Economic policy making in Sub-Saharan Africa and IMF involvement.
The IMF is generally called upon to assist a member country in addressing a balance of payments imbalance brought about by several factors, including external and domestic shocks, and internal economic and financial mismanagement. In this context, the IMF has shown great flexibility over time in adapting to its members' financing needs by tailoring the access to, and conditionality of, its resources according to the nature of the external imbalance, by diminishing the cost of borrowing for its poorest members, and by extending the time frame of its programs whenever necessary to facilitate the adjustment process. In addition, the policy dialogue in which a member country engages with the IMF to request its financial assistance has also been adapted over time such that it now incorporates both broad macroeconomic and microeconomic instruments to address balance of payments difficulties.(1)
Initially, any member facing balance of payments problems could gain access to short-term IMF financial assistance (from one to two years) through a stand-by arrangement (SBA), which draws on the IMF's ordinary resources (primarily composed of members' quotas, and thus this support is not called a "loan," but a "purchase" against one's quota; similarly, the repayment is termed a "repurchase").(2) A program under this arrangement has often involved the adoption of policies that seek to bring about a rapid adjustment in domestic absorption to correct external imbalances (see Table 1). However, balance of payments support for developing member countries began to expand significantly in the 1970s, stemming from a series of international events - namely the oil price shocks, and, in the following decade, the sharp decline in commodity prices and in private capital inflows and the steep rise in international interest rates. As a result, the IMF introduced in 1974 the Extended Fund Facility (EFF) to provide financial assistance on a medium-term basis [TABULAR DATA FOR TABLE 1 OMITTED] (from three to four years) to address protracted balance of payments imbalances. This longer time frame resulted in a program design emphasizing a broad structural transformation of the economy concurrently with appropriate domestic absorption management to achieve external viability. The most advanced economies in Latin America and about one-third of sub-Saharan African (SSA) countries have received IMF financial assistance under the EFF.(3) In addition, the IMF has also periodically established temporary facilities to supplement resources already available under SBAs and EFFs. These facilities which were financed by sources other than the IMF's ordinary resources, remained in effect until their resources had been completely committed, as was the case for the oil facilities in 1974-1975 and 1979, the supplementary financing facility (SFF) in 1979-1981, and the Trust Fund in 1976-1981. The latter was set up to provide financing on concessional terms to low-income member countries, with SSA members receiving almost one-third of Trust fund resources.(4)
Since the mid-1980s, the IMF has become increasingly involved in providing concessional resources to finance medium-term, growth-oriented adjustment programs in low-income member countries, mainly in SSA, under two temporary facilities: the structural adjustment facility (SAF) and the extended structural adjustment facility (ESAF), which are still in effect. The establishment of these facilities recognized that many IMF members did not have the capacity to service nonconcessional debt in the short- to medium-term. The programs under SAF/ESAF have sought to address a long period of balance of payments problems in order to achieve external viability and facilitate the resumption of sustainable growth. To this end, the programs have relied on both macroeconomic stabilization and structural adjustment policies to address the fundamental causes of the country's economic crisis. It is expected that the adjusting country will eventually gain full access to the international capital market without the need for any type of exceptional foreign financing, including debt forgiveness or rescheduling. About 70 percent of SAF/ESAF arrangements had benefitted SSA countries through mid-1995.(5)
The aims of this paper are: (1) to examine the IMF's involvement with SSA countries over the past two decades; (2) to describe some underlying macroeconomic and structural disequilibria in these countries that have led to the adoption of an IMF program, particularly during the 1980s; and (3) to review the main elements brought into the policy dialogue between the IMF and SSA members undertaking growth-oriented adjustment programs. The paper has been organized as follows. Section II presents a brief history of the IMF lending to SSA. The next section highlights some of the initial economic conditions in this region prior to the adoption of policy changes. A clearer knowledge of these initial conditions would contribute to a better understanding of the policies adopted to tackle those disequilibria. Section IV presents the IMF's general principles used in its financial programming and strategy in supporting a growth-oriented adjustment program. This section also summarizes some important results of this type of program. Section V concludes the paper.
II. THE IMF AND SUB-SAHARAN AFRICA - A BRIEF HISTORY
Ethiopia was the first SSA country to join the IMF (1945) and it was also one of its founders; most SSA countries joined the IMF after their independence in the early 1960s.(6) The region's membership was practically completed by 1977, with the exception of Zimbabwe, Mozambique and Angola, which joined the IMF in 1980, 1984 and 1989, respectively.(7) Despite this early membership, few SSA countries made use of the IMF's ordinary resources in the 1960s.(8) As a result, total IMF credit outstanding to SSA only increased from SDR 4 million in 1960 to SDR 107 million by the end of the decade, or from 0.1 percent of the Fund's total credit outstanding to 3.3 percent over the same period (see Tables 2 and 3), with only two countries, Ghana and Sudan, accounting for about 70 percent of total credit outstanding by 1970.
Most of the increase in net IMF credit in the 1960s resulted from financial support made available under SBAs and in a few cases under the compensatory financing facility (CFF).(9) The latter was established in February 1963 to assist members experiencing balance of payments difficulties attributable initially to short-falls in earnings from merchandise exports and later, to cover shortfalls in receipts from tourism and workers' remittances and excess cereal import costs. These short-falls were considered to be both temporary and due largely to factors beyond the authorities' control (including natural disasters).(10)
In the 1970s, IMF credit and loans outstanding to SSA grew sharply, to SDR 1.8 billion, representing 16 percent of the total credit by the end of the decade (see Table 3).(11) This increase in lending followed a general trend, because in the second half of that decade, lending to developing member countries became the IMF's primary activity, stemming in part from the 1974 and 1979 oil price shocks.(12) Initially, SSA countries had access to IMF resources through SBAs; in addition, Kenya had an extended arrangement under the EFF, a facility that was introduced in 1974 to give medium-term assistance to (developing) members experiencing slow growth and an inherently weak balance of payments position, which prevented the pursuit of an active development policy. This new facilities continued to rely heavily on macroeconomic instruments to achieve balance of payments adjustment. Nevertheless, these instruments went beyond the traditional ones - fiscal and monetary policies - to include price liberalization, wages, tax reform, and subsidies (Guitian, 1981). In addition, EFFs programs included microeconomic instruments to improve resource allocation as the basis for longer-term structural adjustment, and often called for fundamental shifts in policy, such as liberalization of trade, decontrol of prices, financial sector deepening, and restructuring of state-owned enterprises, and civil service reform (Haggard, 1986).
