ECA And AfDB Worried About Growing Debt :
Akinwumi Adesina, president of the African Development Bank (AfDB), and Hanan Morsy, deputy executive secretary and chief economist of the Economic Commission for Africa (ECA), have expressed regret over the high costs of debts incurred by African governments, noting that this was preventing nations from making crucial investments in infrastructure, health, and education that would help the African Continental Free Trade Area (AfCFTA) come into existence.
Morsy emphasized the urgent need to reform the global debt architecture in light of the fact that debt servicing accounts for nearly half of Africa’s revenue. This will allow countries in economic difficulty to quickly and effectively restructure their debt.
Making this known during a meeting with heads of African regional and continental institutions, she highlighted some of the near-term reform proposals suggested by the High-level Working Group on Global Financial Architecture (HLWG), including the need to suspend debt service for all countries entering the Common Framework restructurings to provide relief and incentivise speedy restructurings, expand eligibility to middle-income countries, establish expanded creditor committees to incorporate private sector creditors, smooth coordination challenges and accelerate restructurings, establish a ‘Comparability of Treatment’ formula to reduce technical disputes and accelerate restructurings further and enhance the use of International Monetary Fund (IMF) Lending into arrears policies to reduce the leverage of holdout creditors.
Noting that credit improvement instruments and guarantee facilities might assist unleash greater resources for investments, she suggested that such mechanisms be linked with debt-for-climate investment swaps, which allow nations to reduce debt payment costs and create fiscal space.
Speaking on the issue of debt resolution, Adesina stated that the AfDB and ECA would continue to work hard to ensure that Africa had a unified voice.
