G8 should use any stimulus easing to help Africa: AfDB

By Natsuko Waki

LECCE, Italy (Reuters) - The Group of Eight developed nations should use room in their budgets created by any withdrawal of fiscal stimulus to help low income economies like Africa, the head of the African Development Bank said on Saturday.

At a meeting in southern Italy, finance ministers from the world's rich nations said they had started to consider "exit strategies," or how to unwind rescue steps for their economies once recovery is certain -- though any actual reductions in stimulus are still a long way off.

The global financial crisis has hit African economies -- many of which rely on energy and commodity prices for budget revenues -- and growth is expected to fall to 2.8 percent, less than half the rate forecast before the onset of the crisis.

"African economies are affected faster and much more deeply than we had expected. I suspect (their) recovery will be slower than the rest of the world," Donald Kaberuka told Reuters in an interview on the sidelines of the G8 meeting.

"Therefore exit strategies must lead to a much more robust and greater attention to challenges of low income countries... I hope exit strategies create fiscal space which would make it possible for a much more robust action for low income countries."

The Tunis-based AfDB has shareholders including Africa's 53 nations and 24 non-African donor countries. It is aiming to increase its shareholder capital threefold to $100 billion.

G8 financial chiefs said in the communique on Saturday that they are prepared to consider additional financing needs for multilateral development banks which play an important countercyclical role in responding to the global crisis.

Kaberuka said playing a countercyclical role required more resources.