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African Nations Slipping Into New Debt Crisis (Financial Times)
May 2, 2018
From the article:
Sub-Saharan Africa is slipping into a new debt crisis, with 40 per cent of the region’s countries now at high risk of debt distress — double the proportion of five years ago.
With the number of countries already unable to service their debts doubling in the past year to eight, officials at the IMF are urging all African countries to raise taxes to provide more scope for paying interest, which has increased to levels last experienced at the start of the century.
The officials caution that any debt relief required in future is set to be much more difficult than in the past because most recent lending has come from commercial sources less amenable to debt forgiveness than are national governments.
Masood Ahmed, president of the Center for Global Development, a development think-tank, said the region’s increased debt had been facilitated by commercial lenders searching for higher-yielding assets. Mr. Ahmed led the World Bank’s Heavily Indebted Poor Countries Initiative in the 1990s — a programme that significantly reduced debt burdens.
“While debt ratios are still below the levels that led to HIPC, the risks are higher because much more of the debt is on commercial terms with higher interest rates, shorter maturities and more unpredictable lender behaviour than the traditional multilaterals,” he said.