AfDB warns of 25 African countries facing debt risks, as IMF approves loans to Zambia, Senegal

The rise in cost of debt servicing has led to 25 countries in Africa being at risk of either high debt distress or in-debt distress, African Development Bank (AfDB) Group president has warned, just as the International Monetary Fund (IMF) has approved billion-dollar loans to Zambia and Senegal.

AfDB chief, Akinwumi Adesina, said African markets have had to bear the brunt from the strict monetary policies in Europe and the United States. The tough economic times have affected interest rates and led to rising costs of debt serving, with AfDB warning that Africa’s external debt could rise from $1.1 trillion to $1.13 trillion.

“As a result, the external debt service payments due for 16 African countries will rise from $21.2 billion in 2022 to $22.3 billion in 2023,” said Adesina.

The growth of continental loan obligations has been blamed on the adversities of the Covid-19 pandemic, the rising costs of energy and food prices due to the Russian-Ukraine war while the rising costs of adapting to climate change compounded these challenges.
This warning comes as the IMF announced late June that it had reached a $6.3 billion debt restructuring deal with Zambia. The agreement signifies a crucial turning point in Zambia’s economic recovery and holds the potential to unlock vital financial resources, propelling the nation towards a path of stability and growth, the IMF said in a statement. The deal, struck at a summit in Paris, focused on easing poor countries’ debt burdens, is crucial for Zambia’s economic recovery, which has been marred by mounting debt distress.

At the same time, the IMF approved about $1.8 billion in loans for Senegal to support the nation’s recovery and protect it from future shocks. The West African country will receive an immediate disbursement of about $216 million, the Washington-based lender said in a statement following an executive board meeting.