The International Monetary Fund (IMF) has raised concerns over the rising debt in Africa. Ms Kristalina Georgieva, IMF managing director told Bloomberg that about 40% of the countries in Africa are at distressed levels.
Pressure on governments to collect and grow revenue while at the same time increase budgets has resulted to the increasing debt levels. For instance, South Africa debt ratio forecast will be 81% of the Gross Domestic Product by 2028.
Kenya’s senate recently approved the amendment to the Public Finance Management Act, 2012 that seeks to raise the government’s debt ceiling to an absolute KShs9 trillion. During the Bloomberg interview, Ms Kristalina advised Kenya government to be cautious on building debt. She although appreciated Kenya’s good macroeconomic policies.
In Zambia’s case, the government’s debt is set to increase to 92% of the GDP this year and 96% in 2020.
She further advised that debt is bad when used for the wrong things and at a speed that the economy cannot handle. She insisted that Zambia needed to focus on how they handle debt and Ethiopia needed to renegotiate some of its debt.