President Cyril Ramaphosa has received the G20 Africa Expert Panel Report aimed at dealing with the continent’s most pressing economic challenges, including country debt and investment.
Earlier this year, National Treasury noted that the continent is faced with an “unprecedented debt crisis” with countries expected to pay nearly $89 billion in external debt service this year, added to some 20 countries facing debt distress.
This led to the formation of a 26-member strong, expert panel with South African former Finance Minister Trevor Manuel as chairperson.
In written remarks for the handover of the report, President Cyril Ramaphosa warned that the question of debt puts the development of the continent at risk.
“If we do not address the debt burden facing many African countries, we risk a lost decade for development in Africa and other regions of the world. That is why South Africa has made debt sustainability a high-level priority of our G20 Presidency.
“The Ministerial Declaration on Debt, agreed by G20 member countries last month, acknowledges the importance of the debt and development challenge and provides a basis for further concrete action to be taken. The report of the Africa Expert Panel puts forward clear and specific proposals that build on the commitments outlined in the declaration,” the President said on Tuesday.
He noted that the report highlights the high cost of capital that African countries face, raising the borrowing costs and limiting equity investment on the continent.
“To reduce the cost of capital, we need to mobilise significantly more concessional funding from multilateral development banks and African trade and finance institutions.
“We need to address biased risk perceptions of Africa by mandating greater transparency and accountability from credit rating agencies,” he asserted.
The report contains recommendations on debt, including:
• Launching a new G20 debt refinancing initiative for low-income and vulnerable countries with contributions from the official sector.
• Establishing a Borrowers’ Club to strengthen the collective voice of borrowers and coordinate peer learning, technical assistance, and research. Convene African Finance Ministers to take this agenda forward and host the launch of the borrowers’ platform.
• Building a multilateral sovereign debt resolution mechanism that is transparent, timely, and effective.
• Assisting developing countries to strengthen debt transparency, build systems for the automatic exchange of information between debtors and creditors, and ensure that creditors participate in the reconciliation of debt data.
• Improving debt sustainability analysis to better distinguish between liquidity and solvency issues, account for heterogeneous external and domestic debt, and reflect sovereign net worth.
On accelerating investments in Africa, the recommendations include:
• Defining and developing national growth programs and national and regional investment frameworks to drive economic transformation and identify critical investments, supported by robust data and governance.
• Accelerating implementation of the African Continental Free Trade Agreement (AfCFTA) as a core platform for African integration and investment.
• Improving the regulation of Credit Rating Agencies by ensuring full disclosure of rating assessment data and reforming their methodologies that recognise economic diversity and avoid procyclical rating actions.
“Together, the actions they propose can create an investment boom in Africa. South Africa will take these proposals forward, not only in the G20, but in other international fora, working closely with the African Union and other partners.
“This report adds significant impetus to our collective effort to ensure that Africa mobilises the resources that it needs to develop and to grow,” President Ramaphosa concluded. – SAnews.gov.za
