Capital flows and current account sustainability in African economies

Workshop

21 - 22 September 2005

Workshop Abstracts of Presentations

Capital Flows to Africa: Recent Evidence and Implications for Current Account Sustainability

Emmanuel Nnadozie
Senior Economic Affairs Officer, ESPD/ECA, Ethiopia

Capital flows can be a blessing or a curse as the experience of such resource rich or booming African economies as Nigeria, Gabon and Algeria have shown in the past. As African countries anticipate large inflows of capital in the form of increased development assistance and other categories there is a need to establish sound policies to manage the risks associated with such inflows. The problems associated with capital inflows are many and varied. A large rise in the capital account surplus will be accompanied by a large rise in the current account deficit. A large capital inflow can lead to currency appreciation and Dutch Disease-type syndrome. That is there is a problem of absorptive capacity to contend with. Also, capital inflows may be associated with rapid increase in money supply, which could lead to inflation.

Examining the current account implications of increased capital flows to African countries is necessary because a striking feature of the balance of payments in African countries is the recurrent current account deficits, which have been described as excessive. 1 Associated with this persistent external imbalance is the anomaly of current account fluctuations symptomatic of extreme trade volatility in many African countries. Yet, the balance of payments can play an important role in the growth performance of countries through its effect on growth of demand. A healthy balance of payments permits lower interest rates necessary for investment, 2 while current account imbalances-surpluses or deficits-affect the balance of payments and creates an imbalance in government saving, borrowing and asset acquisition.

This paper examines recent trends in capital flows to Africa and explains their behavior, evolution and transformation in order to determines the policy and financial system implications of the findings within the context of poverty-reducing growth. It is important to look at capital flows and their current account implications in Africa for a variety of reasons. First, although economists do not agree on the role and importance of current account deficits, there is a general concern that prolonged current account deficits may become unsustainable, crowd out domestic saving or lead to macroeconomic instability, especially when financed with short-term debt or foreign-exchange reserves and when it reflects high consumption spending. Second, the surge in capital flows to developing countries since the 1990s has introduced the issue of the importance of capital flows to the sustainability of current account in these countries, in light of rising international interest rates and the threat of volatility of capital flows. Third, it is important to determine what role capital flows plays, if any, in current account sustainability in African countries and the policy implications that pertain to it.

In light of the foregoing, the natural questions that come to mind are what characterize capital flows to Africa in recent times. What explains these characteristics? Why are capital flows important for current account sustainability? What policy and institutional changes are required to increase capital flows, increase current account sustainability, and promote poverty-reducing economic growth? In this regard, this paper investigates the nature of capital flows to African economies. What types of flows are countries receiving? Are they permanent or transitory? How fickle are international investors when investing in African countries? Are capital flows to Africa subject to large reversals?

Growth Impact and Determinants of Foreign Direct Investment into South Africa, 1956-2003

Johannes W. Fedderke
Professor of Economics, Cape Town University, South Africa

The paper is concerned with the growth impact and the determinants of foreign direct investment in South Africa. Estimation is in terms of a standard spill-over model of investment, and in terms of a new model of locational choice in FDI between domestic and foreign alternatives. We find complementarity of foreign and domestic capital in the long run, implying a positive technological spill-over from foreign to domestic capital. While there is a crowd-out of domestic investment from foreign direct investment, this impact is restricted to the short run. Further we find that foreign direct investment in South Africa has tended to be capital intensive, suggesting that foreign direct investment has been horizontal rather than vertical. Determinants of foreign direct investment in South Africa lie in the net rate of return, as well as the risk profile of the foreign direct investment liabilities. Policy handles are both direct and powerful.

Reducing political risk, ensuring property rights, most importantly bolstering growth in the market size, as well as wage moderation, lowering corporate tax rates, and ensuring full integration of the South African economy into the world economy all follow as policy prescriptions from our empirical findings.

