IMF maintains 6.5 pct 08 Africa growth target

NOUAKCHOTT - The International Monetary Fund is maintaining its 6.5 percent 2008 growth forecast for sub-Saharan Africa and expects oil prices to remain around current levels, Managing Director Dominique Strauss-Kahn said on Friday.

By (Reuters)

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Published: Fri 1 Aug 2008, 10:42 PM

Last updated: Sun 5 Apr 2015, 11:47 AM

Asked in an interview with Reuters if the Fund stuck by the forecast it made earlier this year, Strauss-Kahn replied: "Yes ... our best forecast is for oil to maintain this level, and at this level its impact on growth is not slow, but limited."

Benchmark oil futures hit a record high above $147 a barrel on July 11 after a 6-year rally fuelled largely by Asian demand. U.S. crude CLc1 traded around $126 a barrel at 1530 on Friday.

Strauss-Kahn, who met African finance ministers and central bankers at an IMF and World Bank Africa Caucus meeting in Mauritania on Friday, said the collapse of world trade talks in Geneva this week was bad news for the global and African economies.

He said trade liberalisation could help poor countries cope with food price rises, which have rocked a number of key African economies in recent months.

"It's a question of opening the markets and avoiding export bans. Food from some places can be used in others," he said.

"The crisis is not a shortage of food, but that prices are high, and what affects this is limitation of exports. These are the things which the WTO tried to find solutions to, and the collapse of the talks is bad news for all countries," he said.

Don't help the rich

Strauss-Kahn said African countries trying to help their populations cope with rising food prices should ensure measures are carefully targeted to help poor families.

"The most important thing is not to give (universal) subsidies that help rich people in poor countries. The most important thing is to target specific subsidies," he said.

Many African governments have suspended import duty on staple foods or cut other taxes for all citizens in recent months in an effort to help their economies absorb sharp rises in prices for food and fuel.

"We have to concentrate this help (on) the people that need it most. We have to be careful with the amount of help a state can give. We have to keep in mind that it has to help poor people, but it can also cause problems," Strauss-Kahn said.

Price rises are a worldwide phenomenon arising from record high oil prices, unusual weather conditions in some key agricultural regions, rising food consumption in Asia and increased use of land and food crops for biofuels.

But they have hit poor Africans harder than most, given that food and transport makes up a higher proportion of household spending on the poorest continent.

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