African countries should institute effective debt management strategies to boost economic growth and avoid falling into the debt trap, a United Nations Economic for Africa (UNECA) official has warned.
African countries rely on debt as a significant source of funding for their economic growth and development amid challenges to properly manage it, UNECA Director for Macroeconomics and Governance Division, said Adam Elhiraika while opening a workshop on debt management strategies in Lusaka, Zambia, according to a statement issued by UNECA on Tuesday.
“Efficient and effective debt management will allow debtor countries to take action to avoid the legacy of ‘too little, too late’ sovereign debt management and restructuring,” said Elhiraika.
The workshop is to assist delegates from Ethiopia, Sierra Leone, South Africa, Sudan and Zambia share information, experiences and best practices on debt management strategies, policies and operations to enable them to implement viable debt management procedures and strategies.
Elhiraika said in the past six decades, every global recession has led to a rise in global government debt and over the past decade, many countries in Africa have increased their public debt levels.
“Most of the current public debt was accrued during the fiscal years of 2020 and 2021, when countries took on debt to deal with the effects of the COVID-19 pandemic,” he said.
In an information note, ECA said that continued borrowing has led to high debt accumulation; dwindling capacity of governments to effectively manage public debt during the past economic crisis.
“Debt distress has been aggravated by huge current account deficits, massive redemption schedules, and lack of access to conventional lending markets. Countries often rely on debt as an instrument for financing growth and development,” it said.
The delegates are presenting the current state of debt in their respective countries, highlighting the key challenges hampering debt sustainability and finding possible ways to enhance the capacity of public debt managers.
MG/abj/APA