Analysis-Debt squeeze leaves sub-Saharan Africa's governments in fiscal bind

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Analysis-Debt squeeze leaves sub-Saharan Africa's governments in fiscal bind

© Reuters. FILE PHOTO: An employee pumps fuel into a car at a Shell petrol station in Nairobi, Kenya, September 20, 2018. REUTERS/Baz Ratner/File photoMARRAKECH, Morocco - The International Monetary Fund urged sub-Saharan African policymakers last week to cut costly fuel subsidies and raise more in taxes, measures that may be hard to implement as governments grapple with tough spending choices amid high debt.

"We're doing our utmost to avoid this being a period of ... spending on health and education being harmed," Abebe Selassie, the IMF's African department director, told Reuters in an interview.Many African governments are having to slash spending when the continent's booming population and climate change mean that demand for public money is growing.

"We have to freeze up some expenditure just to make sure that we manage to continue servicing the debt and paying salaries and making sure that the country is functioning." High interest rates make refinancing debt prohibitively expensive for most African countries and have weakened their currencies against the U.S. dollar.

Some governments are taking the advice doled out by the IMF to cut fossil fuel subsidies that the fund says benefit wealthier people.

 

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