The Bretton Woods agencies and sub-Saharan Africa in the 1990s : facing the tough questions

Both the International Monetary Fund (IMF) and the World Bank recognize that sub - Saharan Africa (SSA) represents a difficult and complex development challenge. The author proposes that the Bank and the IMF take four institutional steps to deal effectively with the region's problems in the near term. First, the agencies should reconsider their planned net capital contribution to help overcome the region's severe foreign exchange constraints. Secondly, the Brady proposals represented a major conceptual step forward toward alleviating the private debt overhang that seriously burdens at least a dozen countries in the region. Additional efforts to reduce the private debts of the low-income countries will be needed to achieve the objectives of the proposals. Thirdly, the Bank's analysis of the problems facing the region argues for a faster and more comprehensive reform program. In the 1990s the Bretton Woods agencies will face increasing pressures to give more weight to issues of social equity and political variables. Lastly, the Bank and Fund will have to improve their ability to work together to maximize their effectiveness. The Bank and Fund should collaborate in long-term planning for SSA. Policy Framework Papers should go beyond the current three year horizon and plan some issues for five to ten years. The Bank should also take the lead in organizing external assistance efforts and policy reform programs.