Financial Liberalization and the Structure of Capital Flows in African Countries

Léonce Ndikumana
Associate Professor of Economics, University of Massachusetts, USA

The financial liberalization drive initiated in the 1980s in African countries (and other developing regions) was expected to achieve a wide range of objectives including: (1) the removal of market distortions in domestic financial markets thus allowing higher competition; (2) alleviation of market segmentation in domestic financial markets; (3) increasing financial intermediation, both saving and lending; (4) increasing access to external capital, especially long-term investment capital, thus reaping the benefits of international financial integration; (5) reducing capital flight (Lensink and Hermes 1998); and even (6) reducing corruption through the curtailing of financial regulation (see DeLong 2004).

However, after over two decades of the liberalization experiment in Africa, most observers concur that the experiment has by and large been disappointing. Many reasons have been offered for why financial liberalization failed to produce the expected results. These reasons include: (1) lack of political anchoring and poor policy choices that undercut financial liberalization efforts (Mkandawire 1999); (2) persistence of government interference in financial markets (Seck 1993); (3) partial nature of implementation of liberalization measures (Reinhart and Tokatlidis 2003); (4) macroeconomic uncertainty and instability, including inflation volatility (Seck 1993). Most studies conclude that more needs to be done, especially in terms of accompanying economic and governance reforms to support financial liberalization; indeed it has become evident that financial liberalization is not a panacea.

One of the objectives of financial liberalization (as identified above) is to affect the composition of capital flows in favor of long-term capital in addition to raising the overall volume of capital flows. This study focuses on this particular aspect of the role of liberalization and examines whether, indeed, the structure or composition of capital flows has changed in the era of liberalization in African countries. This issue is central to the development agenda. Increasing the share of long-term investment capital accomplishes important objectives including: (1) increasing the ability to finance capital accumulation and thus stimulate economic growth; (2) increasing the sustainability of current account financing as long-term capital is more reliable than shorn tem capital; and (3) reducing the volatility of capital flows, as long-term capital is more stable that short term capital. The analysis in this paper attempts to establish a linkage between the timing, level, and composition of capital flows on the one hand and measures and episodes of liberalization in the continent on the other hand. The analysis sets the stage and gives insights for a discussion of the appropriate policies and strategies to both increase access to long-term capital and improve the management of capital flows to reduce the risk of instability and maximize the benefits from financial integration.

External Debt and Current Account Sustainabilityin Uganda, 1993/94 - 2004/05

Louis Kasekende
Deputy Governor, Bank of Uganda

The work on leading indicators of currency crises by Kaminsky et al, 1997 shows that the potential leading indicators, which worked best in predicting a currency crisis, included measures derived from the capital account, the debt profile and current account variables. In line with this early warning indicator approach, this paper assesses the sustainability of Uganda's external obligations by analyzing the country's ability to meet its external debt and current account requirements. The evolution of the debt-to-export ratio, external debt, exports, imports, and interest payments within a framework of a dynamic debt model is implemented. The findings indicate that during 1996/97, the current account deficit and the external debt of Uganda approached sustainable levels. In 1996/97, the current account deficit stood at a comfortable level because warranted exports were slightly higher than actual exports. However, the reverse has also been true for the subsequent years as exports dropped in comparison to levels needed to maintain current account and foreign debt sustainability. This notwithstanding, with the current levels of growth in exports and the low interest rate on the existing external debt, Uganda's external debt would have been sustainable. However, the attainment of sustainability has not been possible due to the high level of debt stock accumulated in the past. In addition, a comparison of import and export levels suggests that Uganda's imports are more than double her exports. Most importantly, the recently suggested methodology of determining a country's DSA that jointly uses the country's policy performance based ranking system and the debt stock and flow indicators suggests that attention needs to be maintained on Uganda's debts sustainability. In addition, while Uganda has received substantial aid flows to support its growth, the inflows have also tended to complicate macroeconomic management by affecting domestic liquidity and the real exchange rate. It is therefore important that policies targeting debt stock reduction as well as measures aimed at lowering the ratio of imports to exports are pursued. Export enhancement should therefore be effected through a mix of policies that promote horizontal and vertical export diversification. The paper proposes a number of measures to ensure sustainability of the capital flows and minimize macroeconomic instability that could arise from capital flow volatility. These measures require an improvement in capital flow data collection, strengthening banking sectors, reduction of country risk, improvement of infrastructure and prudent macroeconomic management.

