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FUND EVALUATES ESAF LOAN PROGRAMS FOR LOW-INCOME COUNTRIES, FINDS GROWTH AND EXPORTS RISE, INFLATION CURBED

 WASHINGTON, Sept. 22 /PRNewswire/ -- Since the late 1980s, the International Monetary Fund (IMF) has offered concessional credits to low-income member countries through its structural adjustment (SAF) and enhanced structural adjustment facilities (ESAF), disbursing special drawing rights (SDR) 3.9 billion (US$5.6 billion) to 42 countries as of mid-September 1993. A new staff study, "Economic Adjustment in Low- Income Countries: Experience Under the Enhanced Structural Adjustment Facility," reviews the economic performance of 19 countries -- mainly in Africa, but also in Asia and Latin America -- that had entered ESAF arrangements as of mid-1992.(A)
 The experience of the 19 countries reviewed has been generally favorable, taking into account the very weak starting positions of many and, for some, serious deteriorations in the terms of trade during the arrangement periods:
 -- Real GDP growth, which averaged about 2 percent a year prior to
 SAF/ESAF, rose to 4 percent during SAF arrangements and
 3 percent during ESAF.
 -- Average export volume grew from around 2 percent to around
 7 percent.
 -- Official reserves rose markedly.
 -- Average inflation, while remaining at double-digit levels, fell
 one-fifth.
 At the same time, the study notes, considerable scope remains for improvement in economic performance, particularly in areas of investment and saving.
 In the countries reviewed, structural reforms were more forceful than fiscal improvements, with the most pronounced structural changes occurring in exchange and trade liberalization, decontrol of agricultural prices and marketing boards and liberalization of interest rates. Structural measures in other areas -- notably, banking restructuring and public enterprise reform -- were less forceful. On the fiscal front, most countries reduced, albeit modestly, central government deficits relative to GDP.
 On balance, the largest improvements in macroeconomic performance were registered by countries that adopted the most forceful reforms -- acting to shift resource allocation decisions from governments to markets -- and that made the most progress in improving their debt position.
 As to future IMF assistance, the authors conclude that the fund, in collaboration with the World Bank, should continue to play a role in helping members achieve firm discipline in financial policies; assisting members in designing frameworks for coordinating domestic financial policies, structural reforms and external financing; providing additional concessional financing; and supplying technical assistance. The cutoff date for commitment of financial assistance under the current ESAF is Nov. 30, 1993. Discussions on a successor to the ESAF are underway in the IMF's executive board.
 Members of the public can purchase copies of IMF Occasional Paper 106, "Economic Adjustment in Low-Income Countries: Experience Under the Enhanced Structural Adjustment Facility," by S. Schadler and others, at US$15 each from IMF Publications Services, telephone 202-623-7430, or fax, 202-623-7201.
 (A) Bangladesh, Bolivia, Burundi, The Gambia, Ghana, Guinea, Guyana, Kenya, Lesotho, Madagascar, Malawi, Mauritania, Mozambique, Niger, Senegal, Sri Lanka, Tanzania, Togo and Uganda.
 -0- 9/22/93
 /NOTE TO EDITORS: To obtain copies of IMF Occasional Paper 106, "Economic Adjustment in Low-Income Countries: Experience Under the Enhanced Structural Adjustment Facility," by S. Schadler and others, telephone the IMF Information Division, 202-623-7100, or fax, 202-623-6278.
 /CONTACT: International Monetary Fund, External Relations Department, 202-623-7100/


CO: International Monetary Fund ST: District of Columbia IN: FIN SU:

MH-KD -- DC010 -- 4581 09/22/93 10:14 EDT
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Date:Sep 22, 1993
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