Africa’s external debt now stands at $324 billion

Africa’s external debt has risen from $300.58 billion in 2009 to $324.70 billion in 2010 with sub-Sahara Africa (SSA) accounting for two-thirds of the debt, according to the Economic Report on Africa 2011, a report by the Economic Commission for Africa (ECA).

The overall debt to gross domestic product (GDP) ratio is 24.91%, it said.

The report says, Africa’s external debt fell before the global crisis due to the effect of the debt relieve initiatives, but began to increase since 2009 both in absolute terms and relative to GDP.

The SSA recorded the highest debt of an amount of $278.45 billion as at 2010 as against $256.16 billion in 2009.

North Africa had a lower debt from $44.43 billion in 2009 to $46.24 billion in 2010.

“Regionally, sub-Sahara Africa’s external debt has been increasing in recent years despite the international community’s debt-relief initiatives. North Africa has a lower level”, indicated the report prepared by the ECA and the African Union (AU).

In 2005, the debt was $290.96 billion, $252.93 billion in 2006, $283.32 billion in 2007 and in 2008 it was $286.82 billion, according to the figures in the report.

Ghana’s total debt as at May 2011, the government says stood at $13.4 billion.

The report however noted that debt sustainability in Africa has generally improved in the last decade.

The overall debt-to-export ratio dropped from 92.71 per cent in 2005 to around 73.78 per cent in 2010, though it jumped to 80.3 per cent in 2009 partly as a result of the economic crisis.

During the same period, the overall debt-service-to-export ratio also dropped from 21.05 per cent in 2005 to 14.29 per cent in 2010, and is projected to hover around this trend in 2010 and 2011 to about 14.3 per cent, the report said.

Giving major reasons for the improvement in debt sustainability by African countries, the report noted that it was because of the debt-relief initiatives.

“Of the 40 countries globally eligible (or potentially eligible) for assistance under the Heavily Indebted Poor Countries (HIPC) initiative, 33 of them are in Africa”, it said.

But Official Development Assistance (ODA) which constitutes an important source of development finance for low-income countries, despite the adverse effects of the global crisis on the economies of donor countries, increased from $126.7 billion in 2008 to $127.5 billion in 2009.

“In fact, nominal ODA flows to African countries were at an all-time high of $47.6 billion in 2009 and are estimated to have grown by 4% in 2010”, the report indicated.

“In absolute terms, Africa topped the post-crisis receivers of ODA among developing regions,” it added,

 

By Ekow Quandzie