The International Monetary Fund has called for a significant increase in international support to help African countries overcome a financing crisis that is endangering economic development on the continent.
Abebe Selassie, Director of the Africa Department at the International Monetary Fund, said in statements to the “Financial Times” today that reform of the current mechanisms to deal with the unsustainable debts of African countries is very much needed.
He made it clear that he did not call for the complete abolition of current payments, noting that a more efficient and effective sovereign debt framework is needed, saying, “We need to make sure that resources will support countries rather than being used to service unsustainable debt.”
He noted that many other African countries are at risk of default, as many have been left out of international debt markets since 2020 due to exorbitant borrowing costs, while financing from China and other sources of lending has shrunk, along with development assistance from rich countries.
He spoke of Zambia which has a bailout program from the International Monetary Fund, but stated that the fund could not conduct the second review because the country’s creditors, including China, failed to reach an agreement.
As for Ghana, Selassie said the country cannot even implement the first step of the IMF program because it needs financing guarantees from creditors.
Several African leaders have called for a drastic increase in support from the international community through the International Monetary Fund and multilateral development banks including the World Bank.
In a report published on Friday, the International Monetary Fund said that growth rates in sub-Saharan Africa will decline for the second year in a row, affected by the contraction in growth in major economies such as South Africa.
The report added that growth across the region will reach 3.6 percent this year from 3.9 percent last year, and 4.8 percent in 2021 after the lifting of closures as a result of the “Covid-19” pandemic.
For latest updates and news follow BLiTZ on Google News, YouTube, Facebook, and also on Twitter.