There is potential to increase revenue mobilization, but it must be connected to showing citizens that funds are used for the right reasons and appropriate purposes, stated Abebe Aemro Selassie during the press conference for the presentation of the Regional Economic Outlook for Sub-Saharan Africa.
“People often consider taxes to be high because they do not see quality public services in health and education, so it is necessary to demonstrate that the money is going to the right places, minimizing leakage and corruption,” he added.
Selassie was responding to journalists’ questions about the high public debt in the region and the IMF’s recommendations for reducing the region’s high indebtedness, which has a debt-to-GDP ratio of 65%.
“Public debt is high in many countries, with around 20 countries at risk of debt distress, 14 at high risk, and six already in distress,” said the director of the African department, noting, “The burden of public debt is high, but that is why reforms are necessary.”
For Selassie, the possibility of increasing taxes or expanding the tax base results from the good work done by African countries in recent years: “The situation varies from country to country, but the general direction is that countries have invested significantly in recent years in infrastructure, health, education, and perhaps one area where we haven’t been as successful is in capturing the returns on all these investments through the tax system,” he stated.
“Building public trust is not just a technical issue; it is essential,” he concluded.
In the report presented today, the IMF forecasts that the sub-Saharan African region will grow by 4.1% this year, the same rate as last year, accelerating to 4.4% next year.
Compared to April, the IMF revised the growth forecast for these economies upward from 3.6% in April to 4.1% now.
