The public debt of African countries has reached the 1.2 trillion dollar mark, a significant increase on the 1.1 trillion recorded last August, revealed the United Nations Economic Commission for Africa (UNECA) during the African Business Forum. The worsening indebtedness on the continent reinforces concerns about the financial sustainability and risk of over-indebtedness of several African economies.
The Executive Secretary of UNECA, Claver Gatete, emphasised the urgent need for coordinated action between international creditors and the African public and private sectors to tackle this challenge. ‘Africa’s debt has reached 1.2 trillion dollars and we need structured solutions, involving partners such as the Paris Club, the London Club and the private sector, to guarantee a sustainable model for financing development,’ warned Gatete.
UNECA Executive Secretary Claver Gatete
In August, UNECA had already highlighted the importance of debt as one of the main obstacles to investment in African countries. According to the organisation, high public debt is creating a severe budgetary crisis, with more than a third of African countries at high risk of over-indebtedness. This scenario limits access to new financing and jeopardises investments that are essential for economic growth.
Financing deficit threatens development objectives
In addition to the growing debt burden, UNECA revealed that Africa faces an annual financing gap of 1.3 trillion dollars to fulfil the Sustainable Development Goals (SDGs) by 2030. The situation is worsened by the increase in extreme poverty, which already affects 150 million people and could exceed 476 million by the end of this year, according to UN projections.
‘Without immediate action, Africa runs the risk of not achieving the 17 SDGs by 2030,’ warned Gatete, emphasising the need for deep fiscal reforms, greater control over illicit financial flows and debt relief as essential measures to avoid a prolonged financial crisis.
The International Monetary Fund (IMF) and other multilateral financing institutions have been pressured to adopt more flexible solutions to restructure Africa’s debt, including the reallocation of Special Drawing Rights (SDRs) and the expansion of assistance programmes for the most vulnerable countries.
With the continuous increase in public debt and the limitation of fiscal space, African countries face a twofold challenge: securing the necessary funding for development without further jeopardising their financial sustainability. The need for a new debt management model and greater international coordination is therefore becoming a central issue for the continent’s economic future.
O Económico
