The COVID-19 crisis has resulted in many challenges for public debt management offices across Africa.
Prior to the outbreak of the global pandemic, public debt and service costs in Sub-Sahara Africa (SSA) – both external and domestic – has been rising since 2012. Contingent liabilities and the bailouts of State-Owned Enterprises has led to situations of debt distress in many countries. With the advent of the COVID-19 pandemic, African governments have been forced to take extraordinary measures that include: the reprioritisation of budgets and higher borrowing requirements. Although raising debt levels, has constrained the ability of governments to respond appropriately to the pandemic, several countries have successfully accessed IMF and World Bank emergency funding to address the social and economic impact of the pandemic.
Building on the African dialogue at the Kampala conference in February 2020, where public debt managers, senior officials and different stakeholders from 18 Africa countries, prior to COVID-19, have met, to untangle the complexity facing sovereign borrowers in Sub-Saharan Africa (SSA), in finding affordable financing for national development plans. It was clear that raising debt levels in Africa are rooted in revenue collecting challenges, a temptation of irresponsible lending and lack of capacity within the public debt offices. To deal with higher debt levels, participants agreed that raising debt levels should be firmly on the political and policy agenda across SSA and internationally. As a follow-on from Kampala, the Government of Uganda, CABRI and ODI arranged a virtual workshop, with public debt managers on 20 May 2020 to share their experiences and concerns in addressing the additionally challenges COVID-19 has posed to an already vulnerable debt distress situation.
Collaborating and sharing of experiences, amongst public debt managers, is critical in formulating an effective response to COVID 19 and lessen the debt burden for governments, not only in the short term, but more importantly the longer-term impact on debt sustainability in Africa.