Egypt achieves record primary budget surplus of EGP 629bn despite sharp fall in Suez Canal revenues    Escalation in Gaza, West Bank as Israeli strikes continue amid mounting international criticism    Egypt recovers collection of ancient artefacts from Netherlands    Resumption of production at El Nasr marks strategic step towards localising automotive industry: El-Shimy    Egypt harvests 315,000 cubic metres of rainwater in Sinai as part of flash flood protection measures    Egypt, UNDP discuss outcomes of joint projects, future environmental cooperation    United Bank achieves EGP 1.51bn net profit in H1 2025, up 26.9% year-on-year    After Putin summit, Trump says peace deal is best way to end Ukraine war    Jordan condemns Israeli PM remarks on 'Greater Israel'    Egypt's Supreme Energy Council reviews power supply plans for 14 industrial projects    Egypt, Namibia explore closer pharmaceutical cooperation    Fitch Ratings: ASEAN Islamic finance set to surpass $1t by 2026-end    Renowned Egyptian novelist Sonallah Ibrahim dies at 88    Egypt's FM discusses Gaza, bilateral ties in calls with Saudi, South African counterparts    Egypt prepares to tackle seasonal air pollution in Nile Delta    Egyptian, Ugandan Presidents open business forum to boost trade    Al-Sisi says any party thinking Egypt will neglect water rights is 'completely mistaken'    Egypt's Sisi, Uganda's Museveni discuss boosting ties    Egypt's Sisi warns against unilateral Nile measures, reaffirms Egypt's water security stance    Egyptian pound closes high vs. USD on Tuesday – CBE    Egypt, Colombia discuss medical support for Palestinians injured in Gaza    Egypt, Huawei explore healthcare digital transformation cooperation    Egypt's Sisi, Sudan's Idris discuss strategic ties, stability    Egypt's govt. issues licensing controls for used cooking oil activities    Egypt to inaugurate Grand Egyptian Museum on 1 November    Egypt's Sisi: Egypt is gateway for aid to Gaza, not displacement    Greco-Roman rock-cut tombs unearthed in Egypt's Aswan    Egypt reveals heritage e-training portal    Sisi launches new support initiative for families of war, terrorism victims    Egypt expands e-ticketing to 110 heritage sites, adds self-service kiosks at Saqqara    Palm Hills Squash Open debuts with 48 international stars, $250,000 prize pool    On Sport to broadcast Pan Arab Golf Championship for Juniors and Ladies in Egypt    Golf Festival in Cairo to mark Arab Golf Federation's 50th anniversary    Germany among EU's priciest labour markets – official data    Paris Olympic gold '24 medals hit record value    A minute of silence for Egyptian sports    Russia says it's in sync with US, China, Pakistan on Taliban    It's a bit frustrating to draw at home: Real Madrid keeper after Villarreal game    Shoukry reviews with Guterres Egypt's efforts to achieve SDGs, promote human rights    Sudan says countries must cooperate on vaccines    Johnson & Johnson: Second shot boosts antibodies and protection against COVID-19    Egypt to tax bloggers, YouTubers    Egypt's FM asserts importance of stability in Libya, holding elections as scheduled    We mustn't lose touch: Muller after Bayern win in Bundesliga    Egypt records 36 new deaths from Covid-19, highest since mid June    Egypt sells $3 bln US-dollar dominated eurobonds    Gamal Hanafy's ceramic exhibition at Gezira Arts Centre is a must go    Italian Institute Director Davide Scalmani presents activities of the Cairo Institute for ITALIANA.IT platform    







Thank you for reporting!
This image will be automatically disabled when it gets reported by several people.



Sub-Saharan African economies struggle amid financial tightening: FocusEconomic
Recent Posts
Published in Daily News Egypt on 02 - 10 - 2023

The global monetary tightening that began in 2021 has resulted in Sub-Saharan African countries facing higher financing costs when issuing new debt. Consequently, the region's ratio of interest payments to revenue has more than doubled since the early 2010s and is approximately four times higher than that of advanced economies.
The IMF has determined that half of low-income Sub-Saharan African countries are at high risk of debt distress or are already experiencing it, and some countries, such as Kenya and Mozambique, have lost access to international markets. Moreover, rising interest rates have led to higher yields on foreign assets, causing investors to withdraw their capital from Sub-Saharan African countries. This has weakened national currencies and complicated the repayment of foreign-currency debt. It is anticipated that regional currencies will depreciate by an average of 17.4% against the US dollar in 2023, up from 6.8% in 2022, while international reserves have declined since 2021.
In response to these challenges, central banks have raised interest rates to counter currency depreciation. Authorities have also intervened in foreign exchange markets, and international lending has provided countries with crucial breathing room to adjust policies and address investor concerns. For example, as of March of this year, the IMF had lending arrangements with 21 countries in the region. Additionally, funding approvals from the African Development Bank increased from $4.5bn in 2021 to $6.1bn in 2022.
Economic projections:
FocusEconomics panelists expect SSA's average public debt-to-GDP ratio to reach 56.9% in 2023, with a fiscal deficit of 4.3% of GDP. The region's debt ratio is seen rising further over our forecast horizon, with the fiscal shortfall staying elevated at around 4%. As such, many African countries will likely remain at risk of debt distress in the absence of more concerted efforts by national authorities to boost revenue mobilization and/or restrain expenditures. Even with such efforts, debt restructuring may be the only option in some countries. Even as global interest rates decline in the coming years, the region's fiscal challenges will remain.
On general financing conditions, analysts at the EIU said: "Most of the countries at the highest risk of a debt default are in Africa, reflecting high indebtedness, heavy external debt-service burdens and stretched public finances. African economies had taken advantage of low-cost international credit prior to the pandemic for budgetary and balance-of payments support, accumulating large external debt burdens as a result. However, rising interest rates have increased debt-servicing costs dramatically."
On broader economic developments for the region, analysts at Goldman Sachs commented: "The lack of foreign capital inflows and incomplete currency adjustment processes that may weigh on domestic confidence both contribute to a lack of investment. Meanwhile, elevated inflation (eroding real incomes), tighter financial conditions, and fiscal consolidation weigh on household consumption. [ ...] Put together, along with a negative impulse to external demand stemming from a slowing global economy, we expect these factors to weigh on economic growth in 2023. This, in turn, may contribute to social and political pressures that have already increased considerably across the region."


Clic here to read the story from its source.