FINANCING GAP

Address sub-Saharan Africa's debt crisis

Covid-19 recovery phase will need to be supported by pro-growth domestic reforms.

In Summary
  • The World Bank and the IMF continue to demonstrate their leadership in supporting countries to respond to crises
  • We would like to hear what plans the World Bank and the IMF have to address the debt crisis in a manner that would overall lower borrowing costs
Treasury Cabinet Secretary Ukur Yatani.
Treasury Cabinet Secretary Ukur Yatani.
Image: FILE

The World Bank and the IMF continue to demonstrate their leadership in supporting countries to respond to crises.

The scale of financial resources provided to support countries to respond to the health and economic impacts of Covid-19 is a testament to their commitment to preserving macroeconomic stability and preventing further erosion of development gains.

The Covid-19 recovery phase will need to be supported by pro-growth domestic reforms that promote private sector-led growth, reconfiguration of the mix of fiscal and monetary policy and robust social safety nets.

Noting that several sub-Saharan Africa countries are already confronting high external debt service payments over the medium term, we fear that this could impede our capacity to support recovery.

As the world embarks on the last decade to achieve the Sustainable Development Goals, we believe that the developing countries’ debt situation needs to be comprehensively and aggressively addressed.

We, therefore, appreciate the level of focus brought to this issue by placing it at the core of the Development Committee agenda.

Additionally, we welcome the G20’s Common Framework for Debt Treatments beyond the DSSI.

While this mechanism has provided some relief to sub-Saharan Africa countries, the complex structure of sub-Saharan Africa’s total debts requires a more comprehensive framework that would support debt restructuring and re-profiling.

It is critical that both the IMF and World Bank address the sub-Saharan Africa countries' debt crisis in tandem with the persistent development financing gap.

As such, we would like to hear what plans the World Bank and the IMF have to address the debt crisis in a manner that would overall lower borrowing costs, and assist governments in securing bridge financing, where necessary, to manage their obligations.

On the subject of vaccines, we welcome the efforts made by the World Bank to enable access to safe and effective vaccines for developing countries.

We appreciate the close collaboration that exists with Covax. Initiatives such as the African Union’s vaccine programme should be scaled to supplement the supply of vaccines.

The supply of vaccines to developing countries can be compromised by nationalistic policies that could restrict supply. As such, the global supply chain for vaccines must be diversified.

The Treasury CS spoke during the G24 ministerial and governors meeting