IMF: Between global debt of $152 trillion and Africa’s $518 billion debt

By Inwalomhe Donald 

The International Monetary Fund (IMF) recommendation for African economic recovery has gap and IMF is exploiting the gap for its benefits. IMF is waging economic war on Africa by keeping silent on Italy’s $2.5 trillion debt and putting pressure on Africa that owes debt of $518 billion of the global debt of $152 trillion. I am worried over IMF’s negative comments on Africa.

IMF has not explained why it has lost focus on $152 trillion global debt. What has Africa done wrong to IMF? Why is IMF victimising Africa? The IMF sees its measures as necessary and pre-determined – in most cases by the borrowing African countries having run-up what IMF called unsustainable external or budget imbalances when the global debt is $152 trillion and Africa’s share of the debt is $518 billion. IMF does not understand the strategic differences of African economy. In Nigeria, the Lagos economy is different from Sokoto’s economy.

According to the IMF, global debt has risen to a record level of $152tn (£122tn) including Africa’s $518 billion debt. The IMF does not have a good historical record in Africa. A view of the many countries which have subjected themselves to the IMF doesn’t inspire confidence. Instead of bailing out countries, it has created a list of countries suffering from debt dependency. While the South African situation is getting more desperate, which calls for desperate measures, the idea to turn to the IMF is a bad idea and must be dismissed. There are a number of reasons why I think this is the case.

Historical evidence suggests that IMF-administered rescue programmes are actually a recipe for disaster. They worsen rather than rescue the situation. These austerity measures would cause great suffering, poorer standards of living, higher unemployment as well as corporate failures. The current technical recession would be magnified into a full-blown crisis, leading to even greater shrinking of investment.

Sub-Saharan Africa is not a homogeneous region. Some countries are still growing strongly, helped by declining energy prices. The present poor value of the naira has become an albatross on every aspect of our economy and national life. The revaluation of the naira is therefore fundamental to any meaningful economic reform. Otherwise we are deceiving ourselves.

Although government borrowing has helped many African countries to boost their economies and improve human development, the progress recorded in these areas could be jeopardised if rising debt levels on the continent are not curbed, the International Monetary Fund (IMF) has said.

The Director of African Department at the IMF, Mr. Abebe Selassie, stated that “Sub-Saharan Africa is confronting a pronounced rise in public debt of $518 billion. At the end of 2017, average public debt in the region was 57per cent of its Gross Domestic Product (GDP), an increase of 20 percentage points in just five years. While this is well below the peaks of the early 2000s, the current spike is concerning.”

The main pretext for IMF intervention was to “help solve” the debt crisis that hit African countries in the late 1970s, following the combination of internal and external shocks, notably sharp fluctuations in commodity prices and skyrocketing interest rates. The remedy they proposed, known as stabilisation and structural adjustment programmes (SAPs), achieved the opposite, and contributed to worsening the external debt and exacerbating the overall economic and social crisis.