According to a World Bank report released in 2021, most low and middle income Sub-Saharan African countries combined are owing the World Bank $702 billion as of 2020. The debt burden in the region is at its highest level in a decade.
The debt of Sub-Saharan Africa was estimated to be over $305 billion in 2010. According to the assessment, the region owes more money than it can pay.
This comprises both long-term and short-term external debt ($589 billion).
The COVID-19 pandemic may have worsened the situation but Sub-Saharan Africa was already economically weak prior to the outbreak. Between 2018 and 2019, its foreign debt stock climbed by 8.4%.
The pandemic resulted in almost eight million illnesses, 214,000 deaths, and severe socioeconomic consequences.
According to the report, Ghana and Nigeria recorded a 17 per cent increase in external debt stocks driven by purchases from the International Monetary Fund (IMF) of $1 billion and $3.4 billion, respectively.
The research cited a $3 billion pre-pandemic Eurobond issued to Ghana and a 16 percent increase in private sector non-guaranteed debt in Nigeria as explanations for the increase in the debt burden.
The debt-to-GNI ratio increased by 20%.
According to the International Debt Statistics 2022 report, growth in external borrowing surpassed growth in GNI and exports in low-and middle-income nations worldwide.
In Sub-Saharan Africa, the debt-to-GNI ratio increased about 20 percentage points in a decade, rising from 23.4 percent in 2011 to 43.7 percent in 2020.
Here are 5 African countries owing the World Bank.
Mozambique’s national debt was estimated to be around 19.62 billion dollars in 2020. The country owes 9.3 billion to the World Bank.
Between 2019 and 2020, the ratio in Mozambique grew by 20 percentage points. This had increased by 99 percentage points in a decade (2010-2020).
Mozambique’s economy is expected to increase by 4% in 2022, up from 2.2 percent this year. Still, the country’s northern region remains vulnerable to the Covid-19 pandemic and terrorist threats.
In 2020, Zambia’s external debt to the World Bank was $23. 309 billion. Between 2019 and 2020, the ratio in Zambia grew by 32 percentage points. The ratio has risen by 138 percentage points in a decade.
Zambia’s new government, led by President Hakainde Hichilema, took office in August 2021 and promised to address the crisis. Since the pandemic, Zambia has become the first African country to default on its sovereign debt.
According to media reports, the incoming government would seek assistance from the IMF. It will pledge reforms as part of a formal program in exchange for a low-interest loan.
A settlement with the fund should also open the way for a deal to restructure Zambia’s external loans under the Common Framework for Debt Treatments Beyond the Debt Service Suspension Initiative (DSSI).
According to the World Bank, Capo Verde debt in 2020 was $ 2.0 billion. Between 2019 and 2020, inflation fell by 0.1 percentage point, owing primarily to a euro peg and lower energy costs. On the other hand, revenue shortfalls increased the fiscal deficit to 10.4 percent of GDP in 2020, up from 1.8 percent in 2019.
The current account deficit of 15.6 percent of GDP in 2020, reversing a surplus of 0.3 percent the previous year, is mainly due to a 69 percent reduction in tourism receipts. The high percentage of non-performing loans to gross loans (12%) lowers the quality of banking sector assets and increases risks, eroding financial sector stability.
According to the World Bank, Angola’s external debt stocks in 2020 was $67.287 billion. In 2021, the World Bank Board of Executive Directors approved a $700 million Development Policy Operation (DPO) to support the government of Angola’s efforts to boost the country’s macro-financial and institutional environment for increased private-sector-led growth.
Due to a lack of fiscal revenues (particularly from oil) and limited financing choices, Angola has been in an economic and financial crisis since 2015. Due to a lack of financial resources, the government’s COVID-19 intervention has been limited.
According to the Debt Management Office, Nigeria’s public debt has reached N38 trillion ($92 billion) at the end of the third quarter of 2021, with the entire debt stock increasing by N2.540 trillion in three months between July and September 2021.
On the other hand, the government plans to reduce total public debt by 2025.
According to the World Bank, Nigeria’s debt, being considered sustainable, is susceptible and costly. The Bank says Nigeria’s debt is also at risk of becoming unsustainable in the case of macro-fiscal shocks.
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