THE African Forum and Network on Debt and Development says policies of some development finance institutions are worsening social and economic inequalities in recipient countries through project contingent liabilities In a statement released to mark the Global Week of Action on Inequality, AFRODAD said contingent liabilities posed by development finance institutions such as the New Development Bank, China Exim and Development Bank of Southern Africa lead to market rated fiscal risks that burden state coffers’ ability to fund social services thus exacerbating already existing inequalities Contingent liability is a potential liability or loss that may occur, depending on the outcome of an uncertain future event A contingent liability is recorded in the accounting records if the contingency is likely and the amount of the liability can be reasonably estimated
“As such, Development Finance Institutions (DFIs) should institute pro-poor and sustainable financing mechanisms for infrastructure development projects that do no harm,” AFRODAD said
“Tools and recommendations to effectively address these issues are available and this is the decade to utilize them Countries must ensure better debt management in order to lower borrowing costs and improve debt sustainability.”
It said both borrower and lending governments need to ensure greater debt transparency to make it easier to identify and remedy the biggest risks to effectively contain them AFRODAD said governments should be guided by national interests when entering into such agreements “As we celebrate the Global Week of Action on Inequality, we urge governments to do all their work for the public interest and tackling extreme inequality should be the guiding principle behind all global agreements and national policies and strategies necessary in making social services provision.”
Inequality of opportunities like access to income, power or basic social services like health and education presents a situation that compromises the livelihoods of vulnerable members of the society, strongly and negatively affecting women and children
Source: The Anchor
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Source: Theanchor