However, in the second half of the 1970s, most SSA members received IMF financial assistance through loans from the Trust Fund. This temporary fund was established in May 1976 to provide balance of payments support on concessional [TABULAR DATA FOR TABLE 2 OMITTED] [TABULAR DATA FOR TABLE 3 OMITTED] terms to eligible low-income members.(13) The resources of the Trust Fund, which were all committed by 1981, were derived from: (1) profits from the sale of about 25 million ounces of the IMF's gold holdings; (2) income on the investment of these profits; and (3) contributions by, and low-interest borrowing from, members. The Trust Fund resources supplemented the financing already established for countries under a stand-by or extended arrangements. However, particularly in 1977-1978, most SSA countries that received these funds had no arrangement with the IMF. In this case, Trust Fund resources were mostly granted under a liberal attitude, as performance criteria (conditionality) and reviews did not apply because most countries received the equivalent of less than 25 percent of their quotas.(14) As a result, this financial assistance did not bring about any significant policy change in these countries to support an improvement in economic performance. During the Trust operation, 55 members (60 percent in SSA) received loans totaling SDR 2.7 billion, of which about one-third went to SSA members. Consequently, the structure of total IMF credit and loans outstanding to SSA members experienced a significant change: by 1980, 35 percent of the IMF credit and loans outstanding of these members had shifted to concessional terms (see Table 4).
In the early 1980s, the IMF disbursed about SDR 6.1 billion in a span of four years ending in 1984 to help finance the deterioration in the balance of payments of many SSA members caused, in part, by the sharp decline in commodity prices and in private capital flows and the steep increase in international interest rates. This financing involved the IMF's ordinary resources received mainly under SBAs and some EFFs, complemented in a few cases by the CFF, as a significant amount of concessional resources was not available during most of that period.(15) However, despite the significant increase in the amount disbursed, the number of countries receiving IMF financial support declined substantially, from 32 in 1980-81 to 16 countries by 1985 (see Table 5).
In March 1986, the basic elements and characteristics of the Trust Fund and the EFF were combined to establish the structural adjustment facility (SAF), which was set up to finance low-income developing countries that were eligible for International Development Association (IDA) resources in the form of loans on concessional terms. SAF loans were financed from the resources of the SDA (Special Disbursement Account), which derived from repayment of Trust Fund loans. As in programs supported by the EFF, under this facility adjustment is carried out in three successive annual programs.
The enhanced structural adjustment facility (ESAF) was set up in December 1987 to provide financing on the same concessional terms as the SAF but allowing for a higher access in percent of quota and a fourth-year arrangement in some circumstances. The ESAF resources, initially about SDR 5.1 billion, derived in part from SAF resources and from contributions in the form of loans as well as grants administered by the ESAF Trust.(16) The explicit objectives of the SAF/ESAF were to promote external viability and higher output in a balanced manner by reducing domestic and [TABULAR DATA FOR TABLE 4 OMITTED] [TABULAR DATA FOR TABLE 5 OMITTED] external imbalances, mobilizing resources, and improving resource allocation (Schadler, Rozwadowski, Tiwari and Robinson, 1993). The differences between the two facilities relate mainly to access, monitoring, and funding (see Table 1). In addition, measures adopted under ESAF arrangements are expected to be far-reaching with regard to both macroeconomic policy and structural reforms.
The establishment of these temporary facilities contributed to a sharp increase in concessional IMF credit outstanding to SSA members.(17) Concessional financing accounted for about 10 percent of the total debt outstanding to the IMF by SSA countries in 1986, increasing to 56 percent by mid-1995, or from SDR 555 million to SDR 2.8 billion. This implies that in terms of flow, SSA members have had access mainly to concessional funds since the mid-1980s. Although in the period 1986-93 the total net flow of IMF financing to SSA countries was negative, owing to the repayment of the credit received in the early 1980s under stand-by and extended arrangements, the flow of concessional financial assistance has been positive since 1987. Total net flow became positive again in 1994 (see Table 6).
Since the early 1980s, IMF support has been directed toward adjustment in developing country members.(18) However, the importance of SSA members in the IMF's portfolio has declined significantly during the past 15 years, from 21 percent of total IMF credit and loan outstanding in the early 1980s to 13 percent by mid-1995. In addition, the number of SSA countries receiving IMF financing, which averaged about 20 countries a year in the period 1983-1991, declined to 10 in 1992-1993, and it has increased again since early 1994 as a result of programs with the majority of SSA members of the CFA zone.(19) In fact, by end-July 1995, about half of SSA members were under a program with the IMF, which committed SDR 1.8 billion to finance these programs, with 15 SSA countries being under ESAF arrangements, 1 (Ethiopia) under a SAF arrangement, 2 (Cameroon and Lesotho) under SBAs, and 1 (Zimbabwe) under an EFF arrangement.
Concessional debt now accounts for all IMF credit and loans outstanding to SSA countries, with the exception of eight countries (Cameroon, Congo, Gabon, Liberia, Somalia, Sudan, Zambia and Zaire), most of which have not undertaken an IMF-supported program for many years or have not been eligible to receive IMF concessional financial assistance given, for instance, their relatively high GDP per capita (see Table 7). Furthermore, if one can argue that the intensity of IMF involvement in SSA - as reflected in the amount of resources disbursed and in the number of countries under a program - is any indication of expected economic performance that is due to the adoption of a comprehensive set of policies, then it is not surprising to see an improvement in real GDP growth per capita from 1987 to 1989 in SSA.(21) During this period, the annual net flow of concessional resources increased from SDR 116 million to SDR 450 million, and the number of countries receiving IMF financing, from 16 to 22. However, by 1993, the net flow had declined to SDR 99 million and the number of countries to 10, at the same time, real GDP growth per capita had deteriorated significantly (see Chart 1).
