40% of Africa’s Debts at Distressed Levels—IMF

November 20, 2019
Picture Credit: Reuters

By Adedapo Adesanya

The Managing Director of the International Monetary Fund (IMF), Ms Kristalina Georgieva, has expressed worries over Africa’s escalating debt.

The new IMF Chief expressed the fears on Tuesday in Berlin, Germany where she discussed outlook for the global economy, central bank policy, and her concerns about debt in some African countries with Bloomberg TV. She said 40 percent of Africa’s debt are at distressed levels.

“Are we worried about debt levels in Africa, yes because 40 percent of the countries have gone into debt distress levels.

“In some cases, we are concerned about that but in other cases, we see that investment is going to pay off over time,” she informed Bloomberg in an interview.

Debt levels in the African region have been rising as governments struggle to collect and grow revenue while increasing their national budgets.

She noted that South Africa’s debt ratio is projected to reach 81 percent of gross domestic product by 2028 and Kenya recently doubled its debt ceiling to match the size of the entire economy.

“Take the case of Kenya, we advise Kenya to be more cautious in building debt but we have seen good macroeconomic policy in Kenya. Our program with the country, our engagement with the country, by and large, are just as positive,” she said.

“In cases where debt is dangerous like Zambia, we do say you need to get a handle on your debt.

“In Ethiopia, we say you need to renegotiate some of your debt because it is non-concessional for things that should be on a concessional basis.

“One has to remember that debt on its own is not bad.  It is bad when it goes with the wrong things and when it goes with the speed that the economy cannot handles” she added.

Ms Georgieva further said the IMF will hold a meeting concentrated on the continent with African leaders in December to discuss debt sustainability.

Adedapo Adesanya

Adedapo Adesanya is a journalist, polymath, and connoisseur of everything art. When he is not writing, he has his nose buried in one of the many books or articles he has bookmarked or simply listening to good music with a bottle of beer or wine. He supports the greatest club in the world, Manchester United F.C.

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