Back into the debt swamp
12/12/19 16:35![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png){kind=small}
mahnmut posting in ![[community profile]](https://www.dreamwidth.org/img/silk/identity/community.png){kind=small}
talkpoliticsThe record prices of the raw materials and low interest rates are encouraging African countries to take loans as high as the rates back in the 90s. Some of them are still combating high debt in the conditions of shrinking revenue due to the slowing growth.
Public debt as a share of the GDP in Africa (specifically, south of the Sahara) has doubled for the last decade, nearing its levels at the turn of the century. This is naturally raising concerns. The IMF reports that out of 54 African countries, 20 are nearing or have already fallen into difficulties, which means they'll be finding it hard to meet their obligations from here on.
The African governments have accumulated about 26 billion dollars from the international markets this year, which is close to last year's 30 billion dollars, using their advantages, given the high thirst for profit among the investors in a world of generally negative profit. The continent's volatile national currencies however are increasing the risk of loaning in the more stable currencies, and the rising prices of serving debts could affect other expenses in a region that's home to half the world's poor population.
The current conditions seem ripe for much higher public debt rates now - which means that whenever the next crisis hits (and it will), the risk of its spreading wider would be higher, because the investors are heading toward more profitable assets.
Still more concern of a new crisis is caused by the growth of direct loans from China. The Chinese government, banks and entrepreneurs have granted loans worth a total of 143 billion dollars to African state companies between 2000 and 2017, the SAIS-CARI initiative at the John Hopkins University reports.
While Africa is still far from entering a debt crisis (or at least its biggest creditor might claim so), some countries already have a critically high debt level compared to their GDP, which is a big problem. The GDP to public debt ratio in Africa might still be "within the acceptable limits" as of now, but it's a fact that serving external debts is now eating up about 13% of the revenue of the African countries, compared to just 4.7% in 2010.
The excessive expenses, along with the collapsing prices in the 90s led to an overall debt crisis that made the creditors from the wealthy countries write off much of the debt of dozens of African countries in 2005. But this time it won't be that easy.
Public debt as a share of the GDP in Africa (specifically, south of the Sahara) has doubled for the last decade, nearing its levels at the turn of the century. This is naturally raising concerns. The IMF reports that out of 54 African countries, 20 are nearing or have already fallen into difficulties, which means they'll be finding it hard to meet their obligations from here on.
The African governments have accumulated about 26 billion dollars from the international markets this year, which is close to last year's 30 billion dollars, using their advantages, given the high thirst for profit among the investors in a world of generally negative profit. The continent's volatile national currencies however are increasing the risk of loaning in the more stable currencies, and the rising prices of serving debts could affect other expenses in a region that's home to half the world's poor population.
The current conditions seem ripe for much higher public debt rates now - which means that whenever the next crisis hits (and it will), the risk of its spreading wider would be higher, because the investors are heading toward more profitable assets.
Still more concern of a new crisis is caused by the growth of direct loans from China. The Chinese government, banks and entrepreneurs have granted loans worth a total of 143 billion dollars to African state companies between 2000 and 2017, the SAIS-CARI initiative at the John Hopkins University reports.
While Africa is still far from entering a debt crisis (or at least its biggest creditor might claim so), some countries already have a critically high debt level compared to their GDP, which is a big problem. The GDP to public debt ratio in Africa might still be "within the acceptable limits" as of now, but it's a fact that serving external debts is now eating up about 13% of the revenue of the African countries, compared to just 4.7% in 2010.
The excessive expenses, along with the collapsing prices in the 90s led to an overall debt crisis that made the creditors from the wealthy countries write off much of the debt of dozens of African countries in 2005. But this time it won't be that easy.
(no subject)
Date: 13/12/19 08:21 (UTC)(no subject)
Date: 15/12/19 07:30 (UTC)The thing about the C21st is that the west has privatised or is in the process of privatising the models of economic dominance and servitude, and China has a slightly more statist approach to economic dominance.
Now, let’s see which model works better, shall we?