sustainability. In the circumstances, we consider that ways of expediting debt relief should be explored, including streamlining conditionality regarding completion point triggers; increasing flexibility with regard to the one year implementation requirement for the PRSP; and further reducing the period of track record between the decision and the completion point, particularly where members are making demonstrable progress, as many already are, in improving their systems for public expenditure management. Overall, we urge the Bretton Woods institutions to exercise more flexibility in applying conditionality to reflect the more difficult circumstances in which programs are being implemented. We welcome the joint review of the PRSP that is underway and the proposed review of the HIPC Initiative by the World Bank and urge that full and comprehensive participation of African countries be ensured as part of the review process. We particularly urge that these reviews incorporate realistic assessments of administrative capacity and technical assistance needs in the relevant countries.

10. Current circumstances which are likely to prevail for sometime, also justify that the Fund and the Bank should actively reassess debt sustainability for those countries that have reached their decision points with a view to increase interim assistance as well as to top-up debt relief for those that have reached completion point. We remain concerned about the problem of HIPC-to-HIPC debt, including for countries that have already reached the completion point. In the context of the global slowdown, it will be difficult for HIPC creditors to mobilize the resources needed to provide debt relief to other HIPCs at comparable terms with other creditors and we urge that a resolution of this issue be found by the international financial community.

11. There is also need to revisit the debt burden of some African middle-income countries. Some of these countries are classified as middle-income countries and yet they manifest very skewed distributions of income and wealth. Consequently, the vast majority of their populations live in poverty, and their high external debt burdens constrain their ability to effectively address deep-rooted poverty and to fight communicable diseases. This problem will be compounded by poor revenue performance due to the ongoing economic slowdown. We therefore believe that debt relief, beyond traditional Paris Club mechanisms, is required to support these countries' efforts to alleviate poverty.

    Need for accelerating procedures for helping countries in protracted arrears

12. We wish to draw your attention to the plight of countries in protracted arrears. These countries have no recourse for assistance during these difficult times and we encourage the Fund to find solutions this problem. We believe this problem rests with cases involving protracted arrears, where in some cases overdue interest is exceeding overdue principal. We sincerely feel that innovative solutions, in line with recent Executive Board agreement to proceed on a case by case basis, are called for in order to clear the way forward for these countries, some of which have been persevering with adjustment for a long time. In this context we urge the Fund to substantially improve the flexibility of the Rights Accumulation Program (RAP), to enable the large protracted arrears cases to swiftly enter and to swiftly graduate from RAP, progress promptly to the PRGF and enable them to benefit from the enhanced HIPC framework.

    Assisting countries emerging from conflict

13. We welcome that the Fund is in the process of mobilizing concessional resources to assist countries emerging from conflict and we urge the international community to support this endeavor. Where efforts to restore peace are moving speedily and there is demonstrable commitment to resuscitate the economy, the Fund should show willingness to waive certain conditions applied to these countries, including shortening the duration of staff monitored programs prior to the entry of these members into programs supported by use of Fund resources. In addition, current efforts aimed at fighting terrorism should assist in ensuring that the illegal exploitation of natural resources cannot be used to finance ongoing conflicts.

    Need to mobilize more resources to assist low income countries

14. It is clear that the poor will be the hardest hit by the ongoing downturn and the PRGF Trust should be adequately funded to enable it to address not only the potential for increased demand for resources under the Interim-PRGF from new requests and augmentation under current PRGF arrangements, but also to ensure that the need to have a self-sustaining PRGF is realized in a timely fashion. We urge the Fund to intensify mobilization of resources for this purpose. In this connection, we wish to caution that Stand-By arrangements should be used more sparingly for PRGF eligible countries as this could worsen their debt situation. It would be also useful to explore a temporary oil facility within the Fund in order to compensate low income countries in the event of a sharp increase in oil prices. It is our view that the current discussions for the Twelfth Review of Quotas may need to be expedited. Furthermore, there is need for quickly ratifying the Special Allocation of SDRs, including the possibility of considering a general allocation of SDRs if global liquidity becomes a problem.

    Need for mobilization of more concessional aid

15. The role of the creditor countries is particularly important, not only to ensure that relief is adequate and delivered in a timely manner, but also that adequate non-debt creating financing continues to flow to our countries even after HIPC assistance. In this regard, we welcome the announcement made by the U.S. President, urging International Financial Institutions to offer grants to developing countries in support of poverty alleviation efforts. As such we urge industrial countries to increase their contribution to Official Development Assistance (ODA) from the current level of 0.24 percent to the UN agreed target of 0.7 percent of GDP and we hope that the forthcoming UN Finance for Development Conference will be successful in this regard. As I have mentioned earlier, in stressing the important role of creditor countries and that of the Fund, we of course acknowledge the primary responsibility of our countries in pursuing viable macroeconomic and financial policies, and creating an enabling environment for private investment.

    COMBATING MONEY LAUNDERING AND THE FINANCING OF TERRORISM

16. We endorse the Fund's role in combating money laundering and financing of terrorism. We acknowledge that issues pertaining to money laundering and financing of terrorism are complex and therefore multiple actors at the national and international levels must contribute. The UN should take the lead in defining what and who constitutes terrorism in order to facilitate the work of other institutions. The Fund should remain focused on its financial and supervisory role, in line with its mandate. As it forges cooperation with other agencies, including the FATF, the Fund should refrain from using its universality of membership to encroach into law enforcement aspects.

17. We continue to emphasize the importance of technical assistance to make the role of the Fund more effective in combating money laundering and finance for terrorism. The Fund should not discourage those countries that intend to benefit from establishing Offshore Financial Centers, but should instead raise awareness on issues related to money laundering and financing of terrorism and help catalyze technical assistance for these countries.

18. Even-handedness is of the utmost importance and we would therefore caution that the burden of fighting money laundering should not weigh heavily on program countries. While the macroeconomic relevance test should be an important criterion for Fund involvement, it should also be recognized that though such issues may not pass the macroeconomic relevance test in industrial countries, nevertheless we still feel the policy on fighting money laundering should equally be applied to industrial countries.

19. Finally the current momentum to fight money laundering and financing for terrorism should be used to revisit all other issues that up to now, had remained of serious concern only to developing countries: the prevalence of the so called "conflict diamonds"; bribery in public procurement, transfer pricing; and, externalization of public resources through corruption. We urge the international community to cooperate through their legal and banking systems to stem corruption in developing countries and repatriate those resources back to the countries concerned. In this regard, we look forward to the implementation of the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions.