The Bank of Ghana is advocating an upgrade in the lending framework of the International Monetary Fund.
This, according to the Governor of the Central Bank, Dr. Ernest Addison, will go a long way to help boost African countries’ access to the Fund’s resources.
Addressing the 2023 Africa Consultative Group meeting in Washington DC, Governor of the Central Bank, Dr. Ernest Addison also urged the Fund, “to consider increasing concessional financing to the continent by modifying the access thresholds, including expanding access limits and relaxing eligibility criteria for PRGT resources.”
“This will ensure timely financing assistance to most vulnerable members. It is in this context we welcome the Fund’s decision to temporarily raise the annual and cumulative limits in the General Resources Account (GRA) to 200 percent and 600 percent of quota respectively for a period of 12 months.
Nevertheless, we underscore 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,” he said.
The Governor also urged the Fund 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”.
According to him, a protracted CF process undermines overall confidence and impacts IMF’s catalytic role, in addition to its negative demonstration effect with new countries that are hesitant to request a CF debt treatment.
“We also underscore 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”, he mentioned.
The Governor also called on the Fund to continue to provide tailored capacity development and surveillance support, in conjunction with other international partners, which 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.
African countries urged to commit to sustainable fiscal consolidation measures
To address the fast-deteriorating debt dynamics on the continent, Dr. Ernest Addison urged African countries to remain committed to pursuing credible fiscal consolidation, anchored on efficient expenditure rationalization and robust domestic revenue mobilization measures.
“This will help build buffers for critical social interventions and infrastructural development, while safeguarding medium-term debt sustainability. To boost fiscal resilience, members are undertaking measures to improve public financial and investment management, enhance fiscal transparency and governance, address corruption risks, and progressively phase out untargeted subsidies,” he said.
He further said, African countries must 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.