Dar Es Salaam - Finance Minister Trevor Manuel hopes advanced economies will not act with arrogance when finance ministers from the Group of 20 developed and developing nations meet this weekend to discuss the world economy out of crisis.
"I just hope that this arrogance of 'we are so much better
than the emerging markets...' isn't going to find resonance,"
Manuel told Reuters after an IMF conference this week devoted to Africa in the Tanzanian capital.
Emerging market countries are fuming over the failure by
developed countries, which have long preached to them about
sound economic practices, to properly regulate their banks and
prevent the reckless lending in the US housing sector that led
to the crisis.
Manuel said while rich nations have moved quickly to shore
up their economies and banks with big rescue packages, their
responses have so far been too nationalistic.
"The question though is whether the impulse for their
movement is not too nationalist because you need a high level of coordination and you need a global effort," he said.
Manuel said effectively addressing the crisis will require a
bigger joint effort.
"If you want the world to work in a way where you can
maximize the benefits of this global economy, then you give a
little bit and you can manage these kinds of things.
"It's not like burning the flag and no longer singing your
national anthem. But in the same way as any relationship it
requires a bit of give," he said.
The finance ministers and central bankers from the 20
biggest economic powers will meet on Friday in Britain to pave
the way for a leaders' summit next month.
But so far only a deal to increase resources for the
International Monetary Fund to help countries facing balance of
payments crisis looks likely with countries still divided over
how to regulate markets and deal with toxic assets on banks'
balance sheets.
Sense of despair
South Africa is the only African country represented in the
G20 and Manuel said there was a sense of despair across the
region as countries watch traditional export markets disappear,
access to credit and investment financing dry up, and nearly a
decade of strong growth rates fizzle to a weak 3 percent this
year.
Poorer countries, which could be the biggest casualties of
the crisis, also face the possibility of reduced aid flows as
Western donors face budget pressures of their own. African
leaders have called on the donors ahead of the G20 to honour
their promises made in 2005 of doubling aid to Africa by 2010.
"Here you have the large countries being able to go into
markets and raise finance if they want to, and small poor
countries don't have the same access. There is a sense of deep
inequity about that," Manuel said.
"People in South Africa ask me but if US can run a deficit
of 11.5%, why don't you do the same? What price do they
think would be worth paying to borrow 11.5%?," he said.
"Because the risk premium will increase very quickly and do
we have sufficient to spend all of that money on?"
South Africa together with Australia are chairing a G20
committee on the IMF, while Manuel is separately chairing a
panel of experts looking at reforming the IMF to make it a more
effective global financial supervisor.
Emerging market economies, including China, have long
complained about the IMF's lack of evenhandedness when it comes
to dishing out advice to advanced economies, which all too often have ignored its advice. They want the IMF to be just as
assertive in pointing out policy shortcomings in rich nations as they are in emerging economies.
Manuel said a United States' veto power, which it has
jealously guarded, over decisions in the IMF had "created
perhaps a sense of paralysis".
"If you ask the US, or if you independently evaluate the
decisions taken over a very long period, you'd probably find
that it was never used but its existence has shaped the culture
of the institution," Manuel added.
- Reuters