In order to address the fast-deteriorating debt dynamics on the African continent, African countries remain committed to pursuing credible fiscal consolidation, anchored on efficient expenditure rationalization and robust domestic revenue mobilization measures, Governor of the Bank of Ghana (BoG) Dr Ernest Addison has said.
Dr Addison indicated that this will help build buffers for critical social interventions and infrastructural development, while safeguarding medium-term debt sustainability.
To boost fiscal resilience, he added, International Monetary Fund (IMF) members are undertaking measures to improve public financial and investment management, enhance fiscal transparency and governance, address corruption risks, and progressively phase out untargeted subsidies.
Speaking at a Consultative meeting with the Managing Director of the Fund, he said “African countries also recognize the need to prioritize efficient debt management practices, consolidate debt data in a centralized system, publish reliable, comprehensive, and timely debt information, and deepen domestic debt and capital markets to foster greater access to long-term finance.
“It is, however, clear that domestic policy efforts alone are inadequate to sustainably address the debt burden and restore macroeconomic stability in the continent. For this reason, Madam Managing Director, and given the current context of fragmented global financial safety nets, much stronger support is needed from the IMF to prevent the region’s debt levels from spiraling out of control.
“Going forward, Madam Managing Director, the global policy dialogue should focus on Africa’s debt sustainability, long-term investment needs, macroeconomic resilience to shocks, and laying the foundation for the continent’s inclusive and job-rich growth. Against this backdrop, I would suggest the following for consideration:
” Improve the IMF’s lending framework to enhance the continent’s access to Fund resources is macro-critical in this challenging environment. In this regard, I would urge the Fund to consider increasing concessional financing to the continent by modifying the access thresholds, including expanding access limits and relaxing eligibility criteria for PRGT resources.
“This will ensure timely financing assistance to most vulnerable members. It is in this context we welcome the Fund’s decision to temporarily raise the annual and cumulative limits in the General Resources Account (GRA) to 200 percent and 600 percent of quota respectively for a period of 12 months. Nevertheless, we underscore the importance of aligning PRGT access limits with those of the GRA to enhance Fund support to PRGT-eligible members facing acute debt challenges, while strengthening the fundraising efforts to bolster the PRGT resource envelope.”