This new policy mainly targets beneficiaries of the African Development Fundthe Bank Group’s concessional lending window
The Group’s Board of Directors African development bank approved a new policy aimed at strengthening the debt sustainability of low-income African countries. It gave its consent to the Sustainable Borrowing Policy on February 23, 2022.
This new policy mainly targets beneficiaries of the African Development Fund, the Bank Group’s concessional lending window. the African Development Fund targets low-income and transition countries on the continent.
The Sustainable Borrowing Policy responds to the changing overall debt situation in Africa, particularly in the countries mentioned above. In recent years, low-income countries have been able to access new sources of financing, including private creditors and creditors outside the country. betting club. While this access has allowed them to finance important development needs, it has also increased their public debt.
The Covid-19 pandemic has weighed heavily on public finances. The situation has worsened due to the unprecedented easing of fiscal and monetary policy adopted by countries to cushion the socio-economic impacts of the pandemic.
According to the 2021 edition of the African Economic Outlook, governments announced fiscal stimulus packages following the Covid-19 outbreak in 2020 of regarding 0.02% of gross domestic product in South Sudan until regarding 10.4% of gross domestic product in South Africa. The African development bank estimates that in 2020, African governments needed an additional $154 billion to deal with the crisis.
To address this dilemma, the Sustainable Borrowing Policy introduces two essential elements for managing debt. The first emphasizes debt management and transparency through agreed policy measures and technical assistance. The second element will rely on coordination and partnerships with other multilateral development banks, development partners and donors.
The Sustainable Borrowing Policy replaces the Nonconcessional Debt Accumulation Policy, adopted in 2008 and revised in 2011 to meet the Bank Group’s operational needs. African development bank and its regional member countries.
Over the past two years, the new policy has been the subject of extensive internal and external consultations with regional member countries, civil society and development partners, including multilateral development banks.
