Financial experts at United Capital Research have echoed the International Monetary Fund (IMF) and the World Bank on the Bretton Woods institutions’ advice to African countries to curb their appetite for foreign debt and instead focus on ways of increasing revenue internally.
In a note obtained by New Telegraph last weekend, the experts pointed out that despite the IMF and the World Bank warning about the long-term risks of rising external borrowings, African nations continue to accumulate foreign debts.
The experts stated: “In recent years, most African countries have turned to the international debt capital market to satisfy their funding needs while turning a blind eye to the cheaper but stricter loans by supranational organizations. “As at the start of 2019, 20 African countries have tapped into the Eurobond market, bringing the total outstanding African sovereign Eurobond to $92 billion with over 50 per cent of the Eurobonds with yields above seven per cent.”
Besides, they stated: “In our view, we allude more to the views of IMF and World Bank that African sovereigns need to look inwards to grow revenue and reduce their rising fiscal deficit. With that said, we opine that funds raised in the capital market should be tied to capital projects with matching funding maturity.”