Governor of the Bank of Ghana, Dr. Ernest Addison, recently spoke at the IMF-African Caucus Meeting at the World Bank/IMF Meetings in Marrakech, Morocco, where he emphasised the importance of strengthening multilateral coordination and regulatory efficiency for sovereign debt resolution in low-income countries (LICs) through the creation of a robust Global Sovereign Debt Roundtable (GSDR).
Governor Addison also highlighted the need for revamping the G20 Common Framework (CF) to ensure a more timely, orderly, equitable, inclusive and transparent debt restructuring process for distressed nations in the region, including Ghana, Ethiopia and Malawi.
Public debt in sub-Saharan Africa (SSA) has now reached levels not seen since the early 2000s, placing a significant burden on regional countries.
Dr. Addison called on the Fund to relax the PRGT eligibility criteria, making it easier for vulnerable PRGT-eligible members to receive support; and suggested reducing, suspending or entirely eliminating surcharges for these members.
Governor Addison presented several recommendations for consideration: including the IMF adapting its lending toolkits to changing global conditions; and aligning PRGT access thresholds with those of the GRA to ensure uniformity of treatment.
Additionally, he emphasised the importance of deepening the Fund’s tailored capacity development and surveillance support in collaboration with other international partners, to address member-specific bottlenecks and restore public debt sustainability.
These recommendations come at a critical time, when over half of SSA members are at high risk of debt distress and the region’s economic growth is projected to further decelerate in 2023.
Calls for a stronger GSDR and enhanced cooperation between the IMF, MDBs and RDBs also reflect the urgency of addressing the current global economic challenges which impact low-income countries.
Risks to the world economy remain skewed to the downside, as elevated inflation means central banks may have to keep interest rates higher – in a way that stretches the capacity of borrowers to repay debt, according to the IMF’s latest Global Financial Stability Report.
Central banks have unleashed the steepest series of interest-rate increases in decades during their two-year drive to tame inflation – and may not be done yet.
Making debt more expensive is an intended consequence of tightening monetary policy to contain inflation, according to Tobias Adrian – the IMF’s financial counsellor and director of the Monetary and Capital Markets Department.
