- June 24, 2021
- Posted by: adminer
- Category: Finance, International
The rising national debts and the warning that majority of countries are facing high risk of falling into a debt trap dominated the ongoing African Development Bank Group’s 2021Annual Meetings.
Experts that expressed the fears include the Director-General of the World Trade Organisation (WTO) and ex-Minister of Finance, Dr. Ngozi Okonjo-Iweala; and President of the African Development Bank (AfDB), Dr. Akinwunmi Adesina; as well as Governor of the Central Bank of Egypt (CBE), Tarek Amer.
They warned African political leaders to explore other funding options and scale up debt management transparency.
The experts observed that majority of the countries are grappling with sustainability just as debt servicing has become a major burden on the regional economy.
Okonjo-Iweala observed that the current debt burden pre-dated COVID-19 but was worsened by the pandemic. Noting that “prevention is better than crisis management”, she warned that Africa could not afford to fall into a debt trap again.
According to her, many African countries’ debt to gross domestic product (GDP) ratio ballooned during COVID-19 and the oil market crisis. For instance, she said, Nigeria’s debt to GDP moved up from 29 per cent to 35 per cent during the recent lull in the international crude market.
Recent data shows that the Federal Government spent a sum of N1.02 trillion on domestic and foreign debt service in the first quarter of 2021, representing a 35.7 per cent year-on-year increase compared to N753.7 billion spent in the corresponding period of 2020….