[TABULAR DATA FOR TABLE 6 OMITTED]
[TABULAR DATA FOR TABLE 7 OMITTED]
III. SUB-SAHARAN AFRICA: MACROECONOMIC AND STRUCTURAL WEAKNESSES
The most striking characteristic of many SSA countries has been their unsatisfactory economic performance in terms of economic growth over the past two decades. In the second half of the 1970s, real GDP growth per capita remained practically flat, deteriorating significantly in the period 1982-86 when it declined, on average, by almost 2 percent a year. SSA countries have continued to experience negative real GDP growth per capita in the period through 1993, albeit at a lower pace (see Table 8).(22) Such a prolonged period of economic decline cannot be exclusively explained by the unfavorable international events aforementioned, particularly as no other region of the world has experienced such a dramatic deterioration.(23)
[TABULAR DATA FOR TABLE 8 OMITTED]
Poor economic management in SSA countries has brought about severe macroeconomic and structural weaknesses which, in turn, have hampered economic growth (Guillaumont, 1985; Jaeger, 1991). It is important to highlight among these weaknesses: (1) the severe macroeconomic imbalances, particularly in the fiscal sector, with overall fiscal deficit (excluding official transfers) often above 10 percent of GDP; (2) the high dependence on a few export products; (3) an inefficient financial sector, which has hindered domestic savings and investments, revealing the failure of the region's governments to address their banking systems' problems caused, in part, by the politization of banks; (4) the poor performance of the agriculture sector; (5) a pattern of consumption-led growth; and (6) low productivity growth, as the focus frequently been on the amount of resources available rather than on the efficiency in resource use to spur growth.
These weaknesses have created a vicious circle that the SSA countries cannot escape without a drastic change in economic and financial policies and growth strategy. For instance, as many SSA countries have not been able to diversify their exports and as government revenue has continued to depend heavily on international trade transactions, a worsening in the terms of trade and/or a drop in export volume due to external (i.e., lower external demand) or domestic (i.e., recurring droughts) causes has set in motion an inflationary process in some of them. The latter resulted from the increase in the monetary financing of the fiscal imbalance because governments did not reduce expenditure to match the lower level of tax receipts. However, in other SSA countries, governments have reduced public expenditure, particularly public investments and related recurrent outlays financed with local resources or counterpart funds which, in turn, has led to a deterioration in the countries' human and physical infrastructure. In any case, both alternatives have hindered growth in these countries.
The agricultural sector in SSA has been subject to heavy explicit (export taxes, low producer prices) and implicit (uncompetitive exchange rate) taxation. In addition, governments have often set local producer prices at below-market clearing prices to favor urban consumption; and have allowed parastatal monopoly power in purchasing and exporting primary products at prices usually not linked to the world market prices, shifting the internal terms of trade strongly against agriculture. This, together with rapid population growth, has transformed many SSA countries into net food importers. Furthermore, Khan and Khan (1995, p. 15) have pointed out that "the uncertainty and insecurity of tenure in land throughout Africa adversely affected the incentives to make long-run investments and adopt new technologies where they have become available." These authors also stressed the sector's low productivity growth, as average product per agricultural worker rose by only 18 percent in Africa over the last 25 years.
The agricultural sector in SSA has not been developed to create wealth and to provide a reservoir of resources, as was the case in many Latin American countries. In fact, the industrialization process took place at the expense of this sector and was pushed through in most SSA countries even though agriculture remained at a subsistence stage. This sector has contributed, on average, only about 19 percent to the overall GDP growth in the period 1970-93 in SSA countries and has expanded at a rate below that of population growth (see Table 9). In addition, it continues to account in many SSA countries for 30-35 percent of GDP, about 70 percent of the labor force, and more than half of exports.
Table 9. SUB-SAHARAN AFRICA: SUPPLY AND DEMAND SOURCES CONTRIBUTION TO GROWTH, 1970-93
(Period Average, in percent) 1970-75 1976-81 1982-86 1987-93 1970-93
Agriculture 0.9 0.3 0.4 0.4 0.5 Industry 1.8 1.3 -0.1 0.4 0.9 Services 2.1 1.6 0.8 0.8 1.3
Real GDP growth 4.8 3.2 1.1 1.6 2.7 Per capita (1.7) (0.2) (-1.9) (-1.4) (-0.3)
Total consumption 3.7 4.2 - 1.4 2.4 Gross domestic Inv. 2.9 0.6 -2.0 -0.2 0.4 Resource balance -1.8 -1.6 3.1 0.4 -0.1
Source: World Bank data base.
The industrial and service sectors, mostly under direct government control or ownership, have thus explained more than three fourths of total growth over the last two decades. This has created a conflict of interest in the formulation of policies and the management of public enterprises, owing to the lack of financial discipline and competition. It is not surprising, therefore, to see that the relatively better performance of the industrial and service sectors in SSA has only translated into a mediocre creation of (urban) jobs, transforming the Government as the main employer of formal labor, and into a low expansion of industrial exports.
In the period 1976-1981, the growth experienced by SSA countries was consumption led; gross domestic investment growth was less than 1 percent a year, whereas total consumption growth accelerated, on average, to over 4 percent a year. As the resource balance experienced negative growth, annual real GDP growth declined from almost 5 percent in 1970-1975 to about 3 percent in 1976-81 (see Table 9). This made it more difficult for SSA to adjust to the international events of the early 1980s, as growth mainly spurred by consumption can hardly be considered a sustainable growth path.
The Recessionary Adjustment in the First Half of the 1980s
The sharp fall in net capital inflows, from US$ 5.2 billion in 1981 to less than US$ 100 million by 1984, forced SSA economies to drastically reduce their current account deficits (including net official transfers) of about US$ 9.8 billion (equivalent to about 34 percent of their exports and some 9 percent of GDP) in three years.(24) By 1984, the region's current account deficit was cut to US$ 3 billion (equivalent to about 3 percent of GDP), a decline of almost 70 percent from its peak in 1981 (see Table 8).(25)
The external sector disequilibrium was reduced by a turnaround in the trade balance, which, after recording a deficit of US$ 7.1 billion in 1981, declined to USS 1.2 billion in 1984. However, the rapid reduction in the current account deficit entailed large costs. Export receipts of goods and services declined 16 percent from their peak in 1980 owing to the fall in the international prices of most commodities. Hence, the burden of correcting the external imbalance had to be shouldered by imports of goods and nonfactor services, which plunged from US$ 37 billion to USS 30 billion over the same period. This adjustment was accompanied by strong recessionary effects. By 1984, national income per capita in real terms had fallen back to its 1975 level, and investment per capita had declined about 44 percent in real terms from its peak in 1975.
