LUANDA (Reuters) -Angolan President Joao Lourenco, current chair of the African Union, on Monday called for fairer debt restructuring tools and innovative financing instruments to support Africa’s development.
Lourenco’s comments, delivered to African and European Union leaders assembled in Angola’s capital, come as a growing number of African countries are at risk of debt distress.
The Group of 20’s Common Framework, set up during the COVID pandemic to speed up debt restructuring for poorer nations, has made limited progress, though last weekend’s G20 summit in South Africa committed to improving it.
“We are in dire need of a new vision for the financial relationship between Africa and international lending institutions so that we can invest in development without being stifled by unsustainable debt,” Lourenco told the first day of an AU-EU summit.
“On behalf of all of Africa, I reiterate the urgency of working towards comprehensive reform of the global financial system, including fairer debt restructuring mechanisms,” Lourenco added.
United Nations Secretary-General Antonio Guterres, addressing the same summit, agreed the world’s financial architecture needed to be overhauled.
“We must reform it for everyone’s benefit and this means ending the crushing debt cycle, … giving developing countries, many of them in Africa, greater participation and influence in the global financial institutions,” Guterres said.
A panel of Africa experts set up by South Africa during its G20 presidency this year recommended a new debt refinancing plan for low-income countries hit by heavy debt repayments, rather than the current focus on rescheduling payments.
The G20’s Common Framework initiative saw early test cases such as Ghana and Zambia take years to make progress.
Debt concerns for countries such as Senegal and Mozambique have put debt resolution mechanisms back in the spotlight.
(Reporting by Miguel Gomes; Writing by Alexander Winning; Editing by Alex Richardson)