The Role of Capital Flight and Remittances in Current Account Sustainability

Mohammed Salisu
Principal Research Economist, Development Research Department, African Development Bank, Tunisia

The literature on capital flight and remittances is copious, as a plethora of studies in recent years have focused greater attention on the determinants and impact of capital flight and remittances in the development process. These issues are particularly more pertinent to Africa in view of its relatively high incidence of capital flight in the presence of foreign exchange constraints, limited foreign capital inflows, and high dependence on overseas development assistance. The principal aim of this paper is to estimate the extent and magnitude of capital flights from Africa and remittance inflows to Africa, and to assess their role in current account sustainability.

The paper employs standard methodological approaches to estimating capital flight and remittances for selected African countries and analyses their relationships with current account balance and key economic indicators. Preliminary findings of the paper are as follows:

1. The magnitude of capital flight from Africa has increased considerably in recent years, except for a few oil producers who appeared to have witnessed some capital flight reversals.

The policy implications of these findings are that in spite of the good progress made by many African countries towards economic and political reforms, more innovative policy thinking and reform deepening must be initiated to create conducive environment for private sector participation in general and foreign capital (including capital flight reversal) in particular. Similarly, there is a need for incentivising and mainstreaming remittances into national development strategies with the view to promoting the growth enhancing effects of remittances. A wide range of policy options and forward thinking analyses were advanced in the paper.

Capital Flows and Current Account Sustainability: The Case of Nigeria

Christiana E.E. Okojie
Professor of Economics, University of Benin, Nigeria

Policy-makers view the evolution of the current account balance as a key leading indicator of the health of a nation's economy. A current account deficit is a reflection of the strength of a developing country's economy as it measures the resources coming into a country to finance investment demand in excess of national savings. On the other hand, it can reflect a dangerous and unsustainable imbalance between national savings and domestic investment and the accumulation of debts that cannot be serviced (Roubini and Watchel, 1997). Understanding the factors that affect the current account balance thus appears to be a good strategy for effective policy-making (Calderon, et al, 2001) A striking feature of the BOP in African countries is the recurrent current account deficits, which have been described as excessive. There is general concern that prolonged current account deficits may become unsustainable, crowd out domestic saving or lead to economic instability, especially when financed with short-term debt or foreign exchange reserves and when it reflects high consumption spending. Issues of concern in Africa are; do current account deficits matter? Is the sustainability of current accounts important in the case of Africa? What are the indicators of current account sustainability in African countries and what are the roles of capital flows and other factors in current account sustainability in African economies? This paper addresses theses issues in the Nigerian context. Studies of episodes of currency crises in other regions had shown that the crises were associated with large, growing and eventually unsustainable current account imbalances. A combination of fixed rate regimes, real appreciation, current account worsening, short-term foreign debt accumulation, and weak financial systems had contributed to currency crises in Mexico and South East Asia. It is therefore important to study whether the current account imbalances in African economies are sustainable or not.

