Integrated discussion paper From crisis resolution to crisis prevention

The document outlines a proposed African-led financial architecture to move from crisis resolution to prevention. The first pillar, the African Financial Stability Mechanism (AFSM), is a proposed regional financing arrangement (RFA) providing concessional liquidity, including a specific climate shock liquidity facility, to manage exogenous shocks. The second pillar, the African Stability and Growth Pact (ASGP), is a flexible fiscal governance framework that uses peer accountability and nationally tailored fiscal rules rather than uniform targets. The two are integrated such that access to AFSM liquidity is linked to a country's commitment to and performance under the ASGP. The framework is designed to be hosted by the African Development Bank (AfDB) with oversight from the African Union (AU), and capitalised through a blend of member contributions, Special Drawing Rights (SDRs), and development finance.

• The African Financial Stability Mechanism (AFSM) is designed as a regional financing arrangement (RFA) providing concessional liquidity to address macro-economic shocks, including climate-related fiscal disruptions, but it is not intended to fund long-term climate adaptation or green infrastructure.
• The proposed African Stability and Growth Pact (ASGP) avoids uniform fiscal targets, instead allowing countries to define their own fiscal rules based on their specific macro-economic context and volatility, supported by peer review from the African Peer Review Mechanism (APRM) and the Collaborative Africa Budget Reform Initiative (CABRI).
• The AFSM and ASGP are integrated through a tiered eligibility framework where access to liquidity is calibrated based on a country's compliance with its own ASGP fiscal path.
• The ASGP includes specific 'climate-linked flexibility' allowing countries to deviate from their fiscal rules by up to 2% of GDP for resilience investments, provided there is a plan to return to sustainability.
• The AFSM is proposed to be hosted by the African Development Bank (AfDB) and capitalised through a blended model including member contributions, Special Drawing Rights (SDRs) rechannelling, and support from African development finance institutions (DFIs) and sovereign wealth funds (SWFs).
• A phased roll-out is recommended, starting with a piloting phase from 2025 to 2027 involving five to seven countries to test the integrated model and peer review processes before wider institutionalisation and AU treaty endorsement post-2030.
• The framework aims to address four primary institutional gaps in Africa: the liquidity gap (lack of a regional emergency tool), the credibility gap (absence of fiscal coordination), the ownership gap (donor-driven responses), and the coordination gap (lack of alignment between fiscal governance and liquidity access).

APA

FSD Africa (2025). Integrated discussion paper From crisis resolution to crisis prevention. https://fsdafrica.org/wp-content/uploads/2026/02/801131-ACF-AFSM-paper-Eng-05A.pdf

Chicago

FSD Africa. Integrated discussion paper From crisis resolution to crisis prevention. 2025. https://fsdafrica.org/wp-content/uploads/2026/02/801131-ACF-AFSM-paper-Eng-05A.pdf.

Wikipedia

{{cite report |author=FSD Africa |title=Integrated discussion paper From crisis resolution to crisis prevention |date=2025 |url=https://fsdafrica.org/wp-content/uploads/2026/02/801131-ACF-AFSM-paper-Eng-05A.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{fsdafrica2025integrated, author = {{FSD Africa}}, title = {{Integrated discussion paper From crisis resolution to crisis prevention}}, institution = {FSD Africa}, year = {2025}, url = {https://fsdafrica.org/wp-content/uploads/2026/02/801131-ACF-AFSM-paper-Eng-05A.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }