Africa faces the highest external public debt borrowing and servicing costs in the world, with debt service obligations of $163 billion this year. According to a number of experts, this is partly due to an unfairly inflated perception of credit risk and inappropriate international banking rules. At the same time, restructuring mechanisms such as the G20 Common Framework are proving ineffective, as seen in Ghana, Zambia and Ethiopia. With the African Union calling for more concessional financing from multilateral banks, how can creditors and debtors work together to stem the tide of defaults?
Key points:
- Paris Club and G20 Common Framework: What reforms are needed to make restructuring mechanisms fairer?
- Special Drawing Rights, capital increases, local currency loans, liquidity support: How can the IMF and multilateral banks contribute to more favourable financing?
- Pan-African rating agency, Big Three reforms: How to correct the African risk premium