<!-- Start of picture text --> Policy, Researn:h, and Externail Affairs<br>Debt and Intei-national Finance<br><!-- End of picture text --> WPS 661

- This paper a product of the Debt and International Finance Division, Intemational Economics - Department is part of a larger effort in PRE to assess the availability of external resources to support African adjustment and growth in the 1990s. Copies are available free from the World Bank, 1818 H Street NW, Washington, DC 20433. Please contact Sheilah King-Watson, room S8-040, extension 33730 (32 pages, with tables).

Both the International Monetary Fund and the World Bank recognize that Sub-Saharani Africa represents a difficult and complex development challenge.

Feinberg proposes that t!ie Bank and the Fund take four institutional steps to Sal effectively with the region's problems in the near term:

* The Bank and the Fund will have to improve their ability to work together to maximize their effectiveness in the 1990s. One way to achieve more effective cooperation between the agencies would be for them to synchronize their policies on such issues as resource transfers, commercial debts of middle- and low-income countries, and economic and political conditionality.

**T** he agencies should reconsider their planned net capital contribution to help overcome the region's severe foreign exchange constraints. A negative resource transfer could weaken the influence of the multilateral agencies and tighten the financial straitjackets already crippling many countries in the region.

* The Brady proposals represented a major conceptual step forward toward alleviating the private debt overhang that seriously burdens at least a dozen countries in the region. Additional efforts to reduce the private debts of the lowincome countries will be needed to achieve the objectives of the proposals.

* The Bank's analysis of the problems facing the region argues for a faster anid more comprehensive reform program. In the 1990s the Bretton Woods agencies will face increasing pressures to give more weight to issues of social equity and political variables.

The World Bank and the IMF should collaborate in long-term planning for Sub-Saharan Africa. Policy Framework Papers should go beyond the three-year horizon that current procedures now dictate and plan some issues for five to 10 years.

The Bank and the Fund should unite in an effort to produce strategic plans for the entire region to guide their own work and to give clear signals and realistic expectations to the region. The nations of Sub-Saharan Africa also should play major roles in designing these programs.

Collaboration will proceed more smoothly if - one institution clearly has the lead and, in this region, the World Bank rather than the IMF should take the lead in organizing extemal assistan1ce effons and policy reform programs. Such an approach would be consistent with the 1989 decision to give the World Bank primacy over structural matters.

**The** PRE Working Paper Series disseminates thc findings of woxk under way in **the** Bank's Policy, Research, and Extemal Affairs Complex. Anobjective of the series is to get these findings out quickly, cven if presentations are less than fully polished. **The** findings, interpretations, and conclusions in these papers do not necessarily represent official Bank policy.

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