African Debt advocates demand urgent reforms of the financial global system

THE African Forum and Network on Debt and Development (AFRODAD) and partners have demanded for an urgent reform of the global financial system, stating that available debt relief initiatives have failed as they create room for more borrowing.

According to the activities, the mounting debt trends is clear evidence that debt relief such as the Heavily Indebted Poor Countries and Multilateral Debt Relief Initiatives (HIPC/ MDR), the Debt Service Suspension Initiative (DSSI), the 2021 Special Drawing Rights (SDRs) issuance and currently the G20 Common Framework had failed as they created room for more borrowing.

They noted in a joint statement at the just ended Spring Meetings by the International Monetary Fund (IMF) and World Bank that beneficiary countries performed poorly in development terms, compared to non-debt relief countries despite accessing debt treatment.

The group cited that debt to Gross Domestic Product (GDP) ratio averaged 198 percent in Sudan, and over 100 percent in the Democratic Republic of Congo, Mozambique and Zambia.

"This is the time for Africa to vehemently push back against the IMF World bank policies that do not prioritise people and against creditors who lend irresponsibly with no respect to the duty of care to the borrower.

"If the IMF & World Bank are truly concerned about improving African’s lives, they must first acknowledge that they are at the heart of increasing debt, economic dependency and poverty in the continent and therefore welcome their restructuring to become fit for purpose," the statement indicated.

It noted that countries such as Chad, Ethiopia, Ghana, and Zambia applied for G20 restructuring, but they continued to struggle with a slow process that had negatively affected their credit rating and had not given them a sustainable solution to their debt situation.

"Zambia reached a restructuring agreement with its official creditors, which is commendable but while debt relief or restructuring is necessary to create fiscal space, solutions for the long term should focus on structural policy reforms linked to the concerns on the financial architecture.