APO News from Africa:
- The Moroccan authorities stated their intention to continue treating the arrangement as precautionary
- Morocco’s sound economic fundamentals and overall strong record of policy implementation have contributed to a solid macroeconomic performance in recent years
- Improving the business climate and governance, competitiveness, access to finance, and labor market policies will be essential to increase potential growth and reduce persistently high unemployment levels
On May 12, 2017, the Executive Board of the International Monetary Fund (IMF) completed the first review under the Precautionary and Liquidity Line (PLL) Arrangement and reaffirmed Morocco’s continued qualification for the PLL.
The two-year PLL arrangement for Morocco in the amount of SDR 2.504 billion (about US$ 3.42 billion) was approved by the IMF’s Executive Board in July 2016 (see Press Release No. 16/355). The Moroccan authorities stated their intention to continue treating this PLL arrangement as precautionary. It has provided insurance against external risks and supported the authorities’ program to rebuild fiscal and external buffers and promote higher and more inclusive growth. The arrangement will expire on July 21, 2018.
Following the Executive Board’s discussion, Mr. Mr. Furusawa, Deputy Managing Director and Acting Chair, said:
“Morocco’s sound economic fundamentals and overall strong record of policy implementation have contributed to a solid macroeconomic performance in recent years. The external position remained strong in 2016, as international reserves further increased despite a higher-than-expected current account deficit. While fiscal developments were less favorable than expected, this was due in part to slower growth and accelerated value-added tax reimbursements. Growth is expected to rebound in 2017 and accelerate gradually over the medium term, subject to improved external conditions and steadfast reform implementation.
“This outlook remains subject to significant downside risks, including from weak growth in Morocco’s main trading partners, geopolitical risks, and global policy uncertainty. In this context, Morocco’s PLL Arrangement with the IMF continues to serve as valuable insurance against external risks and supports the authorities’ economic policies.
“The authorities are committed to further reducing fiscal and external vulnerabilities while strengthening the foundations for higher and more inclusive growth. Building on progress made in recent years, further fiscal consolidation is needed and should be based on continued expenditure control, a comprehensive approach to enhance revenues, civil service reform, careful implementation of fiscal decentralization, and strengthened oversight of state owned enterprises. Adopting the central bank law and continuing to implement Financial Sector Assessment Program recommendations will help strengthen the financial sector policy framework. Moving toward a more flexible exchange rate regime will help preserve external competitiveness and enhance the economy’s capacity to absorb shocks. Finally, improving the business climate and governance, competitiveness, access to finance, and labor market policies is essential to raise potential growth, reduce persistently high unemployment levels, especially among the youth, and increase female labor participation.”
Distributed by APO on behalf of International Monetary Fund (IMF).
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Source: APO – Africa-Newsroom: latest news releases related to Africa
Water Management is Key to Sustainable Development and Stability in the Middle East and North Africa:
The importance of water management for sustainable development and stability in the Middle East and North Africa is at the heart of the League of Arab States’ conference on the Sustainable Development Goals which opened in Cairo yesterday. The World Bank Vice President for the Middle East and North Africa, Hafez Ghanem, and the FAO Director-General and Regional Representative for the Near East and North Africa, Abedssalam Ould Ahmed, joined the launch of the Arab Sustainable Development Week to raise awareness of the issue and to discuss the dynamics between water insecurity and fragility, conflict, and violence.
In March of this year, the League of Arab States and the World Bank Group signed a Memorandum of Understanding focused on leveraging the comparative advantages of each organization to take a regional approach to achieving the Sustainable Development Goals. A ceremony was held today in Cairo with the Secretary General of the League of Arab States, Ahmed Aboul Gheit, to celebrate this MOU. Water security in particular will require a regional approach, as the region’s scarce water resources cross borders and their effective long-term management will depend on increased cooperation among countries.
“The FAO, the League of Arab States and the World Bank all share the goal of promoting sustainable, effective and equitable water management in fragile situations – a goal which we believe can contribute to peace, prosperity and stability,” Ghanem said. “Unless action on water is taken, the political and economic consequences will be significant. For example, the impacts of climate change on water scarcity, in the absence of strategies for mitigation and adaptation, could lead to a 14% drop in the region’s GDP by 2050.”
Abdessalam Ould Ahmed highlighted the challenges to the Arab region’s food security due to multiple risks arising from conflicts, water scarcity and climate change.
“Countries of the region need to implement long-term and comprehensive sustainable water management practices to achieve the Sustainable Development Goal of ending hunger by 2030. A peaceful and stable environment is an absolute pre-condition for farmers to respond to the challenges of water scarcity and climate change. The region is not only water scarce, but also dampened by instability and conflict that it is in need of immediate intervention as well as long-term strategies,” Ould Ahmed said.
In 2014, in response to these alarming challenges, the FAO launched a Regional Initiative on Water Scarcity to support member countries in identifying strategies, policies and practices that promote sustainable solutions to water shortage in the region.
The serious potential effect of water scarcity on GDP has caught the attention of ministers of finance, who recently attended the World Bank-IMF Spring Meetings in Washington D.C. to discuss how to fill the financial gap for water and sanitation infrastructure, including using innovative solutions that include micro-finance.
Guangzhe Chen, World Bank Senior Director for Water, also attended the start of the Arab Sustainable Development Week, highlighted the World Bank’s commitment to increased support for countries affected by fragility, conflict and violence.
“Targeted investments to improve the management and delivery of water are key as we seize the opportunities provided by the $ 75 billion commitment to IDA, the World Bank’s fund for the poorest and conflict-affected countries,” Chen said. “In several countries in the region, we are supporting the reconstruction and recovery efforts of governments. For example, we are working with Baghdad to restore water supply and sanitation infrastructure damaged by conflict.”
