From Africa Recovery, Vol.13#2-3 (September 1999), page 32 (part of special feature on ECA conference "Financing for Development")

'Don't forget post-conflict countries'

At its May 1998 summit, the Group of Seven (G7) major creditors recommended special assistance for post-conflict countries in the HIPC framework. It said nothing in public on this subject at its June 1999 summit.

"What people forget is that it is very easy for post-conflict countries to fall back into conflict if there is no consolidation" of peace, Mr. Donald Kaberuka, Rwanda's Minister of Finance and Economic Planning, told Africa Recovery. After World War II, there could have been chronic instability in Germany and in the middle of Europe for a long time. Instead, the Marshall Plan created a zone of stability that is now "one of the most developed areas of Europe."

Rwanda received "generous" pledges from the international community of some $2 bn after the 1994 genocide. But "less than a third" of these pledges actually arrived in Rwanda, with most passing through non-governmental and UN organizations. So, direct support for government programmes was "very small."

"What amazes me is how quickly those funds dry up as soon as the television cameras are no longer there and another crisis has sprung up somewhere else," Mr. Kaberuka observed. Rwanda has just successfully completed the first year of a three-year enhanced structural adjustment facility (ESAF), after an IMF-supervised programme for the previous two years. "All the benchmarks were attained," and Rwanda is now "on the normal track." But this "is not the best way to manage post-conflict situations in Africa," he said, calling for "more imaginative measures."

The issue of post-conflict consolidation and making the transition from an emergency situation to sustainable development is of particular concern to Africa, he continued. Rwanda has "about a million young men with no skills at all, and the number increases by about 10 per cent a year." So, poverty reduction and human resource development are priorities, for which external support funds should arrive promptly. Yet, although consolidating the peace "calls for ... flexibility and patience," often, "some foreign partners come with specific calendars within which to attain some targets. But there are no quick fixes."

Mr. Kaberuka affirmed that debt relief should come earlier for the post-conflict countries than the usual six years, and that conditions for access should be flexible. Rwanda got some relief from the Paris Club in July 1998 but still has to pay $35 mn a year in debt service. It has asked its creditors to consider as part of its track record the IMF-monitored programme of 1996-98, instead of beginning the countdown from the start of the full ESAF. "If that is done, maybe Rwanda could get relief by 2002. But that is still too far," he said, adding that it should begin to benefit by the year 2000.

For now, there is a World Bank-managed Multilateral Debt Trust Fund for Rwanda, through which creditors can help Rwanda meet part of its debt payments. So far, the UK has contributed, while the Netherlands, Canada, the US, Sweden "and a couple of others" have made promises. But the long-term solution for post-conflict countries is "an earlier start to the countdown, and earlier debt relief."

Actual and promised funding currently takes care of about 30 per cent of Rwanda's debt-service obligations, "which is important." But the country needs more help, so it can allocate resources freed from debt service to human resource development and reconstruction, to "create momentum for the future and actually consolidate the peace."

Among other problems is that of debt management, with payment arrears accumulating during a period of conflict. Mr. Kaberuka feels a country's total debt should be considered, instead of "compartmentalizing it into bilateral, multilateral and so on. And debt relief should be seen as a package for budget support," given in exchange for commitments by the country concerned to direct the money released into priority reconstruction areas.

After a conflict, countries must "rebuild their relations with international financial institutions. And that can only be done if the arrears are cleared. Thus, prompt and flexible debt relief would help re-establish normal relationships." Some countries helped Rwanda pay its arrears to the World Bank, the African Development Bank and the International Fund for Agricultural Development, "which enabled us to quickly start normal relationships. But we have a long way to go" for debt relief.

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