The Managing Director of the International Monetary Fund, Kristalina Georgieva, says 40 per cent of African countries are in debt distress.
She described Africa as a continent of opportunities and one with many troubles, noting that the focus was to help countries have sound macro-economic policies, improve the investment climate and show it to the rest of the world.
“Africa is a continent of opportunities and what we are looking for is for this opportunity to be harnessed to the maximum. It is also a continent with many troubles; so, we have to be mindful of these risks especially security risks,” she said.
Commenting on the debt levels of countries, the newly appointed IMF MD said, “Are we worried about debt levels in Africa? Yes, because 40 per cent of the countries have gone into debt distress levels.
“In some cases, we are concerned about that but in other cases, we see that investment is going to pay off over time.
“Take the case of Kenya, we advise Kenya to be more cautious in building debt but we have seen good macroeconomic policy in Kenya.
“In cases where debt is dangerous like Zambia, we do say you need to get a handle on your debt. In Ethiopia, we say you need to renegotiate some of your debts because it is non-concessional for things that should be on a concessional basis.
“One has to remember that debt on its own is not bad. It is bad when it goes with the wrong things and when it goes with the speed that the economy cannot handle.”
Georgieva said countries that were experiencing higher growth rate had done so by borrowing for investments that could generate growth and eliminating red tape for local and foreign investors.
She said the IMF would hold a ‘concentrated’ meeting with African leaders in December to discuss debt sustainability.
Source: The Cable