A Revision of the Economic Policies
The poor economic performance during the second half of the 1970s, and the recessionary adjustment in the first half of the 1980s, prompted many governments in SSA to review their economic policies to reverse the deteriorating economic situation. The focus was on implementing more market-oriented policies, and on reducing structural rigidities and domestic imbalances. However, the piecemeal approach initially followed in many SSA countries, and the political constraints imposed during the transition to multiparty democracies in some of them have hindered the growth adjustment process. In particular, the lack of political consensus and financial discipline in the young democracies thwarted economic management and decision making, and, in some cases, less dirigist policies previously adopted, were reversed. As a result, real GDP per capita did not recover to its pre-crisis level, declining, on average, by 1.6 percent a year in the period 1985-1993. In addition, fiscal indicators showed an increase in the overall fiscal deficit (on a cash basis and excluding grants), to over 10 percent of GDP in the early 1990s from 5.8 percent of GDP in 1984-1985. This deterioration was mainly related to an increase in total expenditure and net lending of about 3 percent to 31 percent of GDP and a decline in total revenue (excluding grants) to less than 90 percent of GDP by 1993, from about 22.5 percent over the same period. Moreover, it is important to note that by the early 1990s, total consumption as a percent of GDP reached a level higher than prior to 1984-1985, whereas investment, after a short recovery in 1987-1988, again experienced a decline through 1993, with low gross national savings hindering a recovery of investment. Furthermore, even though exports of goods and services have grown substantially, the resource balance reached -6.5 percent of GDP by 1993, slightly below its peak reached in 1981-1982 (see Table 8). The poor aggregate performance reflects, in part, a continuing deterioration in the largest economies of the region, such as Angola, Cameroon, and Zaire. In contrast, another group of SSA countries have since the mid-1980s implemented growth adjustment programs, most of them supported by IMF resources, permitting some gains in real per capita incomes in many cases despite the severe deterioration in their terms of trade.
Important policy changes have taken place in SSA countries, namely the progress toward the multilateral liberalization of trade, despite economic and financial difficulties and internal opposition. In the last two years, six SSA countries (The Gambia, Ghana, Kenya, Mauritius, Uganda and Zimbabwe) have adopted current account convertibility.(26) In many instances in the past, SSA countries often implemented extensive controls on foreign trade and capital flows and multiple exchange rates to contain balance of payments crises, resulting from overvalued exchange rates, lack of competitiveness and internal stability. However, during the last decade, the trend in SSA has been to adopt a market-determined exchange rate regime with the objective of eliminating economic distortions and moving transactions in parallel markets back into official markets. In fact, as of end-June 1995, 17 SSA countries were implementing an independently floating exchange rate regime.(27) Thus, the exchange rate policy has now become an important instrument in many SSA countries to achieve and maintain recent gains in external competitiveness which, in turn, should help to attain a sustainable balance of payments position.
It is also important to notice that official development assistance (ODA) or aid flows which consists of concessional financial resources, has increased significantly over the past 15 years to all SSA countries. Net ODA from all donors (excluding multilateral donors) grew from US$ 5.8 billion in 1985 to US$ 10.7 billion by 1992, or from 5.6 to 7.6 percent of GDP over the same period. In addition, bilateral donors have not favored "strong-adjuster" SSA countries(28) more than the rest of SSA countries, as aid flows have increased about 120 percent in nominal dollar terms to both groups. By 1992, aid flows to the group of adjusting countries had reached USS 5.4 billion and to the rest of SSA countries, US$ 5.3 billion, indicating that the increase in foreign resources to adjusting countries could not be the main force behind their relatively better economic performance.
IV. ECONOMIC POLICY DIALOGUE WITH SSA: ITS MAIN ELEMENTS AND RESULTS
The International Monetarist Approach
The IMF has long used in its financial programming the international monetarism approach, which was originally developed by one of its staff member (Polak, 1957; IMF, 1977). In a simple way, this approach indicates that both the balance of payments and inflation are essentially monetary phenomena. And thus the key to controlling the balance of payments and inflation at a given exchange rate is the rate of domestic credit creation. However, it will be very difficult for monetary policy alone, even if the Central Bank is independent, to achieve a lower inflation rate without a high output loss if fiscal policy is not supportive to reduce the rate of domestic credit creation. Thus, fiscal policy also plays a key role in reducing inflation and external imbalances.
The development of this approach responded to the need to offer clear policy tools to member countries which have requested IMF financial assistance so as to achieve both the stabilization of inflation and a reduction in balance of payments imbalances. In addition, the IMF faced a practical problem once conditionality was attached to the use of its resources, given their revolving character (Gold, 1979; Guitian, 1992). As monetary data were available relatively fast in most countries, the financial side of transactions became the underpinning of IMF conditionality. In this context, de Vries (1986, p. 81) pointed out:
the Fund's keen interest in the stabilization policies of members asking for a stand-by arrangement led to the development of new techniques for quantifying monetary targets, as well as the economic concepts and analysis underlying such quantification. Thus, the Fund was a pioneer in formulating analysis and methodology for the monetarist economics increasingly being used by economists and central bankers in the 1970s.
The international monetarist approach has not been explicitly concerned with growth, however. Fisher (1987, p. 165) has pointed out that:
consistent with domestic monetarism of the old Chicago school, international monetarism did not pay particular attention to growth policies. It relied on non-interventionist microeconomic policies combined with macroeconomic stability to allow markets to produce the right allocation of resources, both at a moment of time and intertemporally.
However, the IMF's present Managing Director has made clear on several occasions that the IMF should help member countries to achieve conditions for "high-quality growth," meaning growth that is sustainable, that respects the environment, that brings lasting full employment and poverty reduction, and that fosters greater equity through increased equality of opportunity.(29) Therefore, the policy dialogue between the IMF and its developing member countries has been expanded to include sound environmental principles, the reduction in poverty, the strengthening of good governance and economic management, the development of the private sector, the decline in income inequality, the flexibility of the labor market, the reduction in unemployment, and the trade expansion and openness in the development strategy (Bruno, Ravallion and Squire, 1995). The focus in all these areas emphasizes that adjustment policies that hinder growth cannot produce viable adjustment. If the latter cannot be sustained, then internal as well as external stability will not be achieved, resulting sooner or later in a change in policy.
The literature on the determinants of long-run growth in developing countries shows that our knowledge is still meager, and the academic consensus is weak (Ingham, 1993; Renelt, 1991).(30) The IMF has not developed a particular growth model but has developed general principles based on the institution's eclectic experience in dealing with its member countries. These principles ensure the consistency of policy measures and provide a framework in which policies are connected to targets. The experience shows that most success stories' have involved an outward orientation of policies, although the role of governments has varied in implementing these policies. Thus, the fundamental reliance of the IMF strategy is broadly on market mechanisms, but it recognizes that government policies are bound to affect growth through, for example, the provision of infrastructure, public savings, wage policy, and promotional policies (Stiglitz, 1995). In this context, appropriate demand management and outward-oriented policies have become the two main general elements in the design of growth-oriented adjustment programs. The complementarity between adjustment and growth shows that economic reforms are unlikely to succeed in the midst of macroeconomic instability.
