AfDB says new strategy will address debt distress risks in Africa

The African Development Bank (AfDB) will from next year roll out a five-year strategic economic governance plan for the continent, the Director of Macroeconomic Policy, Forecasting and Research at the bank, Dr. Morsy Hanan, has said.

According to her, the “New Strategy for Economic Governance in Africa” (SEGA), expected to run from 2021 to 2025, deals with a comprehensive collation of data to inform regular debt sustainability analyses, and supports the design and adoption of legislation and regulations on implicit guarantees and contingent liabilities of state-owned enterprises (SOEs).

Speaking at a virtual seminar on debt management post-Covid-19 in Africa, held under the auspices of the AfDB, Dr. Hanan said institutionalising the creation of medium-term debt strategies and publication of annual debt reports; enhancing capacity for compiling debt statistics; and recording, monitoring and reporting using credible IT systems, such as debt management and financial analysis systems, were critical.

The bank is also developing a framework for the multidimensional action plan on the management and mitigation of debt distress risks in Africa, she added.

There has been heightened interest among African countries to access international capital markets, which has put public debt sustainability high on the continent’s policy agenda once again.

Dr. Hanan said fiscal policies will need to play a greater role in maintaining debt sustainability in the future.

According to the AfDB, Africa has embarked on a process of economic transformation, which has resulted in sustained growth over a decade. However, the growth has been uneven, without a sufficiently firm foundation, and is not—by any estimation—complete, it added.

The bank said it aims to broaden and deepen the process of transformation, mainly by ensuring that growth is shared and not isolated, and is for all African citizens and countries, not just for some.

The Chief Economist of the AfDB, Rabah Arezki, urged the international community to come to the aid of Africa in these challenging times.