IMF flags tax reform and debt transparency as Africa’s twin priorities
WASHINGTON / DAKAR — At the International Monetary Fund’s 2025 Annual Meetings press briefing on 16 October, Abebe Aemro Selassie, Director of the IMF’s African Department, said that while sub-Saharan Africa continues to show “remarkable resilience,” the region faces mounting debt-service burdens and limited fiscal space. According to the IMF’s October 2025 Regional Economic Outlook, growth is projected at 4.1 % in 2025, with only a modest pickup expected in 2026.
Selassie identified two policy imperatives for the region: domestic revenue mobilization (DRM) and greater debt transparency. He stressed that these depend not just on technical reforms, but also on building public trust in tax systems and ensuring that reforms are perceived as fair and inclusive.
Why revenue mobilization is back at the centre
Countries across the region, Selassie noted, have significant potential to raise revenues through comprehensive tax-policy reforms and improved tax administration. This includes expanding digital tax systems, reducing inefficient tax exemptions, and strengthening enforcement through targeted compliance measures.
However, he warned that reforms cannot be merely technical; they require institutional strengthening and transparent communication. Without public buy-in, new measures risk being seen as punitive rather than developmental.
Implications for national tax agendas
- Digital tax modernization (e-filing, e-invoicing, analytics) is now a prerequisite for competitiveness and transparency.
- Rationalizing tax incentives should go hand-in-hand with clear communication to avoid resistance.
- Governments must start publishing distributional impact analyses—showing who benefits or bears the cost of reforms—to maintain social legitimacy.
Debt transparency and the crowding-out risk
With external financing conditions tightening, Selassie warned that rising interest costs and reliance on domestic borrowing could squeeze out spending on social and infrastructure priorities. He urged countries to publish comprehensive debt data, strengthen budget oversight, and improve governance of state-owned enterprises (SOEs).
Why this matters
- Weak debt reporting can undermine investor confidence and raise borrowing costs.
- Growing domestic borrowing links banks’ balance sheets to sovereign risk, amplifying financial vulnerability.
- Transparent governance of SOEs and regular audits will be key signals of credibility for partners and rating agencies.
Growth steady, but not yet transformative
The IMF projects regional growth at 4.1 % in 2025—steady but below the pace required for meaningful per-capita income convergence. Some economies, such as Ethiopia, Rwanda, and Côte d’Ivoire, continue to perform strongly, while others face persistent headwinds from commodity dependence, debt pressures, and conflict.
Key takeaways for African stakeholders
- Governments: Embed revenue and debt-transparency goals into 2026-27 budgets. Reforms must be data-driven and institutionally anchored.
- Investors: Greater transparency and credible debt statistics will lower risk premiums and attract long-term capital.
- Development partners: Expect demand for technical support to shift toward tax-administration capacity and debt-management frameworks, not just traditional macroeconomic oversight.
The bottom line
Sub-Saharan Africa’s fiscal outlook is fragile yet full of potential. The IMF’s message is unambiguous: modern tax systems and clean, transparent debt books are no longer optional—they are prerequisites for sustained growth. Governments that act decisively will be best placed to attract investment, safeguard stability, and turn resilience into recovery.
Sources
- International Monetary Fund — Sub-Saharan Africa Press Briefing by Abebe Aemro Selassie, 16 October 2025.
- IMF — Regional Economic Outlook for Sub-Saharan Africa, October 2025.