Nigeria, Africa's most populous country is the leading oil producer in sub-Saharan Africa and a potential economic giant. A notable feature of the Nigerian economy since independence has been the recurrence of current account deficits and an increase in external debt, which grew from about US$960 millions in 1970, to over US$30 billion by 2004.As a ratio of GDP, World Bank estimates showed that external debt was 10% in 1970, reached 110% in 1986, 143.8% in 1993 and 65.2% in 2002. Nigeria's current account balance has fluctuated between deficits and surpluses over time. It showed a deficit pattern over the period 1960-73, with an average of 2% of GDP over the period. It ranged from 0.1% in 1973 to - 4.4% in 1971. Over the period 1960-73, the cumulative current account deficit was approximately 33% of GDP. The period 1974-80 marked a turn in the evolution of the current account balance, with current account surpluses in 1974,1975, 1979 and 1980 as a result of substantial rises in crude oil prices. Outside these years, Nigeria had current account deficits. The current account balance ranged from 10% of GDP in 1978 to 20% in 1974. During 1981-83, the current account was consistently negative, the following three years were marked by surpluses as a result of trade controls during the period. Annual average of current account deficit to GDP for the period 1981-85 was 4.4%. The current account maintained a negative trend during 1986-88, except for 1986, 1989-92 marked current account surpluses, followed by deficits up to 1995 and surpluses in 1996 and 1997. In 2000, the current account balance was a surplus, equivalent to 10% of GDP, but swung back to a deficit by 2002. Thus, Nigeria's current account has swung between deficits and surpluses as world prices for oil changed. This sensitivity to oil prices is due to the non-diversification of the economic base.

Recurring current account deficits, in addition to the evolution of external debt, make it desirable to examine the sustainability of Nigeria's current account imbalances. The concept of sustainability examined in this paper is as defined in Milessi-Ferretti and Razin (1996). An earlier study of the size and sustainability of Nigeria's current account deficits between 1960 and 1997 showed that three were years marked by excessive current account deficits, and that current account deficits accompanied by macroeconomic instability and structural weaknesses can degenerate into an external crisis (Adedeji, 2001). The present study will extend the period of analysis to 2003, to include the period after transition to civil rule, when major reform programmes were initiated. The role of capital flows in enhancing current account sustainability will also be examined. Section two will examine trends and patterns of current account imbalance and capital flows in Nigeria. Section three identifies the determinants of current account sustainability and capital flows in Nigeria, using various indicators identified in the literature. Section four raises policy implications, highlighting suggestions for enhancing current account sustainability in Nigeria. Section five concludes the paper.

Capital Flows and Current Account Sustainability in African Economics: Tanzania's Experience

Isaack Hubert Kilato
Director of Economic Policy, Bank of Tanzania

Over the last five years the Tanzanian Current Account Landscape3 has experienced major shifts. Export values have increased by 101.9 percent, import values have also increased by 66.8 percent, and services receipts have increased by 41.1 percent while services payments have gone up by 46.8 percent.

At the same time income receipts in terms of direct investments, interest receipts and other incomes went up by 62.3%, and payments abroad for the same categories decreased from USD 180.4 Mn. in 2000, to USD 112.1 Mn. in 2004, registering a 32.3 percent decline. Transfer receipts moved from USD 472.1 Mn, in 2000,to USD 711.4 Mn. in 2004, that is a 50.7 percent increase, and transfer payments declined from USD 78.5 Mn. in 2000, to USD 65.3 Mn. in 2004, registering a 16.8% decline.

The above movements have resulted in 34.4% deterioration in trade balance, and a deterioration of 110.1% in services balance, alongside improvements in income balance, and net transfers of 69.0 percent and 64.1 percent respectively. The net impact or net effect of all these movements on the Current Account Balance over the five years is a modest improvement of 7.9 percent.

A closer look at the sub-accounts that made positive contributions to this outcome, namely the Incomes and the Transfers sub-accounts, indicate that the improvements in the Incomes sub-account was mainly associated with substantial drop in External Debt related interest payments, and a significant increase in other (private) direct income flows, linked to private direct investment operations. It also indicates that improvements in the transfers sub-account are reflections mainly of increases in government inflows in the form of donor funds.

