African Debt causing rise in tensions at World Bank and IMF

The debt of Africa has been rising and this fact has been causing a spark in the tensions in a lot of unexpected places.

The total debt externally for the sub-Saharan Africa has been jumping close to 150% to a level of $584 billion in the year 2018 from a level of $236 billion 10 years ago, as per the data of World Bank. A lot of people have been worrying debt load has been becoming unsustainable as there is an increase in the average public debt from the years 2010 to 2018 by a level of 40% to 59% of the Gross Domestic Product.

This is a major issue across the developing low income world however it is particularly acute in this sub-region, where there is a fast growth in the debt accumulation which has outpaced the other areas which are developing. This trend is driven by a lot of the factors which include cheaper money in a lot more economies so the investors are keen to seek the yield in the countries in Africa promising close to 8% or 9% on the euro bonds as per Kristalina Georgieva who is the managing director of International Monetary Fund in the panel discussion in Washington at World Bank in this week. This problem as per her is that the 8 or 9% is not cheap for a lot of the countries who are paying yield out.

World Bank and IMF have been worried especially about weak debt management, lack of transparency as well as a lack of capacity in the low income counties which are increasing.

Both institutions have been worried about coronavirus and its impact on China.