Addressing debt distress in Africa
Despite promising signs of a continuing global economic recovery in 2022, the African debt situation remains worrying.
More than 20 low-income African countries were in debt distress or at risk of debt distress in autumn 2021 according to the International Monetary Fund (IMF).
The good news is that while overall debt levels have generally risen, action requested by African governments from development finance institutions (DFIs) and multilateral lenders has meant many African countries have been able to support their economies without taking on too much additional private debt.
The IMF has also allocated Africa $33 billion in special drawing rights (SDRs), providing an immediate liquidity boost without adding to the debt portfolio.
At the same time, the G20’s short-term crisis management tool – the Debt Service Suspension Initiative (DSSI) – has just ended and its intended replacement – the ‘Common Framework for Debt Treatment beyond the DSSI’ – has been implemented far more slowly than originally envisaged with only Chad, Ethiopia and Zambia engaging with it so far.
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