President of the African Development Bank (AfDB), Akinwumi Adesina, and Professor Joseph E. Stiglitz who was recipient of the 2001 Nobel Memorial Prize in Economic Sciences, have called for a quick and comprehensive plan for debt restructuring in Africa.
Speaking during the official launch of the 2021 edition of the AfDB’s annual African Economic Outlook, Adesina told African governments that it is time to strongly consider building an African financial stability mechanism. According to him, this would give the continent the financial space it needs to holistically and effectively manage its collective debts which now stands at 70% of its overall Gross Domestic Product (GDP).
“It is high time that we set up a homegrown financial stability mechanism where we work together to mutualize our funds and ensure we avoid the spillover effects that come from global pandemics or any external shocks. We must start by making sure that we carry out the macroeconomic policy reforms and the fiscal policy reforms that we need to get done,” he said, adding that Africa “is not looking for a free pass. We are just looking for an equitable way in which Africa’s fiscal space gets dealt with,” Adesina said in a press statement that was seen by Business Elites Africa.
The same sentiment was echoed by Professor Stiglitz who was present at the event. According to him, “You need debt restructuring, and that needs to be really high on the international agenda. Every country has bankruptcy laws but there’s no bankruptcy law for international debt. When there’s too much debt, it’s as much the creditor’s problem as the debtor’s problem.
“What needs to be done with debt is comprehensive and quick restructuring. We don’t want to fall into the trap of doing too little, too late.” Stiglitz’s proposal calls for an international debt framework that includes the private sector, given its growing role as a source of government debt.”
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