Many African countries are experiencing severe macroeconomic shocks and considerable uncertainty around their economic and fiscal outlook. The COVID-19 pandemic has created substantial fiscal risks, both through the potential for large errors in fiscal forecasts, and the potential realisation of contingent liabilities. Building the capacity of governments to identify, quantify, and manage these fiscal risks and associated public debt vulnerabilities is a key priority.

MEFMI in collaboration with the International Monetary Fund (IMF) Fiscal Affairs Department (FAD) and the IMF AFRITAC South (AFS) conducted a virtual seminar focusing on how fiscal risks impact debt sustainability in African countries. The seminar, which was conducted in English, French and Portuguese, combined theory and hands-on-exercises covering various topics. Participants were introduced to the basic principles of fiscal risk, particularly looking at the classification of the nature, type and triggers. Participants were then taken through the fiscal risk management cycle, contingent liabilities and the fiscal risk toolkit. They also learnt about good practices in fiscal risk management, drawing on international and regional experiences. Participants were also shown good practices in reporting fiscal risks, and how to use the new Microsoft Excel-based IMF Debt Dynamics Template (DDT). Illustrations of how to project public debt as a percent of GDP and compute fiscal adjustment paths needed to achieve a user-defined debt target using the DDT were appreciated by participants. Participants were also shown how to perform predefined and customised stress tests, as well as how to customise DDT Template to their respective countries.

It is expected that participants will put to use the knowledge and skills from the seminar to classify, assess and manage fiscal risks as well as analyse the sustainability of debt to support fiscal policy analysis.

The seminar was attended by 80 participants from 29 African countries. Participants from the MEFMI region accounted for 40 percent of the total and were drawn from Angola, Botswana, Eswatini, Kenya, Lesotho, Mozambique, Namibia, Rwanda, Uganda, Zambia and Zimbabwe. The participants were guided by a resource team which comprised of Camilo Gomez Osorio, Mr. Jyoti Rahman; Mr. Bryn Welham (all from IMF-AFS); Sybi Hida (IMF-FAD); Leonardo Martinez (IMF-Institute for Capacity Development) and Cristina Dimande and Dr. Sayed Timuno who are both MEFMI Programme Managers.

The second module of this seminar is scheduled to take place from 8 to 12 November 2021 and will focus on fiscal risks and macroeconomic shocks.

Source: Mefmi

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