Committed to PEOPLE'S RIGHT TO KNOW
Vol. 5 Num 384 Sun. June 26, 2005  
   
Business


Rich-state must end cotton subsidy: IMF


Rich countries must end subsidies to their cotton producers if African countries which grow the crop are to lift themselves from the spiral of poverty, the head of the IMF said Friday.

Rodrigo Rato, in an article for the French daily Le Figaro, said African countries had accepted the need to reform their cotton sectors, and the International Monetary Fund was offering them loans on concessionary terms to do so.

But he said they could not succeed so long as rich nations continued to drive down world prices with huge subsidies to their own cotton producers.

"It goes without saying that Africa cannot get out of this situation alone," Rato said.

"In the framework of the negotiations under way at the WTO (World Trade Organisation), industrialised countries urgently need to end the subsidies which distort trade."

Rato's comments come at a time when there is an international push to alleviate poverty in Africa with aid and debt relief set to dominate a July 6-8 summit of the G8 -- the Group of Seven industrialised nations plus Russia.

British Prime Minister Tony Blair wants rich nations to cancel up to 100 percent of Africa's multilateral debt, pay out an extra $25 billion in annual aid to 2010 and open up Europe to African exports. Africa must practice good governance in return.

Rato said eliminating the cotton subsidies and other distortionary factors would lead to a recovery in prices and encourage cotton production in countries where there was no subsidy.