The Conference of Ministers of the Economic Commission for Africa (ECA) has expressed concern over the rising debt profile of many African nations, saying it limits growth, trade and commerce.
According to the body, recent statistics from the World Bank reveal that 57 per cent of African governments allocate more funds to debt servicing than healthcare while 17 per cent allocate more to debt servicing than education, a situation they described as a threat to development.
They admitted that developing countries are currently facing numerous challenges, including the impacts of the COVID-19 pandemic, ongoing war in Europe and the global economic crisis.
These challenges are further compounded by the escalating economic costs of climate change.
As a result, the ratio of public debt to GDP has risen in developing countries, jeopardising the achievement of the Sustainable Development Goals (SDGs).
To address this, ECA, under the Sustainable Debt Coalition said it is looking to foster collaboration between creditors and borrowing nations, with a focus on sustainability and debt management.
The coalition’s objectives include reducing debt costs, expanding access to sovereign debt guarantees and blended finance, and creating fiscal space for investments with positive environmental outcomes.
Others are including debtor-defined key performance indicators, sustainable budgeting approaches, mechanisms for automatic debt suspension during climatic events, sovereign debt guarantees, debt relief steps and governance reform in international financial institutions.
At a roundtable discussion, the coalition is also looking to present actionable recommendations on the theme of debt and climate change; recommendations which were endorsed by the 55th Conference of Ministers of ECA earlier this year.
