Governor Addison urges IMF to increase concessional financing to African countries
Ghana’s central bank governor, Dr. Ernest Addison, has called for increased concessional financing for Africa from the International Monetary Fund (IMF). He urged the IMF to modify the access thresholds for concessional financing, including expanding access limits and relaxing eligibility criteria for the Poverty Reduction and Growth Trust (PRGT) resources. This, he believes, will ensure timely financing assistance to the continent’s most vulnerable members.
Dr. Addison made this call at the 2023 Africa Consultative Group Meeting with the Managing Director of the IMF, Kristalina Georgieva. He welcomed the Fund’s decision to temporarily raise the annual and cumulative limits in the General Resources Account (GRA) to 200% and 600% of quota respectively for a period of 12 months. Nevertheless, he emphasized the importance of aligning PRGT access limits with those of the GRA to enhance Fund support to PRGT-eligible members facing acute debt challenges, while strengthening the fundraising efforts to bolster the PRGT resource envelope.
The Governor also urged the IMF to continue close engagements with other international financial institutions and creditors to strengthen the multilateral framework for dealing with Africa’s debt distress in a timely manner. In this context, he said, “the G20 Common Framework (CF) should be enhanced to deliver swift, predictable, transparent, and equitable debt resolutions, while permitting debt service suspension during negotiation to offer instantaneous relief to debtors.”
Dr. Addison stressed that a protracted CF process undermines overall confidence and impacts the IMF’s catalytic role, in addition to its negative demonstration effect with new countries that are hesitant to request a CF debt treatment. He also underscored the need for the newly created Global Sovereign Debt Roundtable to remain focused on accelerating debt restructuring processes and making the G20 Common framework more efficient.
The Governor emphasized that tailored capacity development and surveillance support are indispensable in the continent’s reform agenda towards addressing debt challenges and creating fiscal space to tackle long-standing snags to sustained economic growth and development in member countries. He called on the IMF to continue to provide such support in conjunction with other international partners.
To address the fast-deteriorating debt dynamics in the continent, Dr. Addison stated that African countries should remain committed to pursuing credible fiscal consolidation anchored on efficient expenditure rationalization and robust domestic revenue mobilization measures. He believes this will help build buffers for critical social interventions and infrastructural development, while safeguarding medium-term debt sustainability.
The Governor advised African countries to recognize the need to prioritize efficient debt management practices, consolidate debt data in a centralized system, publish reliable, comprehensive, and timely debt information, and deepen domestic debt and capital markets to foster greater access to long-term finance.
Dr. Addison concluded that domestic policy efforts alone are inadequate to sustainably address the debt burden and restore macroeconomic stability in the continent. He emphasized that, given the current context of fragmented global financial safety nets, much stronger support is needed from the IMF to prevent the region’s debt levels from spiraling out of control.
