IMF chief seeks fresh funds for poor countries

By Alexandra Alper

WASHINGTON (Reuters) – The head of the International Monetary Fund on Sunday renewed a

push to fully fund a $17 billion lending package for poor countries, which are threatened by high oil prices and the risk of

euro-zone contagion.

Two days after the IMF secured $430 billion to deal with economic

spillovers from Europe’s debt crisis, IMF Managing Director Christine Lagarde said her next focus was to raise funds for the

IMF’s Poverty Reduction and Growth Trust, which provides low-cost loans to poor countries in Africa, Asia and Latin

America.

Lagarde urged wealthy countries, which made a profit from the IMF’s sale of 403.3 tonnes of gold last year,

to reinvest the windfalls into the PRGT.

“We need more money in that trust if we want to finance concessional loans

for the low-income countries,” she said after talks in Washington with African finance chiefs.

The IMF in 2009 set a

target to raise $17 billion to lend to the poorest countries. So far, 32 IMF member countries have reinvested profits from

the gold sales into the fund.

Lagarde’s comments were aimed at easing concerns that the IMF and donor nations may

turn a blind eye to poor countries as they home in on containing the euro zone crisis.

Elizabeth Stuart, a spokeswoman

for Oxfam, said poor countries have exhausted their resources to deal with contagion from the rich world, while facing the

first drop in aid since 1997.

“Governments are throwing money at the IMF to deal with the European crisis, but

where’s the money for poor countries?” she asked.

AFRICA STILL HURTING

In its World Economic Outlook last

week, the IMF called Africa “one of the regions least affected by recent financial turmoil.”

It forecast growth this

year of 5.4 percent in sub-Saharan Africa, up from 5.1 percent in 2011.

Part of the continent’s resilience, the Fund

says, lies in its success establishing new emerging markets for its exports outside of Europe. Europe now accounts for only

one-fifth of the exports out of sub-Saharan Africa, down from two fifths in the early 1990s.

But African finance

ministers described a host of spillover effects from the euro-zone crisis, highlighting a drop-off in aid.

“Fifty

percent of our budget comes from abroad,” Burundi’s finance minister, Tabu Abdallah Manirakiza, said during a panel

discussion on Saturday. The hit to aid, combined with rising oil prices, has struck his country’s economy hard, he

said.

“The two shocks are having a very negative impact on the budget and economic growth.”

According to the

Organization for Economic Cooperation and Development, major donors’ aid to developing countries fell by nearly 3 percent

last year. The largest cuts came from Austria, Belgium, Greece, Japan and Spain.

OTHER VECTORS

But the decline

in aid was only one of a number of negative shocks emanating from the euro zone, according to the

ministers.

Mozambique’s finance minister, Manuel Chang, said his country was facing a decrease in remittances, a

decline in foreign direct investment, and drops in both the quantity and price of exports, including aluminium, gas, wood,

sugar, cotton and coal.

He said his government was taking a number of measures to create a better business environment

and attract investment.

Speaking after Lagarde on Sunday, Jean Baptiste Ntahwa Kuderwa, the Democratic Republic of

Congo’s finance minister, said that a number of African countries would need aid if faced with an external shock.

But

some representatives of poor countries saw fit to remind the organization of the need to aid all its members.

“The

International Monetary Fund should address (the crisis in Europe), but not at the cost of the others,” Indian Finance

Minister Pranab Mukherjee, the head of the Group of 24 poor and emerging countries, said on Wednesday. “There should not be

concentration only on one problem,” he said.