African Finance Ministers commit to Strengthening Fiscal Management

Finance ministers from nine African countries have expressed strong commitment to Compact with Africa [CWA] objectives of strengthening fiscal management and increasing private investment, which they noted are aligned with their own national development strategies and efforts.

They expressed strong commitment to ensure rapid and robust implementation of policy commitments outlined in CWA documents from their countries. CWA countries represented included Ghana [host], Senegal, Cote d’Ivoire, Morocco and Rwanda. Additional countries who aspire to join the CWA included Benin, Burkina Faso, Gambia, Guinea, The World Bank, The African Development Bank, International Monetary Fund and Germany as G20 Presidency also participated at the meeting in Accra.

In a communiqué issued after intellectually stimulating brainstorming sessions stated that there is the need for CWA to help support national economic transformation strategies that maintain fiscal discipline and macroeconomic stability as a fundamental platform for development.

It also said there was the need to diversify African economies and make them resilient, pursue inclusive growth and reduce inequalities, focus on addressing the growing youth unemployment problem in Africa.

It called on countries to target both domestic and foreign private investors and take into account the regional dimensions of attracting investment and also regional infrastructural connectivity.

Towards this objective within the context of the CWA, the ministers reached consensus on domestic resource mobilization, business framework and financial framework. On domestic resource mobilization, ministers affirmed their resolve to deepen their efforts to increase domestic resource mobilization.

They noted that raising additional revenues has to go hand in hand with improving the efficiency of public expenditures and delivery of public services. In effect, a compact between citizen taxpayers and their governments.

The ministers were of a firm conviction that modernize tax system and treat modernization of tax system as an investment spending, foster peer-to-peer learning between CWA countries in domestic resource mobilization.

With regards to business framework, the ministers agreed on the need for a public administration that prioritizes responding to both domestic and foreign investors and dealing expeditiously with their concerns.

On financial framework, the ministers undertook to collaborate with international financial institutions and other relevant institutions to develop and deploy de-risking financial instruments that enable African countries to attract foreign private investment without sovereign guarantees.

A fundamental question according to Ministers to be addressed is the rising levels of debt-to-Gross Domestic Product ratios in African countries and their constraining effects on economies. They stated that there is a need to examine innovative instruments to address the debt burden so as to enable CWA countries to benefit from the relatively low global interest rate regime.

There was a strong agreement that a partnership approach will benefit CWA implementation. African governments, international financial institutions and the G20 have also agreed to work collaboratively to meet the goals of CWA while African Centre for Economic Transformation [ACET] and other African institutions will support implementation.

Source: Adovor Nutifafa                                                                                                                        

dovor100@gmail.com

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