High-interest rates, growing investor risk aversion, and surging borrowing in recent years have plunged several developing economies into debt crises. Addressing this pressing issue will be a top priority at the upcoming annual IMF and World Bank meetings in Marrakech, Morocco.
Egypt, North Africa’s largest economy, faces the daunting task of repaying $100 billion in hard-currency debt within the next five years.
The country currently allocates over 40% of its revenues to interest payments, with fiscal needs for 2023/204 standing at $24 billion.
Despite having a $3 billion IMF program and a 50 percent devaluation of the pound since February 2022, Egypt’s $2 billion privatization plan has been sluggish, and it has postponed electricity subsidy removal.
The upcoming December elections are expected to hinder necessary reforms, making support from wealthy Gulf nations crucial for meeting financing needs.
The Ethiopian economy took a severe hit from the COVID-19 pandemic, exacerbated by a two-year civil war that began in November 2020.
Ethiopia also lost duty-free access to the US amid allegations of rights abuses.
In early 2021, Ethiopia sought restructuring under the G20 Common Framework established during the pandemic.
In August, China granted partial debt payment suspension, and Moody’s improved Ethiopia’s outlook from negative to stable, expecting swift progress within the Common Framework.
Ghana defaulted on most external debt in late 2022 during its worst economic crisis in decades. However, it swiftly initiated the restructuring of both domestic and $30 billion in external debt and secured a $3 billion IMF bailout in May.
While the finance minister anticipates reaching a deal with international bondholders by year-end, protests in Accra over rising living costs and economic hardships have erupted.
Kenya, facing a 2 billion euro bond repayment next year, is in discussions with the African Development Bank and the World Bank for budgetary support.
Lebanon has been in default since 2020, with no imminent resolution to its economic meltdown in sight. The IMF welcomed recent central bank changes but emphasized the need for deeper reforms.
Pakistan requires over $22 billion to service external debt and cover bills for fiscal year 2024.
High inflation and interest rates, coupled with the aftermath of the devastating 2022 floods, have posed significant challenges.
In June, Pakistan secured a $3 billion IMF bridge loan, followed by cash infusions from Saudi Arabia and the UAE.
While it has enough reserves to last until elections, the question of long-term default avoidance lingers.
Sri Lanka defaulted on international debt in May 2022 due to pandemic-induced economic challenges. A debt overhaul plan was unveiled in June, but disputes persist over the extent of losses for domestic banks and state-owned enterprise investors.
The next tranche of a $2.9 billion IMF bailout package could face delays due to potential government revenue shortfalls.
Tunisia’s economy has been in crisis since the 2011 revolution, and it faces possible default as credit rating agencies sound alarms.
Despite President Kais Saied’s reluctance to accept IMF loans and EU funds, the tourist season and support from Saudi Arabia have eased some pressures, but citizens continue to grapple with shortages of essentials.
Ukraine halted debt payments following Russia’s invasion in 2022. The nation faces the immense challenge of post-war reconstruction, estimated at over 1 trillion euros, and requires $3-$4 billion monthly to keep the country running.
Although signs of economic recovery have emerged, uncertainty looms over the sustainability of international support.
Zambia, the first African country to default during the Covid-19 pandemic, encountered delays in its restructuring efforts.
A $6.3 billion debt rework deal with the Paris Club creditor nations and China is near finalization, offering hope for a resolution by year-end.