With sovereign debt restructuring discussions ongoing in both Zambia and Ghana and high debt levels across much of the continent after the impact of Covid and the more recent Russia / Ukraine conflict, debt sustainability and the economic crowding out effect of high debt servicing burdens has been a central topic of discussion recently.
At the recent IMF/World Bank Spring meetings in Washington DC, it was high on the agenda. There is a sense of urgency for a solution as debt levels have reached a 50-year high and there are more African countries under the “watchlist”.
Many column inches have been written with different views that range from various degrees of debt cancellation to more creative solutions that tap into concessionary financing sources or the development of new sources of investment capital including deepening local currency domestic investment pools to reduce the cost of debt servicing. There is also a growing focus on the other side of the equation; in finding ways to stimulate productive growth and tighten revenue collection. One thing is clear however, the solution must involve Africa with solutions that match this continents needs and preferably address both sides of the equation.
The articles cover the current debate hinting at some new more sustainable financing solutions being explored but also talk to stimulating both domestic driven growth and intracontinental trade to creating a more balanced relationship between debt and economic growth. |