The logical reaction to the above developments have been for the Tanzanian Authorities, albeit at the advise of the Breton Woods Institutions and some Development Partners, to set up units at both the Ministry of Finance and the Central Bank (Bank of Tanzania), that monitor debt developments, direct investment inflows, and donor related inflows. These units have addressed their assignments vigorously.

According to recent Debt Sustainability Analysis (DSA) conducted by both the Ministry of Finance and the Bank of Tanzania, the Ratio of Net Present Value of External Debt to the Average of three Years Exports of Goods and Services (NPV/XGS) was 114.9 percent in 2003/04 which is below the 150% sustainability benchmark, and it is projected to remain below that benchmark for the period beyond 2010/11. This means that the Tanzanian External Debt Structure is sustainable, meaning that Tanzania will be able to meet its external debt obligations. The numbers however indicated that this sustainability is a direct product of the HIPC Relief initiatives. It will therefore remain in place only if the HIPC conditionalities are sustained. Additionally, only a small element of the debt sustainability can be passed on to the Current Account Sustainability. The authorities therefore need to look beyond debt-sustainability and the capital flows that are associated with it, in addressing current account sustainability.

An unpublished survey report on Foreign Direct Investment (FDI) into Tanzania and its associated flows indicate that in 2004 foreign private capital inflows 4and the associated payments reached 8.0 percent of GDP, a level that is above the 6% average for Sub-Sahara African countries. The accumulated FDI stock is about 32% of GDP. Thirty-seven percent (37%) of these flows and stock represent direct equity, with inter-company loans constituting a major source of equity. Direct long-term loans constitute 27% of total.

These flows have contributed to the current sustainable levels of the Current Account Balance in Tanzania, and on their part, they seem to have been influenced by a number of factors, profitability associated with openness and availability of skilled labour being the main one, followed by political stability and favourable macroeconomic conditions. It therefore means that these flows can be sustained only if these conditions remain in place. On long-term perspectives, it has been argued that the Foreign Direct Investment structure in Tanzania has a potential for major future outflows in terms of interest payments, royalty remittances in respect of trademarks etc. technology associated charges and fees, profits and dividends.5

It is very important therefore that FDIs are properly monitored and assessed, particularly as regards the types of investment inflows that come, and methods of investments that take place. Fiscal stance and other incentives or disincentives need to be applied to give right signals to the market as to what type of FDI is desired. At the same time locals need to be encouraged to take the lead in the investment process. Current packages including bureaucratic settings seem to favour foreign investors.

The Authorities need to consider this potential future outcome and design policy measures that will encourage residents to invest in lucrative local businesses on their own or in partnership with foreigners, and where possible to facilitate outward investments in areas that are lucrative.6 Tanzania is opening up. Currently the Private Investment effect on Current Account Balance is positive. It is the future that is not certain.

The donor flows have major impact on the current account balance. The official grants for Tanzania reached 5.1% of DGP in 2004 from 4.3% recorded in 2001. As everyone knows, the sustainability of this aspect depends on the donor group consideration. The recommended policy is to make maximum use of the grants as long as they are available in the development of infrastructure, skills and assets that have lasting positive effects on current account balance. Tanzania is addressing this through major investments in infrastructure mainly road network, agriculture, rural electrification and education. Caution need to be taken, however to have such investments done properly with total ownership and commitment by nationals.

The developments in the sub accounts that experienced deteriorations over the last five years, namely the Trade Account and the Services Account seem to be more in line with developments in the foundation sub-structure of the Tanzanian economy that is GDP, Real Effective Exchange Rate, and Fiscal Balance. It may perhaps be more prudent for authorities to turn their attentions to those areas in order to achieve meaningful current account sustainability. Strategic savings, strategic expenditure, strategic investments targeting a desired macroeconomic framework should be the way forward.

Maximum use of domestic human capital in whatever form, and developing it to the maximum, including creating confidence and esteem by showing trust7 will have a long-term effect on the reduction of "Services Payments" outflows affecting the Current Account Balance.

