BoG Governor calls for enhanced IMF support to tackle Africa’s fiscal challenges

In a recent address at the Africa Caucus Meeting, held alongside the 2024 IMF/World Bank Annual Meetings, Dr. Ernest Addison, Governor of the Bank of Ghana, appealed to the International Monetary Fund (IMF) and other global partners to increase support for Africa in tackling pressing fiscal challenges.

Speaking with IMF Managing Director Kristalina Georgieva, Dr. Addison underscored the need for a multifaceted approach, combining domestic reforms with enhanced international assistance to effectively address Africa’s economic issues.

“The continent faces numerous fiscal challenges,” Dr. Addison said, citing debt vulnerabilities, weak domestic revenue mobilisation, and restricted access to global capital markets—problems worsened by the pandemic, geopolitical tensions, and climate-related shocks.

The African Development Bank (AfDB) estimates Africa needs $170 billion annually for infrastructure, but the financing gap remains significant at $108 billion.

He noted that rising interest payments relative to revenue have constrained investments in essential services, leaving nearly half of Sub-Saharan African countries in high debt distress by the end of 2023.

Addressing these challenges requires a collaborative international approach, Dr. Addison emphasized, urging the IMF to keep its support flexible and responsive to country-specific needs.

“The IMF’s support should remain flexible, adapting to global conditions and country-specific needs while ensuring sufficient resources,” the BoG Governor said.

He advocated maintaining high concessionality within the Poverty Reduction and Growth Trust (PRGT) and warned against resuming interest charges on PRGT funds, stressing, “The timing for the resumption of charging interest rates on PRGT funds is inappropriate as most PRGT-eligible countries are still facing significant challenges.”

Highlighting Africa’s rising food insecurity, worsened by the recent expiration of the IMF’s Food Shock Window, Dr. Addison called for prompt emergency financing through the IMF’s Catastrophe Containment and Relief Trust (CCRT) and additional program support.

Dr. Addison further urged the IMF and World Bank to coordinate efforts in designing resilient fiscal policies tailored to Africa’s unique needs, ensuring that reforms do not disproportionately impact vulnerable populations.

He encouraged the IMF to leverage its convening power to secure additional concessional finance and collaborate with regional multilateral development banks (MDBs) in supporting debt restructuring for high-risk countries.

“Programs should account for regional specificities to ensure sustainable and impactful reforms,” he added.

Governor Addison called on the IMF to continue leading debt restructuring for heavily indebted countries, advocating for “swift, fair, and effective debt resolution” through or outside the G20 Common Framework.

He stressed the importance of private sector involvement in the debt resolution process and urged the Global Sovereign Debt Roundtable (GSDR) to explore innovative financing solutions, including blended finance and debt-for-climate swaps.

Such measures, he suggested, would help address Africa’s debt vulnerabilities and climate risks.