High Level Knowledge Event: “From Debt Resolution to Growth: The Road Ahead for Africa”
This High-Level event will use the 2021 African Economic Outlook (AEO), the African Development Bank’s flagship economic publication, as background report. The thematic focus of this 2021 AEO is: “From Debt Resolution to Growth: The Road Ahead for Africa”.
With this 2021 AEO theme, the Bank has made a strategic and forward-looking choice to discuss a topic that could become a key policy concern on the continent: debt sustainability and growth. The pandemic shock together with large and increasing sovereign debt burdens could indeed pave the way for disorderly defaults and lengthy resolutions, which can hinder economic progress in many African countries.
The 2021 AEO report calls on African countries to innovate or keep abreast of innovations in financing instruments, both legal (such as collective action and aggregation clauses) and financial (such as value recovery and equity-like debt instruments). To reduce debt vulnerabilities, increased use of state-contingent debt instruments that link debt service payments to a country’s ability to pay can be considered.
It also recognizes that, ultimately, only bold governance reforms will help re-ignite growth and keep Africa’s debt on a sustainable path. The continent needs to put in place policies to re-ignite growth such as those related to digitalization and enhanced competition; as well as policies to reduce leakages in public resources and, critically, to enhance debt transparency.
The proposed event will provide an opportunity for Bank Governors to share their views on the key findings and policy recommendations of the report, focusing on debt, public financial management and economic governance. Specifically, the discussion will cover topics such as: domestic resource mobilization; fiscal policy planning and management; deepening capital and financial markets; leakages, corruption, and illicit financial flows; debt data transparency; and policies to reignite growth.
The session will consist of a short presentation (15 minutes) of the macroeconomic outlook for the continent, key findings, and policy recommendations from the AEO 2021. After short comments from a renowned scholar and senior African policymaker (5 minutes each), Bank Governors will share their thoughts before a Q&A session.
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