• Continent’s debt to GDP ratio sees much increase in brief period
ADDIS ABABA – African countries must slash dependence on external financial aid and need to commit more and more financial contribution if the continent is to have a leading role in managing its internal conflicts, says Carlos Lopes, former Executive Secretary of the United Nations Economic Commission for Africa (UNECA).
In an exclusive interview with The Ethiopian Herald, Lopes said that Africa will be highly dependent on the perspectives and desires of donors on the way it deals with conflicts if it is dependent on external donations. Member countries should be committing their finance if Africa is to have a much more prominent role in conflict management.
The African Union has been dependent on donors’ contribution, but the dependence has been diminishing since the AU reform begun, there has been a 20-percent reduction in the budget with African countries contributing more finance.
Countries are becoming more and more enthusiastic with the ides of African solutions of Africans problems, and it needs to be accompanied by African money, Lopes added.
“The issue of debt is a matter of concern that Africa’s debt to GDP ratio increased from 20 to 50 percent in the last ten years. That is a big increase in a very short period.
If we increase our debt, we are about to increase returns by cutting other investments and social programs. This is a demonstration of a lack of fiscal capacity on the part of the African economy. “
Lopes stated that Africa is; however, doing better than the rest parts of the world because other regions’ debt to GDP ratio is much higher than in Africa. It is only the Gulf that has a lower debt to GDP ratio than Africa.
In the last few years, there has been a lot of problem and Africa has not been growing at the same pace as before. This year, according to IMF, out of 30 economies in the world with the highest growth, 16 are African countries.
Lopes said: “The Continent is facing two situations, one group of countries is very much affected with commodity prices and their economies are not doing well. And, we have another group of countries experiencing high growth because of transformation, and they are not important commodity importers.”
The Ethiopian Herald February 14/2020
BY DESTA GEBREHIWOT
