afrol News, 15 May - The Angolan government has made a $3.5 million pledge to the African Development Bank (AfDB), to help increase the bank's capital.

Reports have stated that the Launda administration said the contribution will be made over a period of eight years, as part of the AfDB's increased lending capacity to help members grapple with the effects of the global economic crisis.

The African Develoment Bank ended its annual meeting on Thursday in the Senegalese capital, Dakar, where members approved the bank's proposal to increase its capital.

The Angolan state news agency, Angop, the vice governor of Angola's Reserve Bank (BNA), Rui Minguês, who headed the country's mission to the AfDB's annual meeting, said there was need to increase AfDB's resources not only to lessen the effects of the crisis, but also for its future actions and credibility.

The AfDB's council of governors have approved a $67.36 billion increase that translates to 200 percent of the current authorised capital of $33.68 billion of the bank, with the AfDB's shareholding countries expected to release $16.17 billion, in the next eight years.

The AfDB in its report to the meeting said Africa's economic growth will fall to 2.8 percent this year, less than half the rate, of 5.7 percent, forecast before the onset of the global slowdown.

The report further said budget deficits across the region will balloon as falling commodity prices and demand from Western countries take their toll. The report forecasts a budget deficit of 5.5 percent of output.

"With a projected growth rate of only 2.8 percent, and a bias on the downside, many people will fall back into poverty. This is a setback beyond the control of Africans and is likely to be protracted," the report's authors said in a statement.

The AfDB also noted that several African countries have sought aid packages from international lenders as governments grapple with falling trade incomes and lower remittances.

The bank has in plan to open a $1 billion trade finance facility, offering $1.5 billion in non-concessional financing, while also clearing up the disbursement of previously agreed loans, the banks officials told the media this week.

The joint report by the Organisation for Economic Co-operation and Development (OECD), the AfDB and UN Economic Commission has also warned that the global economic crisis has heightened the risk that "tensions could explode" in Africa.

"The situation remains tense in some countries and new tensions could explode in the coming months due to the worsening of economic conditions due to the global crisis," said the report.

The reported highlighted widespread fallout from the crisis already seen in mass layoffs in the key mining sector, saying that, although some governments have managed to avoid the situation in 2008 by implementing support measures and containing social discontent, the situation is likely to be more challenging in 2009.

The reported ponte out that four of the 52 countries surveyed will fall into negative growth, saying Angola, Africa's biggest oil exporter, could slump from 15.8 percent growth in 2008 to -7.2 percent this year, the Seychelles (-0.4 percent), Democratic Republic of Congo (-0.6 percent), and Chad (-0.7 percent).

Central Africa will suffer worst from the crisis, with overall growth slashed to 0.2 percent, while East Africa should still see GDP rise by 5.5 percent, the report.

The report said South Africa, the continent's biggest economy, will see the GDP growth fall from 3.1 percent in 2008 to 1.1 percent this year.

In supporting the deepening crisis and possible eruption of tensions, the report said several African countries have already seen food riots over the past 18 months and South Africa had deadly xenophobic riots, while a new surge in military coups in Mauritania and Guinea and lately in Madagascar were in the offing.

Other hot spots mentioned by the report included Somalia, Chad, Cameroon, and Sudan.

By staff writer

© afrol News

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