The International Monetary Fund (IMF) has disclosed that 40% of African countries are in a position where they can’t afford to pay back their debts.
According to the Punch, the Managing Director of IMF, Kristanlina Georgieva identified that Africa has a place of numerous opportunities though plagued with insecurity and other social and economic problems.
“Africa is a continent of opportunities and what we are looking for is for this opportunity to be harnessed to the maximum. It is also a continent with many troubles; so, we have to be mindful of these risks especially security risks,” she said.
The IMF, whose goal in Africa is to help countries have sound macro-economic policies, improve the investment climate and show it to the rest of the world, has stated that the international body while optimistic about some of its investment, is also concerned about the debt stress levels on the continent.
“Are we worried about debt levels in Africa? Yes, because 40% of the countries have gone into debt distress levels. In some cases, we are concerned about that but in other cases, we see that investment is going to pay off over time.
“Take the case of Kenya, we advise Kenya to be more cautious in building debt but we have seen good macroeconomic policy in Kenya.
“In cases where debt is dangerous like Zambia, we do say you need to get a handle on your debt. In Ethiopia, we say you need to renegotiate some of your debts because it is non-concessional for things that should be on a concessional basis,” said Georgieva.
Meanwhile, the IMF boss emphasized on the sustainability of debt, stating that borrowing is not bad in its self and countries which experienced higher growth did it by borrowing for investments that could generate growth and also eliminating red tape for local and foreign investors.
“One has to remember that debt on its own is not bad. It is bad when it goes with the wrong things and when it goes with the speed that the economy cannot handle,” Georgieva said.
The IMF is reportedly going to have a meeting with African leaders in December to discuss the issue of sustainable debts.