Mozambique’s Deputy Minister of Economy and Finance, Amílcar Tivane, said on Thursday 12 October that the growth of debt has “a catastrophic effect” in Africa, stressing that innovative mechanisms need to be adopted to free up more special drawing rights for developing countries.
“In addition to rising interest rates, which make financing more expensive, African countries have to absorb the shock caused by the conflict in Ukraine, which has adverse consequences for importers of fossil fuels and cereals. So we’re in a context where there isn’t enough margin to cushion the shocks, and we’re in a situation of vulnerability associated with debt servicing, which is having a catastrophic effect,” he explained.
Quoted by Lusa, in an interview on the sidelines of the IMF and World Bank Annual Meetings taking place in Marrakech, Amílcar Tivane emphasised that debt growth is currently absorbing a significant amount of fiscal space, stressing that “countries are not having the capacity to create fiscal cushions to cushion shocks and meet development spending”.
“We need to rethink and create a creative international financial architecture with innovative mechanisms that include freeing up more special drawing rights for developing countries, as well as investing in green finance and working to improve the macroeconomic scenario,” he clarified.
Taking place over seven days (9 to 15 October) in the city of Marrakech, Morocco, the Annual Meetings of the World Bank (WB) and the International Monetary Fund (IMF) have the central theme of “Global Action, Global Impact”.
The event brings together finance and development ministers, central bank governors, international organisations, private sector executives, representatives of civil society organisations and academics to discuss issues related to concessional financing, as well as options for dealing with growing debt vulnerabilities and the process of restructuring them.