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Ph: DR: The Lusaka workshop will develop a roadmap that will help countries better apply debt management techniques and implement required policies
African countries need to put in place effective debt management strategies to boost economic growth and avoid falling into the trap of over-indebtedness, urges Adam Elhiraika, Director of Macroeconomics and Governance Division, Economic Commission for Africa (ECA).
Opening a Peer Learning Workshop on Debt Management Strategies for Member States taking place in Lusaka, Zambia from 3-6 April 2023, Mr. Elhiraika said debt management is a challenge for African countries, as the said debt becomes an important source of financing for their economic growth and development.
“However, this situation presents an opportunity for countries to effectively adopt fiscal protection for various more apparent events in the foreseeable future,” says Mr. Elhiraika, adding that “effective and efficient debt management will enable debtor countries to take steps to avoid inheriting sovereign debt management and restructuring”.
ECA is organizing a capacity-building workshop for senior officials with the aim of improving fiscal prudence in countries. The said workshop aims to help delegates from Ethiopia, Sierra Leone, South Africa, Sudan and Zambia to share information, experiences and best practices on debt management strategies, policies and operations in the context of debt management. to implement viable debt management procedures and strategies.
Ph: DR: Adam Elhiraika, Director of Macroeconomic Policy Division at ECA
Elhiraika points out that over the past six decades, every global recession that has occurred has led to an increase in global public debt and over the past decade many African countries have seen their level of public debt increase. Most of the current public debt was accumulated in fiscal years 2020 and 2021, when countries took on debt to cope with the effects of the Covid-19 pandemic.
The ECA notes that in times of economic crisis, repeated borrowing has led to a large accumulation of debt and thus reduced the government’s ability to manage this public debt effectively. The debt overhang has been compounded by huge current account deficits, lengthy repayment schedules and lack of access to conventional credit markets. Countries often rely on debt as an instrument for financing growth and development.
During the workshop, delegates will present the current state of debt in their countries and highlight the main challenges that impede debt sustainability. In addition, they will discuss debt sustainability analysis procedures and medium-term management strategies and build the capacity of public debt managers to assess the structure, dynamics and risks of sovereign debt.
Sharing their experiences in debt management, Joseph A. Thullah and Mohamed Samura from the Public Debt Division of the Ministry of Finance, say that Sierra Leone has implemented a number of debt management strategies and risks such as debt swaps and buybacks to manage and reduce government refinancing risks. Sierra Leone continues to prioritize the mobilization of grants over loans and to ensure that new borrowing meets the concessionality threshold of at least 35% of the grant element.
Ethiopia implemented a medium-term debt management strategy (2016-2020) which helped it assess the cost and risk of borrowing and ensured debt sustainability.
Habtamu Alamayehu, Program Officer at Ethiopia’s Ministry of Finance, says that despite challenges, such as poor export performance, low Foreign Direct Investment (FDI) inflows and political stability, the country is considering opportunities for mobilizing additional external resources exclusively from concessional sources and Public-Private Partnerships (PPP).
The workshop will develop a roadmap that will help countries better apply debt management techniques and implement the required policies.
About ECA
Created in 1958 by the Economic and Social Council (ECOSOC) of the United Nations, ECA is one of the five regional commissions of the Institution and has the mandate to support the economic and social development of its member States, to encourage regional integration and promote international cooperation for Africa’s development. Comprised of 54 member states, the Economic Commission for Africa (ECA) plays a dual role as a regional body of the United Nations (UN) and as an integral part of the regional institutional landscape in Africa.
