WB urges African countries to focus on rising public debt


THE World Bank says African countries need to pay attention to the rising public debt relative to gross domestic product.
On Wednesday, the World Bank released the Sub-Saharan Africa 2017 Country Policy and Institutional Assessment (CPIA), which reveals an Unchanged Quality of Policies and Institutional Performance in Africa. The review indicated that 2017 marked a shift from the deterioration observed in the previous year.
This analysis covers 38 countries and describes the progress these countries are making on improving the quality of their policies and institutions. Countries are rated on a scale of one (low) to six (high) for 16 dimensions reflecting four pillars: economic management, structural policies, policies for social inclusion and equity, and public sector management and institutions. In 2017, the regional Country Policy and Institutional Assessment (CPIA) score was 3.1. This average CPIA score for Sub-Saharan Africa remains slightly below the average of 3.2 for other International Development Association (IDA) countries.
Zambia’s overall CPIA score was 3.3 and 3.1 for IDA, the arm of the World Bank Group that provides credits to the poorest countries.
Zambia’s highest performing cluster was Structural Policies with a 3.8 score while the lowest was Economic Management at 2.8.
The report put Zambia’s population at 17.1 million and the country’s GDP at 25.8 billion.
Rwanda continued to lead at regional level and globally with a CPIA score of 4.0. Other countries at the high end of the regional score range were Senegal (3.8), closely followed by Cape Verde, Kenya, and Tanzania, all with scores of 3,7.
According to the review, regional score in the debt policy area fell to 3.1 in 2017. This was the second consecutive year of decline.
“The worsening performance in this component of the CPIA reflects the rising burden of public debt across African countries,” the review reads in part. “Rising debt burdens are translating into heightened risks to debt sustainability. The composition of debt has changed with countries shifting from traditional concessional sources of financing and towards more market-based ones. In March 2018, nearly half of the region’s low-income countries were classified at high risk of debt distress or in debt distress, more than twice as many as in 2013.”
The World Bank stated that harnessing the potential of new technologies would be key to Africa’s development.
It stated that the share of adults with mobile money accounts jumped from 12 to 21 per cent between 2014 and 2017, by far the highest among all the regions.
“The gradual implementation at the individual country level regional credit registries offers prospects for gains in financial inclusion during the next few years,” the Bank stated.
The CPIA is an annual diagnostic tool, which measures the quality of policies and institutional frameworks, and their ability to support sustainable growth and poverty reduction.
It also helps determine the size of the World Bank’s concessional lending and grants to low-income Sub-Saharan African countries.
“The CPIA is important for African countries not only because a better score leads to an increase in concessional financing from the World Bank, but also because it’s an excellent tool for policy formulation and monitoring” said Albert Zeufack, the World Bank’s Chief Economist for Africa. “Our countries should pay more attention to this important tool and use it accordingly.”
The World Bank noted that favourable global economic conditions supported a turnaround in economic activity in Sub-Saharan Africa in 2017, easing pressure on weak policy frameworks.
“In 2017, African countries had a more favorable global environment that provided them with space to implement reforms” explained Punam Chuhan-Pole, lead economist and lead author of the report. “According to our analysis, nearly 30 percent more countries strengthened their policy and institutional quality in 2017 compared with 2016. This is an encouraging trend.”

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