| The SADC Ministers of
Finance and Investment held their fifth annual meeting in Maseru, Lesotho on 8 July 1999.
The meeting discussed a wide range of issues and adopted resolutions to enhance finance
and investment within the SADC region. The resolutions
adopted by ministers are as follows:
The sale of gold:
The proposed sale of gold by the IMF, support for the sale by the G8 countries and the
sale of gold reserves by the UK government were identified as the major causes for the
fall of the gold price at about $257 an ounce. Ministers express concern with the impact
of the sale of gold on gold producing SADC countries.
Ministers express concern with the impact on employment levels in Lesotho and
Mozambique, whose labour force and economy relies heavily on the South African mining
industry (these countries supply about 46% of the gold mining labour force in South
Africa).
For these countries, the impact will especially be on remittances, which form a major
part of their revenue earnings. In this regard, ministers requested the Chairman, Mr
Trevor Manuel, to communicate with the British Chancellor of the Exchequer, Mr Gordon
Brown and find means to stop further auctions of gold by the UK government.
Mr Manuel also requested to inform the IMF of the SADC ministers’ concern about the
intended sale of gold by the institution and its adverse effect on the very HIPC countries
it wishes to assist.
At the meeting, the Chairman of the Ministerial Committee of Mining and Mineral
Resources in SADC, Dr. K. Syamujayo, made a presentation on the negative impact of gold
sales on SADC countries and called for a joint effort between Finance and Mining sectors
to take measures in stopping the current slide in the price of gold.
Debt relief and the HIPC
initiative:
Ministers called for a revised HIPC framework, which should aim at:
Having periodic reviews of the eligibility criteria and a consistent
interpretation of track records. Countries such as Tanzania and Ethiopia will only qualify
for HIPC in the year 2001, though they have had a good record of fiscal reforms for over
five years.
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Shortening the interim period of debt relief from six to three years
for countries that implement IMF/WB reform programmes, have social welfare programmes in
place and observe the principles of good governance. Therefore, SADC member states are of
the view that a country’s total record of adjustment and reform must be adequately
recognised. Countries that have already demonstrated a reasonable track record, such as
Tanzania, Malawi and Zambia should immediately qualify for debt relief.
Discouraging the IMF from selling gold in the present climate. The
Ministers urged the IMF not to support the G8 resolution for the sale of 10 million ounces
of gold.
Reviewing debt sustainability ratios in order to provide deeper and
wider debt relief. It is recommended that the threshold figure for indebtedness be set at
between 100 and 150% of exports and 10 to 15% for debt service to export ratio, with some
of flexibility in exceptional cases.
A lower debt service
threshold prevents the inevitable accumulation of arrears as a result of the widening
spread between the scheduled debt service ratio and actual payments.
Encouraging additional contributions to the HIPC Trust Fund since the
lack of financing is the major obstacle to implementing the initiative. As at February
1999, pledges to the Trust Fund were US$442 million, falling far short of the debt service
relief package of US$4 billion. Substantial contributions should be made to the HIPC Fund,
which is commensurate with financing needs of an expanded HIPC initiative.
Relations with the World
Bank:
The main resolution was re-appraising with the World Bank in a manner that will develop
a vision to address critical developmental challenges facing Africa, amidst a changing
global environment, into the next millennium. This should be underscored by the need to
bring about economic prosperity through structural transformation of African economies,
industrialisation and capital accumulation. The Ministers further emphasised the need for
infrastructural development poverty eradication and human and institutional capacity
building in a manner that preserves African resources.
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Investment promotion in the region:
Ministers discussed the declining trend of investments in the region especially foreign
direct investment in light of shrinking domestic savings in member countries and the
existence of foreign exchange controls that inhibit investments. Ministers recognised the
importance of combining sound macroeconomic policies with efforts to attract investments
in the region.
The meeting received reports from:
The Committee of Central Bank Governors presented reports on work done
on recent economic developments and statistics for SADC countries. Another report dealt
with work done on national payment systems while a third report explained the training of
officials on banking and economic issues in the region.
Year 2000 Compliance:
This discussion focused on six broad areas of need. These are:
- Finance and Banking
- Revenue Collection
- Fiscal Accounts
- Municipal Accounts
- Health System
- Telecommunications
Ministers were assured that remedial programmes are already in place and further decided
to seek public holidays for the first and second of January 2000 and to take the Y2K
matter further at the Task Team on Information Technology.
The 6th annual meeting of SADC Ministers of Finance and Investment will be held in
Mozambique in July 2000.
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