The International Monetary Fund (IMF) on Wednesday warned African countries that their increasing levels of debt and failure to service their public debts was creating poverty for its citizens.
Montfort Mlachila, senior resident representative for IMF in South Africa, said that countries like Zimbabwe, Eritrea, and Mozambique were facing worrying levels of debt and as the IMF they were concerned about the situation in these countries.
“One of the key challenges African countries face is the rapid increase in public debt levels, which in turn mean that they are spending more and more money on servicing the debt at the expense of more socially and economically useful activities such as investment in infrastructure,” Mlachila said.
There is a need for countries to create the necessary fiscus space notably by increasing the domestic resource mobilisation. This entails, broadening their tax base so that they can capture a lot more revenues that are needed to address this challenge. Additionally, governments need to make better investments so as to save money which is wasted due to bad management.
Mlachila made this speech during the last day of the Infrastructure Africa Business Investment Forum in Sandton. If African countries did not find “creative ways” of managing their debt, they would prolong their poverty levels.
Mozambique, Zambia, Eritrea and Zimbabwe are among some African countries facing problems because a lot of the debt has become unsustainable and they will need to restructure the debt so that they can create the fiscal space to invest more in infrastructure.
-African News Agency (ANA)