IMF sees African economy growing: Ghana's expands briskly

WASHINGTON, Sept 22 (Reuters) - The International Monetary Fund on Wednesday slightly revised down its economic growth forecast for Africa but said prospects are improving for the continent's largest economy, South Africa.

In its latest World Economic Outlook, the IMF predicted Africa's gross domestic product would grow by 3.1 percent in 1999 and by 5 percent in 2000. The forecasts for both years were revised down a tenth of a percentage point from the previous outlook released in April.

But the fund said the projection masked the fact that the economies of Algeria and many smaller countries, such as Cameroon, Cote d'Ivoire, Ghana, Mozambique, Sudan, Tanzania, Tunisia and Uganda, have been expanding rather briskly.

``Growth of 4 to 5-1/2 percent is projected for most of these countries in 1999, with some further strengthening expected in 2000, and inflation has generally been held at low-to-moderate single-digit levels,'' the IMF said in its report.

But the fund said growth in three of the biggest economies, South Africa, Nigeria and Morocco has been sluggish.

``In South Africa, growth is expected to strengthen somewhat in 1999 following the slowdown in 1998, supported by renewed financial market confidence, much lower interest rates and improved prospects for exports, especially to Asia,'' it said.

The fund said further cuts in interest rates may be warranted as inflation falls further but it added that the ability to reduce rates was limited by the need to avoid a worsening the current-account deficit.

Cuts in oil production linked to quotas set by the Organisation of the Petroleum Exporting Countries have hurt Nigeria, the IMF said. But it added, ``slippages in fiscal and monetary policies in the first quarter of 1999 have exacerbated the situation.''

Morocco is struggling with drought-related problems but the IMF also urged it to work on trimming the budget and making structural reforms.

In sub-Saharan Africa, the IMF said policy changes in some countries have improved economic performance but in most cases they have not been enough to remove the many obstacles to attracting private capital.

The IMF urged sub-Saharan countries to take full advantage of the Heavily Indebted Poor Countries Initiative aimed at providing debt relief for the world's poorest nations.

But the fund said the debt relief would only work to boost the confidence of outside investors if it were combined with sound economic policies of the countries.