News & Analysis: Debt and debt relief

Riding the COVID-19 economic storm

“The economic fallout for the continent from COVID-19 is likely to be severe and enduring. This burden falls heavily on countries with a high dependence on commodity exports to China, weak sovereign balance sheets, high debt burdens, and volatile currencies, among other external fragilities.”

via African Business Magazine

Fitch: Sub-Sahara African debt burdens rising faster than elsewhere

“Government debt burdens across sub-Saharan Africa are rising at a faster pace and to higher levels than elsewhere in emerging markets, heightening the risk of further rating downgrades and defaults, ratings agency Fitch warned.”

via Reuters

Private lenders need to step up on African debt relief

“The impasse between the G-20 and international financiers has bolstered the position of Chinese lenders, who hold an additional $64 billion of disbursed credits in Africa alone, and who also are pursuing painstaking restructuring talks. Taken together, the position of the Chinese and the financiers could make it harder for African governments to respond to the pandemic.”

via Atlantic Council

As Africa Faces COVID-19, Chinese Debt Relief is a Welcome Development

“Given the scale of Africa’s debt crisis, it should be taken as a great reassurance that China, its largest official lender, has warmed to the idea of cancellations.”

via Council on Foreign Relations

Not much give from China in its relationship with Africa

“Despite a warm African response to the recent ‘Extraordinary China-Africa Summit on Solidarity Against COVID-19’, not much new came out of the virtual meeting. Crucially, there was no movement on cancellation of the $150bn in concessional loan debt.”

via SAIIA

IMF Press Conference on the Regional Economic Outlook Update for Sub-Saharan Africa

“Sub-Saharan Africa’s economy is now expected to contract by 3.2 percent in 2020, this is double the contraction we expected in April. It represents by far the worst performance on record. It implies a 7 percentage points swing from the growth we were expecting prior to the crisis for 2020.”

via IMF

Africa needs its own ‘repo’ market

“Many African countries face a vicious cycle: lack of market access due to rising spreads at a time when they need it most and consequently weaker investment and growth potential — in some cases the ugly spectre of downgrades, defaults and debt restructuring may follow. An SPV funded by a major central bank could help break this pernicious pattern and create a virtuous circle for countries with sustainable macroeconomic fundamentals.”

via Financial Times

The Milken Institute’s Conversation with IMF Managing Director Kristalina Georgieva

Milken Institute Chairman Michael Milken discusses the IMF’s response to COVID-19 with Managing Director Kristalina Georgieva.

via Milken Institute

Egypt v. Coronavirus: The pound faces a war of attrition, not a crisis

“The COVID-19 pandemic raised the risks for the Egyptian currency in several ways. Tourism, which was bringing in US$1b a month, has collapsed. Many foreign investors have sold their Egyptian T-bills. Revenue from the Suez Canal has slumped, with the Economist Intelligence Unit in London predicting a 22.6% decline in global trade volume in 2020.”

via The Africa Report

Africa and creditors wake up to debt dilemma

“In the tough years ahead, heavy debt burdens could push inflation up and pull growth down. Suppliers sink when the government stops paying its bills, and trade slows with uncertainty. Africa’s debt burden suddenly looms larger.”

via African Business Magazine