Africa can tap into new sources of finance – IMF

The International Monetary Fund (IMF) says Africa could tap into new sources of finance with radical transparency. Managing Director, IMF, Ms Kristalina Georgieva made the remark during a High Level Knowledge Event of the virtual 2021 Annual Meetings of the African Development Bank (AfDB). Georgieva said that the pandemic was an opportunity for transformative reforms to improve public services, strengthen governance and boost domestic revenue mobilisation. “Think of how digitalisation can improve tax administration and revenue collection and the quality of public spending.

“With radical transparency, Africa can tap into new sources of finance, such as carbon offsets and there is room to encourage more private investment in social and physical infrastructure, “she said. The IMF managing director recalled the membership’s backing of an unprecedented new allocation of Special Drawing Rights (SDRs) of 650 billion dollars. According to her, once approved, hopefully by the end of August, the bank would directly and immediately make about 33 billion U. S. Dollars available to its African members. She said it would boost members’ reserves and liquidity, without adding to their debt burden and also help address their emergency needs, including vaccines. Earlier, Dr Akinwumi Adesina, President of the AfDB, commended the IMF and the G20 for the positive efforts to address the debt situation.

This, he said, included the initiatives such as the Debt Service Suspension Initiative (DSSI) and the G20 Common framework. Adesina said the bank had the opportunity to tackle Africa’s debt challenges, more decisively, with the recent decision by the IMF to issue 650 billion SDRs. The AfDB president expressed delight at the agreement of the African Heads of State and global leaders, at the summit on Financing of African Economies, to provide 100 billion U. S Dollars of the SDRs to support Africa. He, however, emphasised the need to utilise the SDRs in direct financing to Africa. “To use the Special Drawing Rights, we need new lenses, we need new approaches, for these are extraordinary times. These SDRs should also be used to direct financing to Africa, through the African Development Bank – a prescribed holder of SDRs – to on-lend to African public development banks, to support green, climate-resilient and inclusive recovery, and the stabilisation of the economies.

“Let me be very clear: Africa is not looking for a free pass,” Adesina said. The AfDB president further stressed that debt resolution must be reinforced by stronger economic governance, public financial management, better and transparent management of Africa’s natural resources and mobilisation of domestic resources. He urged African leaders not to let the pandemic mask the gains that the continent had made along the way. “We must sustain those gains, and do even more to help Africa get back on a faster recovery pathway,” Adesina said. The 2021 Annual Meetings of the AfDB Group is holding from June 23 to June 25 with the theme: “Building Resilient Economies in Post COVID-19  Africa.” (NAN)