The Economic Commission for Africa (ECA), has urged African countries to institute effective debt management strategies to boost economic growth and avoid falling into debt trap.
The Director, MACROECONOMICS, and Governance Division, ECA, Adam Elhiraika, in a statement said debt management was a challenge for countries on the continent.
Speaking during a peer learning workshop on debt management strategies for member states in Lusaka, Zambia, Elhiraika said debt had become a significant source of funding for economic growth and development.
“This provides an opportunity to effectively enact budgetary protection for various events more apparent in the foreseeable future.
“Efficient and effective debt management will allow debtor countries to take action to avoid the legacy of ‘too little, too late’ sovereign debt management and restructuring,’’ he said.
The director said the ECA would be hosting a capacity building workshop for senior government officials in an effort to enhance countries’ fiscal prudence.
Elhiraika said in the past six decades, every global recession led to a rise in global government debt and over the past decade, many countries in Africa increased their public debt levels.
He said most of the current public debt was accrued during the fiscal years of 2020 and 2021, when countries took on debt to deal with the effects of the COVID-19 pandemic.
“The ECA notes that during an economic crisis, continued borrowing has led to high debt accumulation, dwindling the government’s capacity to effectively manage public debt.
“Debt distress has been aggravated by huge current account deficits, massive redemption schedules, and lack of access to conventional lending markets.
“During the workshop, delegates will present the current state of debt in their countries and highlight the key challenges hampering debt sustainability.
“They will also discuss debt sustainability analysis procedures and medium-term management strategies and enhance the capacity of public debt managers to evaluate the structure, dynamics, and risks of sovereign debt portfolios,’’ he said.
Some stakeholders at the learning workshop shared their country’s experiences with debt management.
The workshop is expected to develop a roadmap that will support countries to better apply debt management techniques and implement requisite policies.
