The Governor of the Bank of Ghana (BoG), Dr Ernest Addison, has underscored the need to revamp the G20 Common Framework to ensure timely, orderly, equitable, inclusive, and transparent debt restructuring for distressed members, such as Ghana.
“In this regard, we call for a carefully designed debt resolution mechanism, especially for vulnerable members with large domestic creditors (as in the case of Ghana) to help avert domestic financial market instability,” he stated at the on-going World Bank/ International Monetary Fund meeting underway in Marrakech, Morocco.
Speaking on the topic “Making Public Debt Useful for Sustainable Growth in Africa”, Dr Addison, who spoke on behalf of his fellow Governors, called for multilateral debt cancellation for vulnerable countries facing acute debt challenges.
Dr Addison said African economies were faced with acute debt challenges underscored by rising social and infrastructural needs, amid spillovers from issues of the COVID-19 and the tightening of global financing conditions, saying Public debt in Sub-Saharan Africa (SSA) had now reached levels last seen in the early 2000s.
“The resultant increased debt service burden, together with complex creditor composition, has heightened risks to debt sustainability to the extent that more than half of the SSA members are now in or at high risk of debt distress. Simultaneously, protracted high inflation has constricted the policy space, posing difficult policy trade-offs for many members in the region,” Dr Addison stated.
He said the challenging environment had led to another year of moderated pace of economic recovery in SSA, stressing that SSA growth was projected to further decelerate in 2023.
The World Bank noted that SSA growth was projected to slow to 2.5 percent in 2023 from
3.6 percent in 2022, due to rising conflict and violence across the region.
Dr Addison said SSA countries remained committed to implementing relevant policies and reforms towards enhancing fiscal discipline with the aim of restoring debt sustainability and fostering inclusive and sustainable growth in the continent.”
Given the fragmented global financial architecture, the Governor said the IMF should be steadfast and adapt its lending toolkits to changing global conditions to serve its vulnerable membership better.
“In this context, we restate our earlier request for increased concessional financing by aligning Poverty Reduction and Growth Trust (PRGT) access thresholds with those of the General Resource Account to ensure uniformity of treatment,” he stated.
He called on the Fund to relax the PRGT eligibility criteria to foster access to adequate Fund support while reducing, suspending, or eliminating entirely surcharges for most vulnerable PRGT-eligible members facing acute debt challenges.
Dr Addison appealed for additional pledges from willing donors to close the gaps in PRGT resources, and said strengthening multilateral coordination and efficiency of the regulatory framework for debt resolution in low-income countries, through a formidable Global Sovereign Debt Roundtable (GSDR), was paramount.
