BRIAN LIGOMEKA, Grahamstown | Wednesday
AFRICA’S growing debt burden is largely due to poor or corrupt political leadership and reckless economic management, the International Monetary Fund (IMF) said this week.
IMF programme co-ordinator for southern Africa, El Tigani Ibrahim, said increasing numbers of African countries were struggling to service debt repayments because their political leaders had mismanaged the economy.
“Poor political leadership in many impoverished nations, coupled with poor public sector management and at times poor project selection by donors, has resulted in much of foreign borrowing being squandered,” said Ibrahim.
Speaking at a Reuters Foundation economic briefing in Grahamstown, Ibrahim said African politicians often lived beyond their means, allowing high trade and budget deficits without encouraging savings to cushion their economies from external shocks.
Ibrahim, who is also the IMF’s resident representative for South Africa, added that all countries seeking assistance from international funding bodies such as the IMF had mismanaged their economies.
“All countries struggling with debt burdens or seeking IMF support have failed to play their cards right in one way or another,” he said.
“Some poor countries resort to new borrowing simply to service their debts. Funds for new investment become scarce as a result, economic growth slows and debt dynamics are [derailed] and become unsustainable.”
He called on African leaders to act more like statesmen and begin admitting and addressing inherent weaknesses or failings in their economies instead of “blustering” through crises.
Ibrahim added that the IMF and World Bank heavily-indebted poor countries (HIPC) initiative was beginning to deliver dividends with 13 of 41 eligible countries having qualified for debt relief after successfully restructuring their economies and curtailing government spending.
Another seven African countries, amongst the poorest in the world, will qualify for HIPC funding by year-end.
Ibrahim also warned the South Africa should urgently attempt to address the disparity between the country’s privileged rich and massive poor underclass but cautioned President Thabo Mbeki against using international loans to do so.
“South Africa’s domestic financial reserves are large enough for the government to tap without risking external debt,” he said. – African Eye News Service