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IMF chief, Kristalina Georgieva, ‘concern’ over public debt in East Africa. Here’s why

Published

2 years ago

February 11, 2023

The International Monetary Fund is concerned over the state of public debt in some Middle East and North Africa (MENA) states.

The international lender said public debt in the countries is of “concern” and that governments need to build resilience through fiscal policies to protect against shocks in uncertain times.

IMF Chief, Kristalina Georgieva, while speaking at the Arab Fiscal Forum in Dubai, urged authorities to adopt “robust” fiscal frameworks and address climate change.

The IMF forecast last month that economic growth in MENA would slow to 3.2% this year, before ticking up to 3.5% in 2024. Inflation was seen to surpass 10% in 2023, according to a full copy of Georgieva’s speech published by the IMF.

“Public debt is a concern, especially in countries that are oil importers and that is an issue we will continue to be working on,” she told the forum, adding that inflation in the region was “far too high still”.

“We need at least 15% for tax policies to be sustainable. I would argue that we need more… that there is space to double tax revenues,” Georgieva said.

The state of public debt in many African countries has hit the roof, thus warranting IMF’s intervention. Specifically, in East Africa, Uganda’s central bank recently revealed that domestic revenue for debt servicing rose to 30% in the year to October from 24% in the same period two years earlier.

Georgieva further revealed that he region needs to boost its average tax-to-GDP ratio to at least 15% from a current 11%.

Related Topics:East Africa Featured Kristalina Georgieva

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IMF mission concludes 4th loan program assessment in Egypt

Published

3 days ago

November 22, 2024

Ifeoluwa Dada

Following the completion of a recent visit to Egypt, the International Monetary Fund (IMF) has announced that its mission had achieved significant strides in policy talks aimed at concluding the fourth review of the IMF loan program.

The review is the fourth in Egypt’s most recent 46-month IMF loan program, which was authorised in 2022 and increased to $8 billion this year following an economic crisis characterised by high inflation and chronic foreign exchange shortages. It may unleash more than $1.2 billion in financing.

Along with reaffirming its commitment to maintain a flexible exchange rate system, the IMF stated that Egypt “has implemented key reforms to preserve macroeconomic stability,” including the unification of the currency rate that facilitated imports.

Earlier on Wednesday, Egypt’s Prime Minister Mostafa Madbouly said Cairo has asked the IMF to modify the targets for the programme not only for this year, but for its full duration, he added without giving more details.

“Discussions will continue over the coming days to finalize agreement on the remaining policies and reforms that could support the completion of the fourth review,” the IMF added in its statement.

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Kenya seeks $750m from World Bank, obtains $200m from AfDB— Official

Published

5 days ago

November 20, 2024

Ifeoluwa Dada

The head of debt management for the finance ministry told Reuters that Kenya had obtained a $200 million loan from the African Development Bank (AfDB) and was negotiating a fresh $750 million loan with the World Bank.

After being forced to abandon proposed tax rises costing more than 346 billion shillings ($2.68 billion) in June due to fatal demonstrations, the East African nation’s administration, which has been grappling with significant debt, has been frantically seeking fresh funding.

The Finance Ministry’s public debt management office director general, Raphael Owino, told Reuters that the IMF’s October clearance of the seventh and eighth reviews, which opened the door for a $606 million loan tranche, had aided the ministry’s talks for more loans.

“The World Bank is coming on board, riding on the back of IMF receipts,” Owino said. “The AfDB is already on board.”

The discussions for more assistance, which came under the World Bank’s “Development Policy Operations” (DPO) with the government, were confirmed by a representative at the organization’s Kenya office.

“The amount of the current (loan) is yet to be determined. The amount will also depend on the implementation of the policy reforms agreed upon,” the spokesperson told Reuters, adding that past DPO loans averaged about $750 million.

In May, the World Bank approved the latest round of DPO loans, totalling $1.2 billion.

According to a statement made last month by Finance Minister John Mbadi, Kenya has set a foreign borrowing goal of 168 billion shillings for the fiscal year ending in June 2025.