March 10, 2004

SOUTH AFRICA: 'Poorer nations need a greater voice', says Finance Minister

According to Finance Minister Trevor Manuel, emerging-market economies should play a greater role in the governance of multilateral institutions, such as the World Bank and International Monetary Fund (IMF). This would improve the credibility of these institutions and help efforts to reduce poverty. As he explained at an inaugural global economic governance lecture at Oxford University, multilateral institutions experienced a "degradation of their legitimacy" because they were not representative of the global economy. "If the World Bank, IMF, World Trade Organisation, Financial Stability Forum and the Bank for International Settlements do not represent the voices of the poor and marginalised they (are) unlikely to correctly analyse the policy choices that can be used to address the concerns of the poor and marginalised," Manuel noted.

While moves to increase representation of developing countries on the World Bank and IMF governing councils had been discussed, there was a dilemma of balancing "the need to maintain the support of the rich nations" with efforts to make these institutions more legitimate and "credible". On globalisation in Africa, Manuel said that faster economic growth on the continent would depend not only on macroeconomic stability, but also on regional institutions, which had an important role in providing market infrastructure and boosting private sector involvement in the economy.

"I do not subscribe to the idea that either the institution of the state or the institution of the market can or should do everything in economic development. There are simply too many examples of failures of systems of paternalistic states and uncontrolled markets for me to accept either as a one-size-fits-all model for development." Macroeconomic reforms such as privatisation might also not have the desired effect of boosting economic growth in African countries because of weak regulatory capacity, immature institutions and thin markets, Manuel explained. (Business Day, Johannesburg)


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