Former Governor of Nigeria’s Central Bank says African countries risk going back to HIPC debt levels with increased borrowing

According to him, the countries could find themselves buried under debt once more if the borrowing appetite of the countries is not curtailed.

More than 30 countries in sub-Saharan Africa were beneficiaries of the World Bank and IMF HIPC initiative which had all or partial external debt written off to allow for the government to spend on social infrastructure.

Ghana signed on to the HIPC initiative in the early 2000s during the administration of former President John Kufuor.

But speaking in Accra on the sidelines of an economic forum held in honour of the former Vice President, Kwesi Amissah Arthur, the former Nigerian Governor said the rate of debt accumulation now is worrying.

“It is unfortunate we went out of the HIPC debt relief, and we are going right back there. We have no more memory of how we even got in the first stance. We are borrowing as if there will be no tomorrow. It is tragic,” he said.

The various governments’ propensity to borrow according to him is encouraged by a “terrible incentive system” which encourages debt rather than discourage debt accumulation in the period following the debt forgiveness.

“This is where the interface of politics come in. The quality of governance that you have. We finish on this [HIPC], successive policymakers now show up, and they are calculating for them debt sustainability after the first debt relief, and so politicians now move up steadily to borrow more because they have debt sustainability,” he added.