Africa’s Debt Worries World Bank
NAIROBI, Kenya (AP) _ The World Bank is apprehensive about Africa’s foreign debt and will be ″as rigorous as ever″ in setting conditions for further loans, the bank’s vice president for eastern and southern Africa said Monday.
Edward Jaycox told a news conference that the debt burden of many African countries was higher in relation to the size of their economies than Latin American countries which owed more money.
Africa’s collective foreign debt is expected to reach $170 billion by the end of the century. At a summit in July, African heads of state called for an international conference on the continent’s debt problem.
Jaycox declined to identify Africa’s most debt-ridden nations but said some, ″no matter how hard they try, face an almost impossible task getting back to a growth pattern.″
However, he said the World Bank would not ease pressure on borrowing nations to implement austerity measures - such as currency devaluations and reductions of food subsidies - as conditions for receiving funds.
″Unless the governments are willing to bite the bullets that need to be bitten, we are not going to support them,″ he said.
Jaycox said it was natural that governments would complain about austerity guidelines. He said the World Bank was expanding the staff at its regional offices to get more accurate information on whether its conditions are reasonable.
If friction between borrowers and lenders worsened, he said, ″we’re going to have a real mess on our hands.″
Citing the severe drought and famine that affected much of Africa last year, Jaycox said 1984 was ″certainly the roughest year that independent Africa has had to face.″
He said the World Bank has made the continent its top priority, but added that the bank’s total lending to sub-Saharan Africa in the 1985 fiscal year was down from 1984 because of limited overall funding. He called this decline ″terribly embarrassing.″
Jaycox said the 1985 figures for World Bank loans were contained in an annual report scheduled for release Friday.
He attributed the reduction in lending in part to ″aid fatigue,″ saying many of the countries providing loans were experiencing economic problems of their own or had grown disenchanted with the lack of major economic progress in much of Africa.
″They are tired of putting money into a losing proposition,″ he said, adding that the continent needed ″four or five success stories″ to encourage donor nations.
He said the principal sources of Africa’s economic problems - low commodity prices and high interest rates - are expected to continue for the forseeable future. The World Bank, he said, was concerned by the ″inability of many African governments to cope with this hostile environment.″
One step the World Bank is taking, Jaycox said, is the establishment of special fund to support economic reform programs undertaken by African governments. He said the fund began operations last month with a total of $1.2 billion pledged by the World Bank and 15 countries.