Former Minister of Finance, Seth Terkper, has called on African governments to ensure the sustainability of their debts in order to attract development finance assistance.
Development finance refers to financial resources to support economic development and growth in countries, particularly in low- and middle-income regions.
Mr. Terkper, who is also the Executive Director of Public Financial Management (PFM) Tax Africa Network, a consulting firm, made the comment when he held a virtual engagement with journalists following the conclusion of the International Monetary Fund/World Bank Group (WBG) annual meetings in Washington, US.
During the session, he noted that many African countries have transitioned to lower and middle-income status, reducing their access to grants and concessional financing for sustainable development and poverty alleviation.
He emphasized the importance of development finance going forward and urged African governments to diligently address their debt burdens to attract such support.
“Africa must do something about its debt, otherwise, we might be shut out of development finance,” Mr Terkper said. Per reports, he led Ghana’s 16th International Monetary Fund (IMF) loan-support programme,
The IMF’s April 2024 Regional Economic Outlook for Sub-Saharan Africa noted a gradual improvement in the region after four turbulent years.
The region’s growth is projected to increase from 3.4 per cent in 2023 to 3.8 per cent in 2024. However, the report highlighted that “not all is favourable,” as the funding squeeze persisted.
Governments in the region are still facing challenges such as financing shortages, high borrowing costs, and impending debt repayments, which need to be addressed.
“Amid these challenges, sub-Saharan African countries will need additional support from the international community to develop a more inclusive, sustainable, and prosperous future,” the report noted.
Mr. Abebe Aemro Selassie, from the African Department of the IMF, emphasized the importance of African governments continuing to improve public finances, with a focus on domestic revenue mobilization. He made these remarks during the release of the April IMF Regional Economic Outlook for Sub-Saharan Africa last week.
He also encouraged a sustained effort to reduce inflation and suggested implementing reforms to enhance skill development, stimulate innovation, improve the business environment, and promote trade integration. These measures aim to secure more affordable and stable financing for the region.