Fidelity bank banner Bayelsa State banner
Africa's rising debt: IMF warns against heavy borrowing in spite of economic growth

By Kwasi Kpodo on 08/05/2018

Share on facebook Yahoo mail icon Gmail icon Share on Google+

Views: 535


Sub-Saharan African nations are at growing risk of debt distress because of heavy borrowing and gaping deficits, despite an overall uptick in economic growth, the International Monetary Fund warned on Tuesday.

The sober assessment comes as African countries continue to tap international debt markets and issue record levels of debt in foreign currencies, spurred on by insatiable investor demand for yields.

In its economic outlook for the region released in Accra Ghana, the Fund projected the rate of economic expansion would rise to 3.4 percent this year, up from 2.8 percent in 2017, boosted by global growth and higher commodity prices.

Slower growth in South Africa and Nigeria – the continent’s two largest economies – weighed on the region-wide average, but the IMF expects growth to pick up in around two-thirds of African nations. However, under current policies, that rate is expected to plateau below 4 percent over the medium term.

Meanwhile, around 40 percent of low-income countries in the region are now in debt distress or at high risk of it, the IMF said. And refinancing that debt could soon become more costly.

“The current growth spurt in advanced economies is expected to taper off, and the borrowing terms for the region’s frontier markets will likely become less favourable ... which could coincide with higher refinancing needs for many countries across the region,” it said.

African governments issued a record $7.5 billion in sovereign bonds last year, 10 times more than in 2016. And they have issued or plan to issue over $11 billion in additional debt in the first half of 2018 alone, the report said.

Foreign currency debt increased by 40 percent from 2010-13 to 2017 and now accounts for about 60 percent of the region’s total public debt on average, IMF data showed. Average interest payments, meanwhile, increased from 4 percent of expenditures in 2013 to 12 percent in 2017.

Six countries – Chad, Eritrea, Mozambique, Congo Republic, South Sudan and Zimbabwe – were judged to be in debt distress at the end of last year. And the IMF’s ratings for Zambia and Ethiopia were changed from moderate to “high risk of debt distress.”

The IMF conceded that Africa’s enormous needs will continue to demand heavy investments to build infrastructure and social development. But to do so while avoiding the risk of a debt trap the continent, which currently has the lowest revenue-to-GDP ratio in the world, will need to become more self-reliant.

“With debt vulnerabilities rising in the region, sub-Saharan African countries will need to further rely on sustainable sources of financing, making domestic revenue mobilisation one of the most urgent policy challenges for the region,” it said. (Reuters)

Source News Express

Posted 08/05/2018 7:12:24 PM

 

Share on facebook Yahoo mail icon Gmail icon Share on Google+


 

CLASSIFIED ADS

 

You may also like...
Special Squad kills ASP, innocent woman

Fidelity Bank, LBS, NEPC forge alliance on export...

EFCC arraigns estate agent for N9.6m fraud

I did not say Amaechi is corrupt and...

Konga compliance debuts to boost standards

Anambra Guber: Court stops APGA primaries

Troops gun down female suicide bomber •Terrorists new...

Senate restates need to revamp Ajaokuta Steel

APCON blows hot over offensive political adverts

Breaking: 9 dead, 37 injured in Gombe bomb...

UK’S exit from the EU: Consequences for Nigeria,...

CBN moves to ensure availability of Forex, announces...

 

Latest News Boko Haram survivor bags degree in USA, as Leah Sharibu marks six months captivity Abuja building collapse: Bodies of mother, child, other recovered from site Defection: Saraki replies Tinubu Tragedy in Asaba as man kills two younger brothers Gully erosion cuts off major road linking Onitsha and environs Catholic Church spends $3bn to settle clergy sex abuse claims Police arrests man over alleged attempt to kill mother for money rituals FG earmarks N700m for reconstruction of institutions destroyed by herdsmen Buhari meets with security chiefs Arsenal forward, Iwobi makes Nollywood debut We didn’t demolish Yinka Ayefele’s Music House — Oyo State Government NBA elects Paul Usoro as new President

 

Most Read NUDE PHOTO OF OMOTOLA JALADE-EKEINDE surfaces online (379,216 views) Nigerian female sex addict opens up, says ‘I like it with both men and women’ (367,485 views) Shameless Genevieve Nnaji exposes breasts in public (297,274 views) Finally named: The full list of friends of Nigerian female sex addict who prowled Facebook (242,547 views) OLUMBA OLUMBA OBU (the one who called himself God) IS DEAD (223,592 views) Igbo scholar disgraces Femi Fani-Kayode •Demolishes claims on Igbo/Yoruba history with facts and figures (217,615 views) Breaking News: POPULAR REVEREND CONVERTS TO ISLAM in Kaduna (Nigeria) (193,278 views) OBJ’s son reported dead in Lagos plane crash •Names of more victims emerge (175,402 views) THE FINAL DISGRACE: Igbo scholar unleashes more facts about Igbo/Yoruba history, finishes off Femi Fani-Kayode with second article (160,030 views) My wasted years in Olumba Olumba Obu’s Evil Brotherhood (158,918 views) Lagos plane crash: Journalist releases victims’ names (153,216 views) Gunmen kill ASP, 2 other police officers in vain bid to kidnap Rivers PDP chieftain (143,461 views)

 

Categories Advertorials (3) African Press Organisation (81) Art & Literature (56) Business & Economy (3,465) Business Verdict (48) Columnists (912) Complaints & Requests (95) Enterprise & Opportunities (207) Entertainment (529) Features (642) Global Business Monitor (295) International (2,282) Interview (162) Live Commentary (28) Love Matters (135) News (38,173) Opinion (1,064) Pidgin (11) Politics (6,110) Religion (831) Sports (1,654) Stock Watch (33) AMA & Al Jazeera Global Update

 

CBN banner

Firstmobile banner

 

 

NEWS EXPRESS TV

Real Madrid vs Atletico Madrid 2-4 Highlights and Goals

 

APO Group Partner

 

 

CLASSIFIED ADS

GOCOP Accredited Member

GOCOP Accredited member

 

 

Africa Media Agency and Al Jazeera

Advertisement