Africa borrowing like it’s the 1990s worries the IMF
INTERNATIONAL – Record commodity prices and low global interest rates have encouraged African countries to borrow like they did in the 1990s, but now some are struggling to pay up as their revenue slows along with economic growth.
Government debt as a percentage of gross domestic product in sub-Saharan Africa has doubled in the past decade, heading back toward the level it reached at the turn of the century. International Monetary Fund Managing Director Kristalina Georgieva said in November this is a cause for concern. Of the 54 countries on the continent, 20 are near or at distressed levels, according to the IMF, which means they face difficulties honoring their obligations.
African governments have raised about $26 billion in international markets this year, from close to $30 billion in 2018, as they took advantage of investors’ thirst for returns in a world awash with negative yields. Volatile currencies across the continent increase the risks of borrowing in hard currency and the rising cost of servicing debt could crowd out other expenditure in a region that’s home to more than half of the world’s poor people.
Source: iol.co.za