Dhonte (1995) has pointed out that the Fund has developed a pragmatic doctrine of sustained economic growth based on the interaction of theoretical insights and of experience in dealing with more than 180 countries. He has identified four core postulates of this doctrine:
1. Openness to foreign trade to eliminate the development of directly unproductive profit-seeking activities caused by trade and payments restrictions;
2. Maintenance of a realistic exchange rate, as no country has ever sustained adequate economic growth with an "uncompetitive" exchange rate;
3. Market-determined price mechanisms to provide the signals to guide the efficient utilization of domestic resources; and
4. Appropriate control over domestic demand which, in turn, depends on an efficient fiscal system and flexible labor markets, to achieve moderate inflation, as no country has ever sustained adequate economic growth under high inflation (Bruno, 1995).
It is important to emphasize that the aforementioned principles are in practice also supported by the World Bank. IMF and World Bank complement their resources to support countries implementing a medium-term, growth-oriented adjustment program, in the first case through a SAF/ESAF arrangement and in the second case through a structural adjustment loan (SAL) or through a sectoral adjustment loans (SECAL). The policies and objectives of the medium-term program are reflected in an official document called a policy framework paper (PFP), which is revised annually and produced by the authorities in collaboration with Bank and Fund staffs. In addition, at least twice a year, the programs are reviewed to reassess the impact of the policies adopted, incorporating an element of great flexibility in the implementation of policies and in the policy dialogue.
Most reform efforts under IMF expertise in growth-oriented adjustment programs have centered on the following areas.
1. Fiscal Sector Reform and Policies
The development of an efficient fiscal system is crucial not only to control domestic demand (budgetary imbalance is one of the major causes of macroeconomic disequilibrium), but also to enhance resource allocation, as the structure of public revenues and expenditures affect savings and investment and the efficiency with which resources are used (Spencer and Clements, 1987). Structural aspects of fiscal policy have become as important as the short-run demand management effect. In a growth-oriented adjustment program, priority is given to the objective of eliminating dissaving by the public sector, as the impediments for increasing the availability of domestic savings need to be removed to finance the large additions to the capital stock required to sustain economic growth and generate employment opportunities. The fiscal policy reform is; therefore, a key element not only in restoring external and internal financial account balances but also in promoting economic growth. Thus, it is important to determine the path to a sustainable fiscal stance. To this end, the fiscal policy reform in growth adjustment programs deals mainly with: (a) the increase in resource mobilization, and (b) improvements in the composition and control of expenditure and reduction in unproductive expenditure.
In many SSA countries the low level of government revenue in relation to GDP is not the result of low tax rates but of an inadequate structure and loose administration.(31) Therefore, on the revenue side, the fiscal reform seeks to strengthen tax revenue performance by improving tax administration and increasing the tax base. To this end, the tax reform often includes a simplification of the tax structure, a reduction in tax exemptions, and an improvement in administration. In addition, as the informal and nonmonetary sectors constitute a substantial part of the economy in many SSA countries, taxation of the informal sector has also become an important instrument to expand the tax base. However, the question is not only how to tax the informal sector, but how to reduce its size to also expand the tax base; thus, the importance of economic and financial deregulation.
The final aim is to develop a more balanced tax structure by reducing the excessive reliance on taxes on imports and exports (accounting for about 50 percent of tax receipts in most SSA countries) in favor of domestic broad-based consumption (through the adoption of a value-added tax, preferably with a single rate and few exemptions) and direct taxes. This more balanced tax structure is expected to reduce the instability of the tax base in the face of sharp fluctuations in international commodity prices. This effort is also complemented by trade liberalization which, in turn, reduces the level of effective protection to promote a better allocation of resources and an expansion in tradable goods. However, as domestic taxes are more difficult and costly to collect, this type of tax reform must be accompanied by a substantial strengthening of tax administration.
There is also the challenge to make the tax structure compatible with the capacity to administer, and to avoid distortions in the relative prices of factors of production. Another challenge is the realization of a tax system that will encourage savings and investments and promote the growth of the economy. Also encouraged is a shift from a specific excise tax to an ad valorem valuation basis, which enhances the responsiveness of the tax system to inflation without the need for numerous discretionary rate changes (Nashashibi, Gupta, Liuksila, Lorue and Mahler, 1992).
The improvement in revenue has become the principal instrument of fiscal adjustment in many SSA countries, as expenditure restraint has been so severe recently that any further restraint could jeopardize public service and administration. The issue at present is not so much of the level but of the composition of public outlays, as SSA countries cannot afford to divert a large proportion of GDP to unproductive expenditures. In a recent IMF study (1995, p. 4), it was pointed out that for public goods to be efficient or "productive," they should be (1) produced or provided at the lowest possible cost, and (2) consistent with a sustainable macroeconomic framework. In addition, the authorities should not produce too much of one good and too little of another. Reducing or eliminating unproductive expenditure, the authorities can increase the provision of essential public programs, particularly cost-effective social safety nets, which have become an important ingredient in IMF-supported program.
The need to look into the "quality" or composition of public expenditure is also relevant, given its impact on labor productivity. An improvement in the latter, which is achieved mainly by the acquisition of education and improved health standards, is needed to increase (real) income in a non-inflationary fashion. In fact, many SSA countries devote disproportionate amounts of their education budget to secondary and third level schooling and to scholarships for university students, thus diverting critical resources from a more important goal - namely, achieving universal primary education and improving educational opportunities for women and the poor. With respect to outlays on health, public resources are mainly absorbed by curative health care and urban hospitals instead of primary and preventive health care and development of health centers in rural areas where the majority of the population lives. In addition, government subsidies in SSA distort the allocation of resources and/or worsen income distribution by offering goods and services often consumed in urban areas at below-market clearing prices. As a result, the IMF often recommends that this type of subsidy be eliminated to improve the composition of public outlays and release public resources to finance targeted subsidies. Furthermore, a civil service reform and the privatization of public enterprises are, whenever necessary, important elements to such an improvement and to encourage the development of the private sector.
