Meles Zenawi asks IMF to sell gold reserves to help Africa
By William Wallis, Financial Times | March 18, 2009
Last week, he said his "miracle" economy would grow by over 12 percent this year. The IMF and World Bank stepped in, and slashed his 'miracle' by half, and warned the impact would be devastating for Ethiopia, whose economy is the most vulnerable in sub-Saharan Africa.
Since he came to power in 1991, Meles has been feeding the country false hopes, and bragging about, among others, exporting electricity to all neighbors, even across the Red Sea to Yemen. This is a slap in the face of Addis Ababans, who for years have been used to frequent power outages, and very lately, power rationing.
This week in London, corrupt African leaders did what's good for them: picking up a cheerleader who knows no shame: Meles Zenawi. He is dryly warning the IMF to sell part of its gold reserves to rescue who? Failed states like his.
Meles Zenawi, Ethiopia’s prime minister, representing the continent, said the sell-off could raise between $5bn (€3.8bn, £3.6bn) and $15bn to be channelled through the IMF, World Bank and other multilateral institutions.
Africa needed short-term increases in development assistance of between $30bn and $50bn to offset declining trade and investment. The availability of such funds was a matter of life and death, Mr Meles said in an interview with the Financial Times.
“We are seeking a much smaller stimulus package than is being spent bailing out the small and medium-sized banks in the west,” Mr Meles said.
In countries such as Britain, he added, the worst likely consequence for individuals in the downturn is the loss of employment. “The worst that can happen in Africa is that people who were getting some food would cease to get it and instead of being unemployed would die,” he said.
African economies are facing a looming balance of payments crisis as income from commodities, foreign investment, remittances and aid shrink simultaneously.
Mr Meles said there was a risk that fragile recent gains would be washed away, conflicts would reignite and more states would fail.
“Africa was beginning to stand up and now it is being knocked down again by this crisis, which is not of Africa’s making. That is one of the biggest tragedies,” he said.
In the past, African gold producers have opposed the idea of the IMF selling off its reserves because of its likely impact on world prices.
“Gold prices are doing well now so a slight correction to mobilise resources for Africa would not be that difficult,” Mr Meles argued.
More funds for the continent could be sourced if other developed countries join Europe in supporting a recapitalisation of the IMF with hundreds of billions of dollars of additional funds, he said.
In the longer term, Africans would have to rethink all their “development strategies” and “find ways of doing well in an environment that is less permissive”.
Ethiopia has resisted western pressure to open up its economy faster and privatise its banks, a position Mr Meles suggested had proved “prudent” in light of global events.
“One of the problems at the moment is that the situation is so volatile,” he added. “It keeps changing every week. It destabilises everything, including one’s thinking. If we knew where the bottom was we could start thinking as to how to get out of it.”
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