Risk of debt defaults in Africa has increased – AfDB
Written by crest887fm on July 3, 2021
The African Development Bank has stated that the risk of debt defaults is increasing among African countries.
This statement was contained in the Strategy for Economic Governance in Africa, which was launched on Friday by AFDB.
The economic strategic document stated that countries have developed debt vulnerabilities due to decline in economic output, which was triggered by certain policies and measures to curtail the COVID-19 pandemic, adding that public debts had exceeded 50 per cent of GDP.
It stated that declining economic output as a result of containment measures against COVID-19 and policy measures to stimulate the economies have heightened debt vulnerabilities.
The bank stated that following the increase in public debt stock, there had been a corresponding increase in the risk of debt defaults, adding that at least 24 African countries had applied for the Paris Club–led Debt Service Suspension Initiative.
It recommended that countries focus on developing the capacity for effective debt management, as well as strengthen growth, financing instruments, and effective governance, which would be highly beneficial towards avoiding any debt crisis.