The composition of public sector investment is also relevant because it affects resource allocation and the future level of recurrent expenditures. The emphasis is on increasing the allocation in the investment budget for health, education, institutional, and physical infrastructure so that public investment can help to increase the productivity of private investment and to complement, rather than substitute for, private investment. However, the dividing line between what is classified as current and as capital is an arbitrary one. Current spending on health, education, administration, and infrastructure maintenance can have important effects on growth. Thus, the objective is not to promote capital over current expenditure but to promote, given the situation in each country, a composition of total expenditure that will contribute to higher efficiency in the economy in order to support a better economic performance.
2. Monetary Policy and Financial Sector Reform
Monetary policy plays an important role in promoting price stability in the medium-term and in achieving balance of payments viability in IMF-supported programs. However, in several cases, if a country maintains an exchange rate peg or is part of a currency union, or if the nominal exchange rate has been chosen as the nominal anchor in the program, the focus is on adopting the necessary monetary (and fiscal) policy to support such a peg. In addition, monetary policy is now geared to relying increasingly on indirect instruments of monetary control, like open market operations, and to remove direct credit controls or ceilings. The greater use of indirect monetary instruments can be seen as the counterpart in the monetary area to the widespread movement toward enhancing the role of price signals in the economy (Alexander, Balino, Enoch et al., 1995).
Monetary policy also emphasizes the development of a market-determined structure of rates of return through the complete liberalization of all interest rates. The latter is important because in SSA countries, particularly in those that are not part of a currency zone,(32) the Central Bank has often been compelled to apply below-market interest rates when financing the government. The authorities might believe that by implementing this policy, they were avoiding a higher fiscal imbalance. However, this policy has often worsened the quasi-fiscal deficit, as it has negatively affected the central bank operational accounts. Furthermore, commercial banks have also been compelled to finance the public sector at below-market interest rates, as these institutions have been allowed to buy treasury bills to comply with part of their reserve requirements, which have generally been nonremunerated and kept at above 10 percent of deposits. As a result, the whole structure of interest rates has been dominated by the lower rates charged to the public sector, resulting in negative interest rates in real terms, even in some countries where (deposit and lending) interest rates to the private sector have been market determined. This was also the result of a very cautious approach by private commercial banks to lending to the private sector, given the high number of nonperforming loans to this sector, making the Treasury their "best client."
The elimination of financial repression is also stressed in the policy dialogue in order to attract funds away from the informal (financial) sector where the real cost of borrowing is generally higher, and to improve the effectiveness of monetary policy by increasing the monetary authorities' control over the total supply of credit (Roubini and Sala-i-Mar, 1992). In addition, it also helps to mobilize personal savings and to discourage speculative investment and attacks on the exchange rate. Together with the development of indirect instruments of monetary control, the IMF encourages governments to follow international practice in the regulation and supervision of banks, ensure more transparency of accounts, increase competition, and to establish powerful, effective, and independent banking regulators. In fact, although interest rates in many SSA countries have been liberalized, weak competition among financial institutions has not resulted in lower spreads between deposit and lending rates, as one would have expected.
3. Labor Market Reform
Labor market reform is becoming an important element in growth-oriented adjustment programs, as its rigidities hinder an efficient allocation of resources and increase the cost of labor switching to more productive sectors. This is particularly relevant in many SSA countries, where a high percentage of the formal labor force is employed by the public sector, which has largely made the labor market immune to market forces. As a result, adjustment programs seek to make the labor structure more flexible and less segmented.
The excess number of public employees in either the central and local administration or in public enterprises represents a disguised form of "unemployment compensation" for the urban population employed in the formal sector. As a result, civil servants in SSA receive relatively low salaries but, in turn, they work fewer hours a day than is required for full-time employees, given their need to look for, or perform, other jobs to supplement their income. Therefore, given the low level of public wages in many SSA countries, there is little choice to improve the efficiency of public administration but to reduce the number of civil servants, keeping the better trained employees and improving their salaries. Labor market reform is also important to pursue because competitiveness gains cannot be sought entirely through a reduction in real wages in countries where wages are already at a subsistence level. As labor productivity is very low in most SSA countries, adjustment programs expect to improve real income by raising productivity through investment in human, physical, and institutional infrastructure. In addition, when by law the setting of wages in the public sector affects the structure of wages in the private sector, the nominal adjustment of public wages also becomes the focus of attention in IMF-supported programs. It is also important to stress that these programs seek to create employment particularly in rural areas - where three-fourths of population still lives in SSA - and not just in urban areas. Furthermore, it is clear that to change the structure of employment creation will involve hard policy decisions after decades in which the industrial and service sectors have failed to create enough urban employment (Tanzi, 1995).
4. Social Safety Nets
Growth adjustment programs aim at reducing poverty, and fostering greater equity through increased equality of opportunity. The policy dialogue often underlines the importance of improving the quality of public outlays and the switch toward social expenditures (see Section 1). To this end, universal subsidies should give way to targeted subsidies, and social expenditure should emphasize basic educational levels and primary health prevention in rural and urban areas. It is also stressed that no permanent reduction in poverty and inequalities is achieved at the expense of growth.
Sequence and Pace of Adjustment
Other key ingredients in the policy dialogue are the sequence and pace of adjustment to be implemented in the program. In the case of SSA, most IMF-supported programs have adopted a more gradual approach to adjustment. However, in a rapidly changing international environment, as reflected by the globalization of the production activities and the integration of international capital markets, a gradual approach can be difficult to sustain, given the limited effectiveness of restrictions and controls. Furthermore, the speed of adjustment also depends on the severity of macroeconomic imbalances. Thus, a gradual approach could be difficult to sustain if inflation is very high or if the balance of payments deficit is unsustainable at the onset of the program.
The sequence of adjustment is also conditioned to the changing international environment, and in this context, previous countries' experience may not useful. The policy advice often points toward adopting first reforms oriented mainly toward reducing severe macroeconomic imbalances and then reforms aimed at improving the allocation of resources and the restoration of growth. The severity of the imbalances might also require that stabilization and reform measures be taken simultaneously. In addition, the experience of some countries has shown that there are prerequisites to successfully complete some reforms. For instance, the liberalization of capital movements can result in financial and economic instability if some prerequisites are not in place, including a reasonably strong financial system with appropriate accounting, legal, and supervisory infrastructures, effective mechanisms for the enforcement of banking regulations, and macroeconomic stability.