Capital Inflows and Current Account Sustainability: The Case of Ghana

Maxwell Opoku-Afari
Head of Special Studies Office, Research Department, Bank of Ghana

Trends in trade and current account balances in Ghana show a consistent deficit (but for brief episodes of surpluses). This has constantly created a financing gap in the Ghanaian economy. It is interesting that this financing gap has mostly been filled by depending on capital inflows, in particular, aid inflows, as foreign direct investments (FDI) and other components of the capital accounts have not been significant in contributing towards the perennial financing gap. It is observed that even as Ghana depends to a large extent on aid inflows, it has tended to be pro-cyclical.

Both theoretical and operational definitions of current account sustainability show a persistent and fragile current account balance (deficit) for Ghana. It is evident from all these analysis that current account sustainability in Ghana is very sensitive to donor flow dynamics rather than gains from trade. It is not hard to conclude that to make Ghanaian current account deficits sustainable, the economy would need to alter the current structure of the economy (which has changed very little over the past four decades), to make trade gains a predominant pivot of current account dynamics. In addition, worker and private remittances from abroad is gaining increasing importance over the past 5 years and since that has been showed to be relatively stable and counter-cyclical, all efforts should be made to channel the greater percentage currently in the informal formal sector to the formal sector through reducing both implicit and explicit cost of remitting from and into Ghana.

Capital Flows and Current Account Sustainability: Uganda's Experience 1994-2004

E.S.K Muwanga-Zake and Philip Mike Katamba
Trade and external Debt Department, Bank of Uganda

This paper analyzes the composition, magnitudes and trends of capital flows and current account deficit in Uganda over the 1994- 2004 period. The results reveal that the pattern of capital flows fluctuated over the period mainly on account of official flows, the basis on which the magnitude of Uganda's external debt stock grew substantially during the period. Private capital flows also increased steadily over the period, with the bulk being in the form of foreign direct investment that appeared to be more stable than other identified flows. Additionally, these flows appeared to have provided some impetus for positive and significant growth in output. However, the current account deficit excluding grants proved to be consistently large. The size of the deficits seemed to suggest that it might continue to remain unsustainable in the medium term. This is because total imports tended to grow at a faster rate compared to exports of goods, hence inducing a sustained widening of the current account gap that has translated into a form of a chronic imbalance. The challenge for policymaker in Uganda is to therefore to seek measures aimed at addressing the imbalances through increased growth of the capital stock via increased national savings and investment in order to boost output, which may, given appropriate conditions, contribute to narrowing the deficit to sustainable levels.

Flux de capitaux et viabilité du compte courant des économies africaines: cas du Burkina Faso

Antoine-Marie Sie Tioye
Directeur de la prévision et des analyses macroéconomiques, Ministère de l'économie et du développement, Ouagadougo

La présente étude présente la situation du compte courant du Burkina Faso à la lumière des développements en matière de critères de soutenabilité ou viabilité de déficit du compte courant. Le choix du régime de change, la politique d'endettement et la politique d'attractivité des flux des capitaux sont également analysés.

En effet, le déficit de compte courant est un reflet de la force de développement dans la mesure où il traduit une entrée de capitaux qui financent des investissements productifs. Par ailleurs, il peut représenter un déséquilibre potentiellement insoutenable entre épargne nationale, investissement et accumulation de dette extérieure.

La structure des comptes extérieurs du pays dont les exportations portent sur quelques produits primaires et qui importe des équipements et des biens intermédiaires, rend le déficit structurellement déficitaire.

La balance des paiements a été soumise à d'importantes pressions durant la période 1995-2004 suite à la flambée du cours du pétrole et du dollar, à la persistance de conditions climatiques difficiles et à la mise en place du tarif extérieur commun.

