- February 11, 2022
- Posted by: Amos Ekow Coffie
- Categories: Banking and Finance, FDI, Finance
Five of Africa’s heavily-indebted countries —Ghana, Kenya, Angola, Ethiopia and Zambia — are about to experience serious debt risks, according to Standard Bank Group.
The five countries have already been red-flagged by the leading pan-African bank which described them as “the fragile five”.
Focus on Ghana and Kenya
Business Insider Africa gathered that Ghana’s debt risk is being fueled by the country’s deteriorating public finances. Bloomberg quoted Jibran Qureishi, the head of African research at Standard Bank Group, to have said that Ghana will probably need an IMF bail-out to be able to restore confidence in investors.
Recall that Ghana’s credit rating was recently downgraded by Moody’s, due to the increasing difficulty being faced by the West African country with regards to addressing its “intertwined liquidity and debt challenges.”
Analysts are also of the opinion that lenders may not be keen on refinancing Ghana’s Eurobonds once the US Federal Reserve Bank finally increases interest rates.
As for Kenya, available records show that debt servicing costs make up as much as a third of the country’s foreign reserves. Specifically, debt servicing costs represent 35% of the country’s forex.
But while Kenya can still afford to refinance its debts, the upcoming presidential election in the East African country is raising concerns. For one, there is the worry that the election could detract from efforts being made to tackle borrowing and manage the country’s budget deficits.