Many African countries today face unsustainable debt levels, largely due to borrowing to finance infrastructure and the economic impact of the Covid-19 pandemic.
On this subject, the Managing Director of the International Monetary Fund (IMF), Kristalina Georgieva, spoke in an interview with DW, on the sidelines of the Hamburg Conference on Sustainable Development. She detailed the measures taken by the IMF to support the African continent.
Interview :
DW: Many African countries are facing unsustainable debt levels, made worse by borrowing to build infrastructure and also because of the Covid-19 pandemic. How is the IMF tackling this growing debt crisis in Africa?
Kristalina Georgieva: We work very closely with African countries in three ways. First, we are a source of liquidity and reserves for them. We have provided an allocation of special drawing rights, which does not increase debt, but increases reserves and liquidity. We also provided financing on an exceptionally large scale during the COVID-19 pandemic to help countries meet their urgent needs — lending 16 times larger than usual.
Second, we work with countries to identify ways where debt is unsustainable and promote restructuring through the Common Framework as well as during the Global Sovereign Debt Roundtable (GSDR) discussions. So far, Chad, Ghana, Zambia, and now Ethiopia, have benefited from this debt restructuring.
Third, we are the only institution that has provided debt relief during COVID, around $1 billion for the 29 poorest members, the majority of whom are in Africa. But let me say this: our biggest role in helping Africa is to support its growth. Growth is the best way to beat debt.
DW: Speaking of the continent, sub-Saharan Africa has historically been underrepresented in international organizations. Is there a plan to give it a greater role in IMF governance?
Kristalina Georgieva: Yes, absolutely. On November 1, we will add an additional member from Sub-Saharan Africa to our governance body and Board of Directors. We do this because we believe Africa deserves fairer representation. We are also looking to recruit highly qualified African professionals. And especially women, they are fantastic in our teams.
DW: Will you announce here on Deutsche Welle who this IMF Board member will be?
Kristalina Georgieva: There were two seats for sub-Saharan Africa, and now African countries have organized themselves into three new constituencies. We will announce the results of the vote once it is completed.
DW: IMF programs often emphasize fiscal austerity, which can limit governments’ ability to invest in infrastructure and social services. How does the IMF ensure that its policies in Africa balance fiscal discipline, growth, job creation and poverty reduction?
Kristalina Georgieva: We pay very close attention to the budgetary conditions in our member states. For what ? Because fiscal and financial stability is a prerequisite for countries to do well. But when we do this, we always consider the appropriate balance between meeting today’s urgent needs and meeting budgetary constraints as well as medium-term fiscal sustainability.
In each of our countries, we study these compromises very carefully. When we make decisions, they are well thought out and approved by our members. I was very happy to hear one of the African Prime Ministers say this: “We saw the IMF as a very strict policeman. Now we see the IMF as a partner.”
Together, we are charting a more sustainable development path, and I want to emphasize again that our main goal is stability, not for stability’s sake, but as a prerequisite for growth and development.
DW: The IMF has been a strong pillar for many African countries. What final message do you want to send to them today?
Kristalina Georgieva: I think Africa has immense potential, both for its own people and for the whole world. We have a young population; we have a huge reservoir of talent, both in men and women, on which aging Europe and Asia actually depend. We see ourselves as a bridge. We are strengthening conditions and investments in Africa so that capital from the North can go where the workforce is dynamic and strong. My wish for Africa is to do well for itself and so that the rest of the world also benefits.
Edition : Kossivi Tiassou
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