These links between water management, fragility and conflict are also discussed in the recently launched World Bank report Turbulent Waters which discusses how countries affected by fragility, conflict and violence made slower progress towards meeting the water-related Millennium Development Goals. The study also describes how investments in water can be conducive to stability by addressing short-term livelihood needs and long-term sustainability challenges.
Distributed by APO on behalf of Food and Agriculture Organization (FAO).
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Source: APO – Africa-Newsroom: latest news releases related to Africa
IMF Staff Completes 2017 Article IV Consultation and Review Mission to Rwanda:
- The IMF team reached preliminary agreement with the government, subject to approval by IMF management and its Executive Board, on policies that could support completion of the seventh and second reviews of Rwanda’s PSI- and SCF-supported programs.
- Growth in 2016 was 5.9 percent, down from 2015, but comparing favorably to growth in the subcontinent, which averaged just 1.4 percent–the lowest in two decades.
- The government also implemented a “Made in Rwanda” policy to encourage domestic production of certain goods currently imported and promote export diversification, intended to foster external stability and growth in the medium term.
An International Monetary Fund (IMF) staff team, led by Laure Redifer, visited Kigali from May 2-15, 2017 to conduct 2017 Article IV consultations, and the seventh and second reviews of Rwanda’s Policy Support Instrument (PSI) [1] and Stand-by Credit Facility (SCF) [2] supported programs respectively.
Ms. Redifer issued the following statement at the end of the visit:
“The IMF team reached preliminary agreement with the government, subject to approval by IMF management and its Executive Board, on policies that could support completion of the seventh and second reviews of Rwanda’s PSI- and SCF-supported programs. The Executive Board is scheduled to consider the reviews in July 2017.
“The IMF staff team highlighted that Rwanda’s economy continues to perform well, with strong implementation of its IMF-supported program. Growth in 2016 was 5.9 percent, down from 2015, but comparing favorably to growth in the subcontinent, which averaged just 1.4 percent–the lowest in two decades. Deceleration of growth in Rwanda was primarily attributable to the drought’s impact on agriculture, as well as completion of large construction projections and policy adjustment to address growing external imbalances. The IMF team anticipates that growth should recover gradually over the course of 2017, owing to good rains and expanding domestic production. Food-driven inflation peaked in early 2017, and should decelerate as food supply constraints recede.
“Rwanda’s external trade deficit was lower than expected in 2016, following a strong pick up in goods and services exports, combined with reduced demand for imports. The IMF team observed that these developments reflected in part decisive government policies: to address pressures on the balance of payments and falling reserves, the government allowed the exchange rate to adjust, resulting in depreciation of just under 10 percent in 2016, supported by public spending restraint and prudent monetary policy.
“The government also implemented a “Made in Rwanda” policy to encourage domestic production of certain goods currently imported and promote export diversification, intended to foster external stability and growth in the medium term. These efforts should allow for a slight increase of foreign exchange reserves in 2017. The IMF team commended these policies, but underlined the importance of balancing tax incentives in Rwanda and domestic revenue mobilization objectives. To that end, the IMF team urged accelerated completion of revisions to income and fixed asset tax laws, and further analysis of the effectiveness of various tax incentives in promoting the competitiveness of Rwanda’s private sector.
“For its longer-term analysis, the IMF team focused on three policy areas for sustaining the country’s impressive growth record. First, Rwanda’s development policies under Vision 2020 and Economic Development Poverty Reduction Strategies I and II have enabled the country to make nascent but tangible progress in moving from lower value-added to higher value-added economic activities, fostering structural transformation. The IMF team underscored that planned strategic public investment in growth-enhancing infrastructure must create room for more private sector activity, vitally important for shifting the engine for growth, creating jobs, and improving living standards. Second, the IMF team commended the government’s concerted efforts to promote gender inclusion in economic activity, which has resulted in impressive progress that has provided an overall growth dividend for the country. Building on this progress, there is potential to boost growth further via more inclusion of women in higher productivity jobs. Finally, the IMF team welcomed improvements in financial access in Rwanda, in particular thanks to the expansion of microfinance and new technology, but noted that there remains room for further progress in lowering the costs of financial services and creating deeper financial and securities markets.
“The IMF team also welcomed Rwanda’s participation in the G-20’s “Compact with Africa.” The compact has good potential to leverage ongoing and new work by the government and development partners to attract and increase private investment in strategic sectors of the economy, for example, development of industrial parks and infrastructure, in the context of a stable economy and a welcoming business environment.
The IMF team met with Minister of Finance and Economic Planning, Claver Gatete; Governor of the National Bank of Rwanda, John Rwangombwa; Minister of Trade, Industry and East African Community Affairs, François Kanimba; Minister of Agriculture and Animal Resources, Gerardine Mukeshimana; Minister of Gender and Family Promotion, Esperance Nyirasafari, and other senior government officials, private sector representatives, civil society organizations, academia, and development partners. The team thanks the various interlocutors for the collaborative and fruitful discussions.
[1] Rwanda’s PSI-supported program was approved by the IMF Executive Board on December 2, 2013 (see Press Release No.13/483). The PSI is an instrument of the IMF designed for countries that do not need balance of payments financial support. Details of Rwanda’s current PSI are available at www.imf.org/rwanda.
[2] Rwanda’s SCF-supported program was approved by the IMF Executive Board on June 8, 2016 (see Press Release No.16/270). The SCF provides financing to low-income countries on concessional terms. For more details see www.imf.org/external/np/exr/facts/scf.htm.
Distributed by APO on behalf of International Monetary Fund (IMF).
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Source: APO – Africa-Newsroom: latest news releases related to Africa