La balance commerciale est donc demeurée déficitaire. Cependant, du fait d'une évolution plus favorable des exportations (13,1% en moyenne entre 2000 et 2004) que celle des importations (5,9% en moyenne), le déficit commercial s'est nettement atténué passant de 12,1% du PIB en 2000 à 8,4% en 2004. L'analyse de l'évolution des exportations montre que le Burkina Faso est un pays peu ouvert et bénéficie peu de ses atouts compétitifs. En effet, les exportations sont passées de 10,3% du PIB en 1995 à 8,9% en 2004.

Le déficit courant (hors dons) même s'il s'est atténué sur la période 2000-2004, passant de 15,2% du PIB à 11,7%, il reste supérieur à la norme communautaire de 5%. Le surplus de la balance des paiements s'élève à 0,2% du PIB courant en 2003 et 0,4% en 2004 du fait de l'importance des capitaux non monétaires.

On note ainsi, contrairement à d'autres pays de la zone UEMOA, que l'économie burkinabè n'a pas su tirer avantage des gains de compétitivité-prix consécutifs à la dévaluation de 1994. A titre de comparaison, le taux d'exportation, pour le Mali, est passé de 16% en 1998 à 24% en 2003. Ce qui pose du même coup la problématique de recherche de véritables sources de croissance et de diversification des exportations.

Par ailleurs, malgré la nette amélioration de l'environnement macroéconomique et les très bonnes conditions dont bénéficient les investissements directs étrangers dans le pays (en terme de sécurité juridique des investissements et des possibilités de rapatriement des dividendes et du capital) suite aux différentes reformes engagées, le niveau des investissements directs étrangers reste faible. La faiblesse des IDE pourrait être le signe révélateur d'un manque de confiance à long terme des investisseurs étrangers dans le pays.

L'importance des transferts nets tant privés (notamment ceux provenant des travailleurs burkinabè immigrés, toutefois en baisse constante) que publics (aides internationale) a permis de limiter le déficit du compte courant, qui reste toutefois structurellement déficitaire. L'accroissement du niveau des transferts officiels consentis au Burkina Faso a permis de compenser la baisse des transferts bruts des travailleurs burkinabè et d'améliorer le solde de la balance des comptes courants qui est passé de 12,4% du PIB en 2000 à 8% du PIB en 2004.

L'agrégat macroéconomique qui revêt un caractère préoccupant est le ratio de la valeur actuelle de la dette sur les recettes d'exportations. Ceci, au regard de la contrainte réelle que représente la hausse des taux d'intérêt internationaux, l'appréciation de l'euro par rapport au dollar et la baisse des cours internationaux du coton. En effet, en dépit de l'allègement de la dette, le niveau de la dette extérieure appréhendé à travers ce ratio demeure non soutenable. Le ratio de la valeur actualisée nette de la dette rapporté aux exportations est estimé pour l'année 2004 à environ 225,9 contre un objectif de 193% et les projections montrent que le déclin attendu en 2017 ne sera probablement pas réalisé en dehors de tout autre allègement de la dette, car le ratio à cette date sera de l'ordre de 231,6%. Pour faire face à cette situation, la stratégie du gouvernement ne peut être que de contracter des financements uniquement sous forme de dons, de contracter et de garantir des prêts ne comportant qu'un élément de don supérieur à 35%.

1 Calderon and others (2001) IMF.

2 McCombie and Thirlwall (1999, p 82).

3 Current Account Landscape is in this write-up defined as consisting of all the component parts of the Current Account plus the Memorandum Items that have an impact on the Current Account Balance. For the purposes of this presentation memorandum items include GDP, Terms of Trade, External Debt Level, International Reserves, Fiscal Balance and Effective Exchange Rate.

5 Ghana's outflows in 2000 were twice as high as inflows.

6 Japan pursues the "Outward Investment Policy" they also use it to export their labour (skills).

7 Most African Consultancies are given to foreigners, which shows lack of trust on local skills. But at the same time it denies them the right exposure and experience. It also, demoralizes local talents. It finally has a lasting effect on the Current Account Balance.