IMF worried over rising debt in sub-Saharan Africa

BY: Dominic Moses Awiah
Vice President Mahamudu Bawumia (left) and Mr Abebe Aemro Selassie, IMF Mission Chief for Ghana. Picture: EMMANUEL QUAYE
Vice President Mahamudu Bawumia (left) and Mr Abebe Aemro Selassie, IMF Mission Chief for Ghana. Picture: EMMANUEL QUAYE

The International Monetary Fund (IMF) has expressed concern about the rising public debt in sub-Saharan African countries.

According to the 2018 Regional Economic Outlook survey report released in Accra yesterday, about 40 per cent of low-income countries in the sub-Saharan Africa region “are now assessed as being in debt distress or at high risk of debt distress”.

“Debt levels in many sub-Saharan African countries have continued to rise…..Many other countries continue to rely on public-investment-driven growth, with rising debt levels,” the 126-page report said.

The report was outdoored by a team of IMF officials at an event which had the Vice-President, Dr Mahamudu Bawumia, as the Guest of Honour.

Also present were the Minister of Finance and Economic Planning, Mr Ken Ofori-Atta, and the Senior Minister, Mr Yaw Osafo-Maafo.

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The IMF officials who delivered the report were the Director in charge of African Development at the IMF, Mr Abebe Aemro Selassie; the Mission Chief for Ghana, Mrs Annalisa Fedelino, and the Division Chief in charge of the Regional Studies Division of the IMF, Papa M. Bagnick N’Diaye.

This year’s report focused on domestic revenue mobilisation and private investment.

Vice President Mahamudu Bawumia in a handshake with Mr Abebe Aemro Selassie, IMF Mission Chief for Ghana. With them include Mr Yaw Osafo-Maafo (2nd left), Senior Minister and Mr Ken Ofori-Atta (left), Minister of Finance. Picture: EMMANUEL QUAYE

More findings

The report identified domestic revenue mobilisation as one of the most pressing policy challenges facing sub-Saharan African countries.

“Nearly all countries are seeking to raise revenue to make progress towards their Sustainable Development Goals (SDGs), while preserving fiscal sustainability. Despite substantial progress in revenue mobilisation over the past two decades, sub-Saharan Africa is still the region with the lowest revenue-to-GDP ratio,” it said.

Regarding private investment, it said while public investment in the region was at a similar level to that in other regions of the world, private investment in sub-Saharan Africa lagged well below all other regions.

“Empirical work suggests that the strength of current and prospective economic activity plays a dominant role in driving private firms’ decision to invest,” it added.

However, the report said sub-Saharan Africa was set to enjoy a modest growth uptick, adding that the average growth rate in the region “is projected to rise from 2.8 per cent in 2017 to 3.4 per cent in 2018, with growth accelerating in about two-thirds of the countries in the region”.

Ghana’s focus

In his remarks, Dr Bawumia said the government was determined and focused on enhancing its domestic revenue mobilisation to drive home its economic transformational agenda.

For the region to attain its development goals, he said, there was the need for the mobilisation of domestic revenue to finance infrastructural development, adding that the Ghana Beyond Aid agenda sought to focus on that direction.

He said the government was ready to embark on reforms that would stimulate private sector growth and position it to contribute towards the country’s development growth.