Africa's debt crisis: The need for multilateral solutions

Guardian Nigeria

Many African countries are struggling to service their debts, prompting many observers to call for urgent global action and greater involvement of African stakeholders in developing solutions.

Transcript

00:00Now, many African nations are facing unstable, unsustainable levels of debt

00:05exacerbated by borrowing for infrastructure and the pandemic.

00:09How is the IMF addressing Africa's growing debt crisis?

00:14We work very closely with African countries in three ways.

00:18The first one is to be a source of liquidity and reserves for them.

00:23We have provided special drawing rights allocation, which does not add to debt,

00:30it adds to reserves and liquidity.

00:32And we also provided financing on exceptionally high scale during the pandemic

00:38to help countries deal with pressing needs.

00:4116 times higher lending than in normal time.

00:45Second, we work with countries to identify when debt is not sustainable

00:51and promote debt restructuring through the common framework,

00:55as well as in the discussions of the Global Sovereign Debt Roundtable.

01:01So far, we had Chad, Ghana, Zambia, now Ethiopia, benefiting from debt restructuring.

01:09And three, we are the only institution that actually provided debt relief during COVID,

01:16about a billion dollars to the poorest 29 members, majority of them in Africa.

01:23But let me say this, our biggest role to help Africa is to support Africa to grow.

01:31So growth is the best way to beat debt.

01:35Absolutely.

01:35Speaking about Africa growing, sub-Saharan Africa has in the past

01:40been underrepresented on international organizations.

01:44Are there plans to give it a bigger role in the governance on the IMF?

01:49Yes, absolutely.

01:51Great.

01:51Absolutely.

01:52On November 1st this year, we will add one more board member

01:58from sub-Saharan Africa in our governing body, in our board of directors.

02:04And we're doing that exactly because we believe that Africa deserves to be represented more fairly.

02:12We also look around to hire highly qualified African professionals, and especially women.

02:22They are fantastic in our troops.

02:27IMF programs often emphasize fiscal tightening,

02:31which can restrict government's ability to invest in infrastructure and social services.

02:36How does the IMF ensure that its policies in Africa

02:40balance fiscal discipline with the need for growth, job creation, and poverty reduction?

02:45We pay very close attention to the fiscal conditions in our member states.

02:51Why?

02:52Because fiscal stability, financial stability, is a prerequisite for countries to do well.

03:02But when we do that, we always look at the right balance

03:06between meeting the pressing needs of today against the budget constraints

03:13and the fiscal sustainability over a medium term.

03:17So in each of our countries, we look at these trade-offs very carefully.

03:24When we make decisions, they are well-informed decisions.

03:28They are owned by our members.

03:31I was very pleased today to hear from one of the prime ministers from Africa the following.

03:38It used to be when we thought of the IMF as this very strict policeman.

03:43Now we think of the IMF as a partner.

03:46Together, we put a path for development that is more sustainable.

03:52And I want to emphasize again that our main objective is stability,

03:57not for stability's sake, but as a precondition for growth and development.

04:02IMF has been a strong pillar for many African countries.

04:06What words or last parting words do you have for them today?

04:11I think Africa holds tremendous potential for the people in Africa and for the whole world.

04:18We have a youthful population.

04:20We have tremendous talent of men and women in Africa

04:27that the aging world of Europe and of Asia actually relies on.

04:32We think of ourselves as a bridge.

04:36We make conditions, investment conditions in Africa strong,

04:39so capital from the north can go where the labor force is dynamic and strong.

04:46My wish for Africa is do well for yourself, do well for the rest of the world.

04:52Thank you so much for joining us here on Deutsche Welle.

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