African countries are expected to spend around $74 billion on debt service in 2024, the Macroeconomic Performance and Outlook 2024 by the African Development (AfDB) Bank has revealed.
This would be up from $17 billion in 2010.
According to the AfDB, some $40 billion, or 54.0% of total debt service is owed to private creditors.
“Except in Chad, the Democratic Republic of Congo, Gambia, and Mauritania, debt service costs in African countries was higher in 2020–22 than in 2015–19. Debt service payments have risen substantially in tandem with the growing share of debt owed to private creditors".
Debt restructuring negotiations with private creditors failing to reach agreement
This it said is a cause for concern because current debt restructuring negotiations are failing to reach agreement with private creditors.
Presently, Ghana is negotiating a debt restructuring terms with its private creditors. The country is proposing about 40% haircut of up to $13 billion.
The report pointed out that debt service costs have risen, narrowing the scope for government spending and increasing debt vulnerabilities.
“External debt service payments as a proportion of government revenue are higher than before the COVID-19 pandemic in many countries”, it added.
Yields remain high
“Despite the decline in sovereign spreads in many countries, the yields remain higher than pre-crisis levels”, it continued.
For non-distressed countries, the average yield on outstanding Eurobonds has been more than 12% since Russia’s invasion of Ukraine in 2022, compared with 7.0% before the Covid-19 pandemic.
For distressed countries, the yield on outstanding Eurobonds has more than doubled from the pre-crisis level. For instance in Ghana, the yield on outstanding Eurobonds was 21.7% in October 2023 compared with 9.0% before the pandemic.
External debt as a percentage of government revenue for 50 countries with data rose from 6.8% over 2015–19 to 10.6% over 2020–22.
The report continued that resources channeled to debt service have narrowed fiscal space, further constraining government capacity to invest in growth-promoting sectors and human capital development — especially education and health, two areas where average public spending on the continent is below that for comparator regions.
Latest Stories
-
Livestream: Supreme Court’s hearing of lawsuits against anti-LGBTQ bill
4 seconds -
I have faith in Bawumia to continue my good works – Akufo-Addo to Ghanaians
7 mins -
Ghanaian midfielder Abu Francis extends Cercle Brugge contract until 2026
10 mins -
Supreme Court grants AG’s request for live coverage of anti-LGBTQ bill proceedings
10 mins -
Supreme Court to hear Richard Sky, Amanda Odoi lawsuits against anti-LGBTQ+ bill today
13 mins -
Evans Nimako calls for calm amidst missing BVR concerns
13 mins -
SG’s exit could spur growth of pan-African banks – Fitch Ratings
16 mins -
Diplo Rumble: Azumah, EU Ambassador settle for draw in exhibition fight
40 mins -
Mahama is coming to correct your errors – Nii Lante Vanderpuye to Akufo-Addo
42 mins -
Expect fierce rainstorms in the coming weeks – Ghana Meteo warns residents in Northern, Oti regions
50 mins -
Bahamas 2024: ‘There was no time to blame anyone’ – Azamati on reaction after baton drop
50 mins -
Don’t kill me – Mother of three escapes death after vicious attack by husband
1 hour -
JoySports’ Muftawu Nabila donates furniture to Duu Basic School in North East region
1 hour -
AI Economy in Africa: A step towards Africa’s industrialisation
1 hour -
Bahamas 2024: ‘I knew it was game over after receiving the baton from Azamati’ – Joe Paul
2 hours