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Canada The IMF alerts donors to the risk of excessive indebtedness in sub-Saharan Africa

07:40  23 october  2020
07:40  23 october  2020 Source:   rfi.fr

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Sub - Saharan Africa is facing an unprecedented health and economic crisis that threatens to throw the region off its stride, reversing the development progress of recent years and slow the region’s growth prospects in the years to come. The COVID-19 pandemic has spread through almost all countries.

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The specter of excessive debt resurfaces for countries in sub-Saharan Africa following the coronavirus pandemic. The International Monetary Fund has sounded the alarm bells and calls on donor countries to be "bold" in the face of the debt wall that awaits Africa.

The needs of sub-Saharan Africa for the next 3 years to restart their economies are enormous. According to the IMF, it would take 890 billion dollars in external financing for countries in the region. This sum represents more than half of their overall GDP. We will therefore need a return to massive borrowing to stabilize economies weakened by the global health crisis, while the region was on a trajectory of reducing its debt at the start of the pandemic.

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Sub - Saharan Africa ’s economic recovery is expected to continue, reflecting a combination of domestic policy adjustments and a supportive external environment. Risks to the outlook are rising. The global economy is entering a period of unusually elevated policy uncertainty with significant risks that could

The development of derivatives markets in sub - Saharan African countries could enable market participants to self-insure against volatile capital flows. Since such markets would likely be small, consideration should be given to the establishment of a regional derivatives market.

Crisis complicated by the price of oil

Two-thirds of the amount needed has already been identified, with pledges from international financial institutions, bilateral creditors and private creditors. It will therefore be necessary to find 290 billion dollars - by 2023 - to close the financial gap. Oil-producing countries like Nigeria and Angola, faced with falling prices for both black gold and the volume of their exports, are expected to see their debt ratios rise dramatically.

The IMF calls on the G20, made up of the main donors themselves very affected by the coronavirus crisis, to be more daring, for example by reducing the interest on the debt. The fund still welcomes the moratorium put in place last April, initially for 6 months and recently extended until next year.

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