Document - PARTICIPANTS: ABEBE AEMRO SELASSIE - Director, African Department; TATIANA MOSSOT - Senior Communications Officer
PARTICIPANTS: ABEBE AEMRO SELASSIE - Director, Africa n Department; TATIANA MOSSOT - Senior Communications Officer
What does this mean for countries? It means much needed funds are being diverted from spending on investment development to interest payments, with consequences for the region's growth potential and its ability to withstand future shocks. Sustaining reforms will be important for macroeconomic conditions to continue to improve. This will ensure that countries in the region can build their resilience to shocks, generate jobs, diversify their economies, and improve living standards.
MR. SELASSIE: Thank you. We have been, of course, for many years making the case for investment in health education alongside investment in public infrastructure. And I would say that the needed emphasis on spending on health and education now is even more important, given all the scarring, all the adverse effects that the Pandemic has had. It interrupted of course; education of children that were in school schools had to be closed down for a while. There were a lot of learning losses.
Lastly, on recent reforms, we have always fine tuning our policies to make sure that we have the ability to support countries as in a timely and efficient manner as possible. These reforms are consistent with that. I have to tell you that we see China as a very important development partner for African countries. It was before and it will continue to be, so this is not at all aimed at China. Thank you.QUESTIONER: The IMF has maintained Malawi's growth focus for 2024 at 3.3 percent this year.
QUESTIONER: So, my question has to do with the report in which you talk about uneasing of international financial conditions, which has allowed countries like Cote d'Ivoire and Kenya to raise significant financing on international markets.
MR. SELASSIE: Preferred creditor status is something that depends on recognition by other official bilateral creditors in particular. And it is not something that entities can declare as having preferred creditor status. I think it is important. Point to note, one cannot declare that one has preferred creditor status unilaterally.
First and foremost, we do this exactly because governments want us to do that. Second, I think without that kind of financing, that countercyclical financing institutions like the IMF would provide, our countries would be in even more dire straits. Second, the financing we provide is on concessional terms, highly concessional terms, back then and now also.
With respect to commercial creditors. I think we are grateful that the government shared with us some of the terms that are under consideration. Staff has provided an input on whether these terms were consistent with program parameters and the government has decided that they would not pursue this deal just yet.
I mean, one is the general political constraint of taxation always being a very difficult endeavor for any government, so it requires some political capital.And then, second, I think also we do see in many countries, a lot of extensive tax expenditures, that is, companies, entities benefiting from tax exemptions. And we advocate for governments to also make a better effort to minimize these. Reduce these favors that are being done for some companies and not others.
QUESTIONER: Rwanda's debt has been growing very, very big. It is continuously increasing by $8 billion between 2023 and 2028. And while this is happening, the government has prioritized tourism and has spent substantial amounts on funding its airline, RwandAir, which has not made a profit in over 20 years. While it is also prioritizing sponsoring already rich clubs like Arsenal, PSG, and Bayern Munich, while also constructing massive stadiums and arenas in the country.
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