AfDB Says World Bank Critique on Lending Habits ‘Misleading’

LAGOS (Capital Markets in Africa) – The African Development Bank said the criticism that World Bank President David Malpass levied against the multilateral lender and similar institutions for lending too easily to heavily indebted countries were misleading.

Malpass voiced his concern over the practices of lenders that also include the Asian Development Bank and the European Bank for Reconstruction and Development at a World Bank-International Monetary Fund forum in Washington on Monday, saying some were worsening already-challenging debt situations, Reuters reported.

“The general statement by the president of the World Bank Group, insinuating that the African Development Bank contributes to Africa’s debt problem and that it has lower standards of lending is simply put: misleading and inaccurate,” the AfDB said in a statement on Thursday. The AfDB “provides a strong governance program for our regional member countries,” focusing on the improved management of debt, finances and natural resources.

Debt levels in the region have been rising as governments struggle to collect and grow revenue while increasing their budgets. About 40% of African countries are already at distressed levels, IMF Managing Director Kristalina Georgieva said in November.

The World Bank is deeply concerned with surging debt levels in sub-Saharan Africa, and debt management and transparency are a top priority, a spokesperson said in an emailed statement.

“We need to work closely with borrowing countries and all development partners to address this important challenge,” the spokesperson said.

The AfDB lent about half the $20 billion that the World Bank approved for Africa in 2018, the African lender said. The bank said it’s also supporting governments with the renegotiation of royalties and taxes with international companies.

Multilateral lenders are facing calls “to do even more,” said the AfDB. “It helps regional member countries finance debt and development in the most responsible and sustainable way.”

Source: Bloomberg Business News