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Economic policy in Africa in light of the global crisis—send your questions

Shanta Devarajan's picture

On Thursday, April 23, 2009, we are holding a seminar on “Economic policy in Africa in light of the global crisis.” The speakers include Emmanuel Tumasiime-Mutabile, the Governor of the Central Bank of Uganda; Lamine Zeine, Minister of Finance of Niger; and Ali Mansoor, Secretary of Finance of Mauritius. I encourage you to send in your questions to this group by 11 a.m. (Washington time) on Thursday, April 23rd. We will read out at least five of the questions received from the blog during the seminar, and report back (on the blog) the answers and comments

The motivation for the seminar is as follows:

The world economy is experiencing the deepest economic crisis since the Great Depression. Stimulus plans in developed countries amount to at least $3 trillion and more is expected to come. Monetary policies have never been so loose. Tax breaks and increasing spending will raise public debts to record levels. Unorthodox policies are being adopted to address the financial and housing crises. All this is turning upside down what was until very recently understood as "sound macroeconomic management." African countries, which had been experiencing unprecedented economic growth since the mid-1990s, are increasingly feeling the pain of the crisis. Previous crises in Africa were blamed on poor macroeconomic policies and management.  This time, however, the story is very different, not only because the crisis started and is spreading from the developed countries, but also because macroeconomic management in Africa has improved significantly.

The major challenge facing African countries and their development partners is designing the policy response to the crisis. What are appropriate policies for low-income African countries during a systemic crisis? Should African countries pursue Washington-Consensus-type policies or adopt demand-boosting policies and fiscal stimulus? With a worldwide recession, will exchange rate devaluations and other export-led policies work?  In view of these and other challenges, there is a need to be bold and think out-of-the box. The seminar is intended to do just that.

Comments

Submitted by Jann Lay on
People start talking about fiscal expansion in Sub-Saharan Africa. Aren’t the economies of Uganda and Mauritius (Niger maybe somewhat less) already working at the maximum of their absorptive capacity in terms of public consumption and investment? Do you think governments would be able to handle a fiscal stimulus? If yes: How would they handle it? Only some routes (and my opinion): - Tax cuts? (Would erode the thin tax base beyond the crisis.) - Raise public sector pay? (Highly regressive transfer.) - Transfer programs, maybe targeted toward poorer groups? (Only possible if administrative capacity in place.) In advanced economies, a common argument against fiscal expansion is that it becomes effective much too late and therefore is a pure waste of resources. Yet, if expansionary policies are considered a possible instrument against the impact of the crisis in SSA: How would governments make sure that this time-lag does not occur? And which would be adequate fiscal instruments? Is there any room of manoeuvre for central banks in SSA? And if there is: Would you expect monetary policies to mitigate some of the global shock in real terms?

Quelques questions pour la rencontre du 23 avril. a. Peut etre paradoxalement, le fait que l'Afrique sub-saharienne subit gravement la crise actuelle est un indicateur du fait (non escompté) qu'elle est insérée dans les dynamiques globales, et par conséquent est bénéficiaire même d'opportunités et d'effets "positifs" tels qu'une certaine croissance économique et une petite diminution de la pauvrété, ou l'emergence de classes moyennes et d'un "classe financière". Si cela est vrai, est-ce que l'Afrique doit faire partie même d'un réponse globale à la crise? b. Les transations financières vers l'Afrique paraissent presque toutes en diminution, sauf partiellement les flux des remises des émigrants. Il s'agit d'un flux qui devrait être supporté: quels sont les programmes des Ministres des finances et des Banques centrales à cet égard? c. Est-ce que la diaspora africaine pourrait répresenter un antidote, au moins partiel, à la crise en Afrique? Et comment? Merci et salutations cordiales

All of us are now experiencing recession blues and not just the people in Africa. But, we cannot deny the fact that we are still fortunate compared to the people of Africa because here in US we have financial services that can help us whenever we are short on cash such as payday loans. That’s why we have to be thankful for that.

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