Debt sustainability essential for meeting the SDGs in Africa

Abstract

The ECA Executive Secretary, Vera Songwe, told African Central Bank Governors that concerns around Africa’s rising sovereign debt should not focus so much about its level, but rather the ability to pay for it. Elaborating on this point, she stressed that managing debt dynamics well is all about implementing good fiscal policy, which in turn is linked to effective monetary policy. Just a decade away from the Sustainable Development Goals endpoint, economic growth on the continent is still far below the required levels. This period of relatively easy access to capital, due to the prevailing low-interest rates in high-income countries, had not necessarily translated into additional growth for African countries, she stressed. To address Africa's financing gap, the recent ECA Economic Report on Africa 2019 urges countries to adopt appropriate fiscal policies, recommending strategies such as improving the mobilization of non-tax revenue, leveraging the use of information technology and digitization, and strengthening policies that tackle tax avoidance and tax evasion. Central bank Governors meeting in Kigali concurred that there is a negative link between increasing public debt irresponsibly and sustainable growth. They asserted that debt repayment could hinder the future ability of some governments to fund development of expenditure.