African countries debt level at its highest in ten years, study shows

Dec 01, 2015

The weight of the debt in the GDP of African states has regained its 2005 level.

The weight of the debt in the GDP of African states is now reaching its 2005 level, according to a new study from financial data provider Dealogic.

Approximately $5.2 billion (€4.9 billion) were issued by Sub-Saharan African states since the start of the year, against 9.4 billion in 2014.

The survey, seen by newspaper Les Echos, says that over 10 years, the debt raised on international markets by these countries totalled nearly $36 billion.

This increase, according to Dealogic, neutralised the debt relief of over $100 billion achieved in 2005 after an international campaign led by Bono, leader of the rock band U2.

Cameroon's debt currently represents 36 per cent of its GDP, a level slightly under that of 2005 (40.7 per cent).

This rate currently stands at 72.8 per cent in Ghana, well above its 2005 rate (48.6 per cent).

According to the study, African countries wish to take advantage of the favourable financing conditions stemming from the US Federal Reserve's very accommodative policy, designed to boost infrastructure projects.

In 2014, executive director of the International Monetary Fund Christine Lagarde warned African countries against the risks associated with bonds.

She said that even though bonds generate additional funding, they increase the vulnerability of economies, adding that the debt of African countries could stifle their economies and derail the "excellent" economic conditions in the region.ADNFCR-2976-ID-801807047-ADNFCR