ADDIS ABABA, Aug. 1 (Xinhua) -- The UN Economic Commission for Africa (ECA) on Thursday stressed that current concerns regarding Africa's rising sovereign debt should not focus much about its level, rather the ability to pay for it.
The remark was made by ECA Executive Secretary Vera Songwe as she urged the central bank governors of African countries that "managing debt dynamics well is all about implementing good fiscal policy, which in turn is linked to effective monetary policy."
"Concerns around Africa's rising sovereign debt should not focus so much about its level, but rather the ability to pay for it," an ECA statement issued on Thursday quoted Songwe as saying.
"When we talk about increasing Africa's sovereign debt, immediately people worry that we're overspending," the ECA chief said, adding "But it is not only about the level of debt but about the capacity to pay."
Songwe, while emphasizing the need to establish the national capacity to pay debts towards managing debt dynamics rather than the level of debt, also described Rwanda as an example of "fiscal prudence" regarding the current narrative of debt in Africa.
Songwe also stressed that the current "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."
The ECA estimates that Africa needs as much as 638 billion U.S. dollars every year to meet its development goals, while for the funds needed to implement the global 2030 development agenda across all low- and lower-middle-income countries totals 1.2 trillion U.S. dollars on annual basis.
"When you have poor fiscal management, increasing the debt threshold is not a solution," the ECA executive secretary stressed.
The ECA, in its recently published Economic Report on Africa 2019, had also urged African countries to adopt appropriate fiscal policies so as to address the financing gap.
It also recommended African countries to develop strategies such as improving the mobilization of non-tax revenue, leveraging the use of information technology and digitization, as well as strengthening policies that tackle tax avoidance and tax evasion.
Amid urging African countries to effectively manage debt dynamics so as to efficiently finance major global and continental development aspirations, the ECA had also recently organized a high-level meeting of African Central Bank Governors in Kigali, capital of Rwanda.
The meeting of African Central Banks Association, which was held on Wednesday in Kigali under the theme "Rising African Sovereign Debt: Implications for Monetary Policy and Financial Stability," concluded that "there is a negative link between increasing public debt irresponsibly and sustainable growth," according to the ECA. Enditem
