AfDB calls for speedy resolution of debt crisis, implementation of Common Framework

The African Development Bank (AfDB) has called for an urgent and bold action to fast track the implementation of the Common Framework to ensure faster resulting of debt crisis.

Faster debt resolutions required broader participation of debtor countries and lenders, especially the private creditors.

This is according to the latest Africa’s Macroeconomic Performance and Outlook -January 2023, the AfDB Group’s new biannual report.

The report stated that Zambia was one of the first countries to request for the restructuring of its public external debt under the Common Framework in early 2021.

Currently, Zambia is trying to get its debt restructuring negotiations concluded with its private creditors.

President Hakainde Hichilema said on Monday when he met the International Monetary Fund (IMF) managing director Kristalina Georgieva that Zambia would be in a difficult situation to effectively manage its economic affairs if the debt negotiations were not concluded by the end of the first quarter of this year.

But AfDB in its latest report indicated that progress had been slow and hinges largely on reaching an agreement with private creditors.

“So far, only Chad has reached an agreement with external creditors, including private creditors under the Common Framework.

“The creditors committee, co-chaired by China and France, has met several times, but conclusions have not yet been issued,” it stated.

It further indicated that debt vulnerabilities are likely to linger as countries continue to grapple with economic shocks from the Covid-19 pandemic and Russian’s invasion of Ukraine.

At end of September 2022, 23 African countries were either in debt distress, eight countries or at higher risk of debt distress and 15 countries, up from 20 in 2020.

It indicated that debt vulnerabilities in many Africa’s debt- distressed economies preceded the pandemic.

“Strikingly, these vulnerabilities have increased since 2016, with more countries progressively sliding into debt distress. Since January 2022, all the 23 countries that were either in debt distress or at high risk of debt distress recorded an increase in sovereign spreads of more than 700 basis points,” it stated.