Nevertheless, the question is not only what should be done first and at what pace, but how to adopt an optimal policy mix so as to avoid a high adjustment cost, taking into account administrative and capacity constraints present in each country implementing a growth-oriented adjustment program. In this context, growth-oriented adjustment programs emphasize an improvement in the country's institutional capacity as much as in physical and human infrastructure.
Myths of the Result of Growth-Oriented Adjustment Programs in SSA
Below there is a partial list of myths or preconceived expectations of the economic and financial results achieved by implementing the economic policies described above in the context of a structural adjustment program (ESAF) in SSA:
1. Public expenditure as a percentage of GDP declines;
2. Investment and savings as a percentage of GDP go down;
3. Economic activity slows down;
4. Inflation accelerates;
5. External disequilibrium improves most of the time as a result of a contraction in imports rather than an increase in exports;
6. (Urban) unemployment increases; and
7. External viability is hardly ever achieved.
A recent study on economic performance in SSA by Hadjimichael et al. (1995) has clearly indicated the importance of taking into account the considerable diversity in institutional arrangements, economic policies, and results pursued by individual countries in SSA. However, based on this study, which shows the economic performance of the "strong adjusters" in SSA, comparing the pre-adjustment period 19801985 and the adjustment period 1986-1994,(33) one can point out:
1. Government revenue as a percentage of GDP increased during ESAF programs which, in turn, supported an increase in total expenditure, leaving the overall fiscal imbalance (excluding grants) relatively unchanged but improving the primary balance (excluding grants and interest payments) (Sahn, 1992):
1980-1985 1986-1994 As a percentage of GDP
Total government expenditure 18.0 28.0 Total government revenue (excl. grants) 11.7 21.8 Overall fiscal balance (excl. grants) -6.3 -6.2 Primary fiscal balance (excl. grants) -4.3 -2.7
2. The improvement in public savings due to the success in mobilizing resources and in keeping current expenditure under control supported an expansion in public investment which, in turn, encouraged higher private investment. Private and public investment and national savings (excluding grants) as a percentage of GDP rose significantly during ESAF programs:
1980-85 1986-94 As a percentage of GDP
Public investment 4.5 7.1 Private investment 6.8 12.8 Total 11.3 19.9
1980-85 1986-94 As a percentage of GDP
Public savings -1.8 0.9 Private savings 7.7 12.0 Total gross national savings (Excluding grants) 5.8 12.9
3. Annual real GDP growth improved from 1.5 percent on average in 1980-1985 to 4 percent in 1986-1994; real GDP per capita also improved from an average annual decline of 1.6 percent to an average annual increase of 0.9 percent over the same period. In over half of the countries, the agriculture sector grew much faster during the adjustment period than in 1980-1985, and in some countries, such as Benin, Mali, Mozambique and Uganda, the agricultural output growth more than doubled;
4. The annual average inflation as measured by the consumer price index, declined slightly from 26.6 percent during the pre-adjustment period to 24.4 percent in the adjustment period;
5. External disequilibrium deteriorated during ESAF programs as the overall balance of payments deficit increased from 5.4 percent of GDP to 7.1 percent. However, it was possible to finance this higher imbalance as foreign financial assistance, particularly official transfers, increased significantly;
6. Data on labor market in SSA are very scanty. Urban unemployment is most likely to rise at the onset of a structural adjustment program, particularly if the government is implementing a civil service reform and privatizing public enterprises, which involves a decline in the public sector labor force. However, as pointed out above, the excess number of public employees in either the central and local administration or in public enterprises represents a disguised form of "unemployment compensation," becoming open unemployment when reforms take place.
7. Adjustment programs aim at achieving a sustainable balance of payments position or external viability in the medium-term. This can be measured for instance by a reduction over time of: (a) the external debt service and the external debt outstanding as a percentage of exports of goods and services, and (b) the country's dependence on exceptional financing, including the accumulation of external payments arrears, the need for debt rescheduling and/or forgiveness, and for balance of payments loans and grants. The results in this area are mixed but most strong adjusters are striving toward external viability. In this context, the IMF is playing an effective role in mobilizing bilateral (through Paris Club debt rescheduling and debt forgiveness operations) and other multilateral financing to support the adjustment effort.
The IMF has over time shown great flexibility in responding to its members' financing needs. In fact, since the early 1970s, concomitant with the increasing demand for financial assistance from developing countries, the IMF has tailored new arrangements and facilities to take into account the fact that developing countries need a longer time frame to achieve external viability, and has found ways to diminish the cost of borrowing for its poorest members by granting resources on concessional terms with an annual interest rate of less than one percent. SSA members have been important recipients of these resources, initially through the Trust Fund and since the mid-1980s through SAF/ESAF arrangements. As a result, total debt to IMF of most SSA members is now concessional. No other region of the world has experienced such a dramatic change in the structure of its debt to the IMF achieved in less than ten years.
The policy dialogue between the IMF and its member countries has also been expanded over time to include at present broad macroeconomic and microeconomic instruments to address balance of payments problems under conditions of "high-quality growth." The latter refers to growth that is sustainable, that respects the environment, that brings lasting full employment and poverty reduction, and that fosters greater equity through increased equality of opportunity. The IMF has developed a pragmatic doctrine of sustained economic growth based on the interaction of theoretical insights and on the experience accumulated over the years in dealing with a broad membership. In this doctrine, macroeconomic stability, as always advocated by the IMF, continues to be a key ingredient in any growth adjustment program. Furthermore, although the fundamental reliance of the IMF strategy is broadly on market mechanisms, it recognizes that government policies are bound to affect growth through the provision of infrastructure, savings, promotional policies, and public expenditure and tax policies and as such are important elements in the policy dialogue.
The achievement of external viability with growth was put in practice in programs with SSA countries beginning in the early 1980s under a few EFF programs, but more widely since the establishment of the SAF/ESAF arrangements in 1986-87. Therefore, IMF involvement in a comprehensive policy making framework with SSA members is relatively recent, as at the time of the Trust Fund financing, most countries received these resources under a situation that carried "low-conditionality" or just general commitments for policy changes.
Although the SSA region has yet managed to reverse a long period of economic deterioration, there is evidence that some SSA countries that have established a growth-conducive environment toward the goal of high-quality, growth have performed much better than the rest of countries in the region. Nevertheless, policy makers in the region are still struggling with myths or preconceptions often invoked as common results of growth-oriented adjustment programs supported by IMF resources.
Acknowledgment: The views expressed in this paper are those of the author and do not necessarily represent those of the IMF. The author would like to thank, without implications, Karl Driessen and James Boughton for helpful comments and suggestions.
