African Countries Facing Debt Crises
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African Countries Facing Debt Crises

In Africa, the United States dollar is the king of all currencies. With revenue gaps spreading across, large numbers of African countries have become net borrowers, heavily indebted with massive fiscal slippage.

As a result, leaders in the region rely heavily on international financial support, and grants – especially from multilateral lenders- World Bank and International Monetary Fund (IMF). The spread of covid-19 and the recent Russia-Ukraine war have given African leaders a veritable alibi for non-performance and outright poor performance.

Individually, troubled countries in the region have large exposures to the regional financing organisation, Africa Development Bank, in an effort to keep the continent in shape. Despite this support, local currencies in the region continue to decline against the United States dollar.

With a combined gross domestic product of $1.8 trillion, 55 African countries are equal to the size of France’s economy.  Recently in India, top officials from the Group of 20 leading economies discuss how to help the growing number of countries now in the grip of debt crises. Nigeria had planned to join the group in 2020.

Unfortunately, Africa’s largest economy with a $440 billion gross domestic product size (as per World Bank data in 2021), fell through her Vision 20:2020 agenda, moving from pro-market to social interventionist policy.

The United Nations estimates that over 50 countries, accounting for more than half of the world’s poorest people, are in need of immediate relief to avoid even more extreme poverty, according to a Reuters report.


Zambia, the first African country to default during the COVID-19 era back in 2020, is seen as a litmus test for the G20’s Common Framework initiative set up during the pandemic to accelerate and streamline debt restructurings. But progress with Zambia’s $13 billion debt rework has been glacial.

Some western officials have blamed China for the hold-up, something that China disputes, while there have also been broad disagreements about how much debt the country can afford going forward and whether multilateral lenders like the World Bank should also write off some of its loans to Zambia.

Zambia’s currency, the kwacha, has fallen about 8% against the U.S. dollar this year, which the country’s central bank has blamed partly on the debt restructuring delays and warns it’s also adding to inflation.


Ghana – whose debt-to-GDP ratio soared above 93% last year and spent over 40% of its government revenues of debt interest payments alone – became the fourth country to seek a rework under the Common Framework in January.

Accra U-turned over its resistance to IMF help in July in the wake of street protests, and secured a $3 billion agreement with the fund in December, contingent on it successfully restructuring its debts.

The cocoa, gold and oil producer has now turned its attention to negotiations with external creditors, after finishing a domestic debt exchange last week with 64% sign-up from holders of the 130 billion ($10.40 billion) originally slated for restructuring.


Egypt has experienced a double whammy from COVID-19 and soaring food and energy prices, and has struggled in recent years to contain its rising debt and debt servicing burden.

Cairo finally secured IMF approval for a new $3 billion support package in December. As part of the deal, it committed to a flexible currency, a greater role for the private sector and a range of monetary and fiscal reforms.

Egypt has had three sizable devaluations since March 2022, weakening its currency by nearly 50% over the past 12 months. This has been painful for its 104 million strong population with inflation climbing to nearly 26% – its highest in more than five years and likely to increase borrowing costs.

The IMF wants its support to help bring in $14 billion from other sources. The country raised $1.5 billion with a sukuk earlier this week but whether it can tap the conventional borrowing markets will depend on its other areas of progress.


Tunisia and Malawi are two smaller economies where recent global shocks have exacerbated pre-existing vulnerabilities.

Tunisia is suffering its worst financial crisis which has led to a shortage of basic food items and is seeking a $1.9 billion IMF loan in exchange for unpopular reforms, including cutting food and energy subsidies.

After reaching a staff-level agreement in mid-October, the IMF postponed its board meeting on Tunisia’s loan program scheduled for Dec. 19 over reform delays, but analysts who follow the country hope the deal can be finalised soon.


Malawi has been experiencing severe foreign exchange shortages in recent months and is trying to restructure its debt in order to secure more funding from the IMF, which approved emergency funds for the donor-dependent country in November.

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