The International Monetary Fund (IMF) has called for a significant increase in international support to help African countries overcome a funding squeeze that is jeopardizing the continent’s economic development.
Head of the IMF’s Africa department Abebe Selassie, told the Financial Times on Sunday that reform of the current mechanisms for dealing with unsustainable debts of African countries is “desperately needed.” Selassie did not call for an outright cancelation of current repayments. “We need a much more efficient sovereign debt framework,” he said, adding “we need to be sure that resources are going to support countries rather than being used to service unsustainable debts.” Several other African countries are at risk of default. Many have been shut out of international debt markets since 2020 by “exorbitant” borrowing costs, Selassie said, while finance from China and other new sources of lending had been curtailed, along with development assistance from rich countries.
Zambia has an IMF bailout program but Selassie said the fund had been unable to conduct its second review because the country’s bilateral creditors, including China, had failed to reach agreement. Meanwhile, Ghana cannot even get to the first step of an IMF program because it needs financing assurances from its creditors, he added.
Several African leaders have called for a radical increase in support from the international community through the IMF and multilateral development banks including the World Bank.
In a report published on Friday, the IMF said growth rates in sub-Saharan Africa would decline for the second year in a row, weighed down by a contraction in growth in key economies such as South Africa.
Growth across the region would hit 3.6 percent this year, from 3.9 percent last year, following a rebound to 4.8 percent in 2021 after pandemic lockdowns were lifted, it added.
Source: Qatar News Agency