1. Another opportunity for a policy dialogue between Fund's members and the IMF staff is during Article IV, or surveillance, consultations carried out once a year with all members, whether or not they are under a program supported with Fund resources.
2. The Fund's first SBA was with Belgium in 1952.
3. Throughout the paper, SSA excludes Nigeria and South Africa to present less biased total aggregate data, as these two countries account for about 50 percent of SSA's GDP.
4. Subsidy accounts were also established to reduce the cost for low-income developing countries of using, for instance, the 1975 oil facility and the SFF. In addition, the IMF has also instituted emergency assistance related to natural disasters.
5. Given the concern with stabilization-cum-structural adjustment, the World Bank also responded to the needs of these countries providing resources through structural adjustment credits (SACs) and sectoral adjustment loans (SALs). Thus, the operations of the World Bank and the IMF in these countries have become increasingly coordinated.
6. The IMF was designed at a conference held at Bretton Woods (USA) in July 1944; it came into existence in December 1945, and the first Executive Board meeting was held in May 1946. The Fund's policies and activities are guided by its charter, known as the Articles of Agreements.
7. Namibia and Eritrea, which became independent recently, jointed the Fund in 1990 and 1994, respectively.
8. These countries were: Burundi, Ghana, Liberia, Mali, Mauritius, Rwanda, Sierra Leone, Somalia and Sudan.
9. See IMF (1991) for a complete description of Fund operations. See also Guitian (1992).
10. The compensatory and contingency financing facility (CCFF) superseded the CFF in August 1988, adding a mechanism for contingency financing to support adjustment programs approved by the Fund.
11. Excluding reserve tranche which is part of the member own reserves; a purchase of Fund resources under this facility does not constitute a use of Fund credit and is not subject to conditionality.
12. In the 1970s, the only two major industrial countries to receive substantial IMF financial assistance were Italy and United Kingdom. All debt to the IMF by industrial countries was paid off by 1987.
13. The eligibility criterion for receiving Trust Fund resources was a per capita income of less than US$ 510 in 1975.
14. This is also the case when a member country receives financial assistance from the IMF equivalent to up to 25 percent of its quota ("first credit tranche purchase").
15. Eight SSA countries (Gabon, Ghana, Cote d'Ivoire, Malawi, Senegal, Sudan, Zaire and Zambia) had programs under the IMF's EFF during the first half of the 1980s.
16. Member countries that give voluntary contributions to the Trust forgo the market rate of interest they could otherwise have obtained on those funds.
17. At present, there are discussions within the Fund concerning the options for transforming the ESAF into a self-sustained facility.
18. In the 1980s, only Australia, Iceland and Portugal made purchases of the IMF's ordinary resources.
19. The CFA zone countries are: Benin, Burkina Faso, Cameroon, Central African Republic, Chad, Comoros, Congo, Cote d'Ivoire, Equatorial Guinea, Gabon, Mali, Niger, Senegal and Togo.
20. The only SSA countries that have never had an IMF-supported program are: Angola, Botswana, Cape Verde, Djibouti, Namibia, Nigeria and Seychelles.
21. In a given year, as some IMF-supported programs can be considered "off track," it is better to measure IMF involvement by the actual number of countries drawing on the IMF financial resources rather than by the actual number of programs in place.
22. Botswana, Congo, Lesotho and Mauritius can be singled out as success stories in SSA, given that annual real GDP per capita grew, on average, 8.3 percent, 2.6, 3.7 and 4.6 percent, respectively, over the period 1970-90. See Ghura (1995, Table 1). These countries account for about 6 percent of SSA's GDP; and only Botswana has never implemented an IMF-supported program.
23. In the period 1975-93, real GDP per capita of developing countries in Asia reached on average 4.8 percent a year, and in Latin American and Caribbean countries 1.2 percent a year. Over the same period, SSA's real GDP growth per capita experienced a decline of about 0.7 percent a year.
24. The debt crisis forced the Latin American region to close its current account deficit of US$ 40 billion (equivalent to about 35 percent of its exports of goods and services and some 6 percent of GDP) in only two years.
25. Excluding net official transfers, the current account deficit declined from almost 12% of GDP in 1981 to around 6% in 1984.
26. Only two other SSA countries had previously adopted current account convertibility, Seychelles in January 1978 and Swaziland in December 1989.
27. SSA countries classified under a flexible exchange rate regime (independently floating) by end-June 1995 were: Ethiopia, The Gambia, Ghana, Guinea, Kenya, Madagascar, Malawi, Mozambique, Rawanda, Sao Tome & Principe, Sierra Leone, Somalia, Tanzania, Uganda, Zaire, Zambia and Zimbabwe. See International Financial Statistics, September 1995, p. 8.
28. See Section IV for the group of countries classified as strong-adjusters according to Hadjimichael, Ghura, Muhleisen, Nord and Ucer (1995).
29. Opening remarks by Mr. Michel Camdessus at Conference on Income Distribution and Sustainable Growth, Washington, D.C., June 1, 1995. See also the address by Mr. Camdessus at the United Nations Economic and Social Council conference on July 6, 1995 published in the IMF Survey (Washington: International Monetary Fund, July 17, 1995, pp. 217-220).
30. See Ghura (1995) for an empirical study of the determinants of growth in SSA in the period of 1970-1990.
31. The average tax to GDP ratio in SSA region reached about 14 percent in the 1990s. However, in some countries it is below 8 percent.
32. By end-June 1995, 14 SSA countries were keeping a fixed exchange rate vis-a-vis the French franc, three countries (Lesotho, Namibia and Swaziland) vis-a-vis the South African rand, and two (Liberia and Nigeria) with respect to the U.S. dollar.
33. This group of countries comprises 14 SSA countries that effectively implemented structural adjustment programs financed by the use of IMF resources in the context of ESAF arrangements for at least three years during 1986-1993 (Benin, Burundi, The Gambia, Ghana, Kenya, Lesotho, Malawi, Mali, Mozambique, Niger, Senegal, Tanzania, Togo and Uganda). In addition, it includes five countries (Botswana, Mauritius, Seychelles, Swaziland and Zimbabwe) characterized during the same period by low external and internal imbalances. All these countries account for about 40 percent of the SSA region's GDP.
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|Title Annotation:||Illinois Centennial Essays on Economics; International Monetary Fund|
|Publication:||Quarterly Review of Economics and Finance|
|Date:||Jan 1, 1995|
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