Association of African Central Banks welcome APRM’s support to member states on international credit rating agencies.
The APRM delegation participated at the 42nd Ordinary Meeting of the Association of African Central Banks (AACB) hosted by the National Bank of Rwanda from the 28th July – 1st August 2019, at Kigali Convention Centre in Kigali, Rwanda. The AACB was formed in 1963 at the Summit of the African Heads of State and Government held in Addis Ababa, Ethiopia, the Association of African Central Banks works under the auspices of the African Union. It has the objective of promoting co-operation in the monetary, banking and financial spheres in the African region as well as envisage the advent of a single currency and a common central bank.’
The Annual meeting discussed and share experiences on a macroeconomic stability theme, entitled “Rising African Sovereign Debt: Implications for Monetary Policy and Financial Stability”. There are growing concerns that African countries are accumulating external debt which has been steadily increasing by almost 20 percentage points of Gross Domestic Product (GDP) between 2013 and 2018. According to the World Bank’s 2017 report, 11 out of 35 low income countries in Sub-Saharan Africa are classified as at high risk of debt distress. The huge appetite for sovereign borrowing has been driven by the need to finance budget deficits and infrastructure projects. Debt servicing cost has grown to be the highest expenditure item in the majority of African countries crowding the fiscal slack. The increasing interest rates on sovereign bonds vis-à-vis the depreciation in domestic currencies are mainly blamed for increasing debt burden, as most sovereign borrowings are through Eurobonds.
The APRM submission to the 42nd Ordinary Meeting AACB highlighted the key aspects of the proposed Draft Policy Framework on APRM Support to Member States’ on Credit Rating Agencies; the milestones to date and the way forward. The Annual meeting welcomed the initiative and recommended that the policy framework be circulated for comment to the members of the Association of African Central Banks through the Executive Secretary.
The meeting hosted more than 400 participants including, African Central Bank Governors and their senior staff, domestic economy policy makers, development partners, financial sector players, academia, think tanks and representatives of African Regional Economic Communities.