Many African countries are facing a dangerous situation as public debt repayments reach their highest levels since 1998
Public debt repayments in some African countries are at their highest levels since 1998. The Conversation Africa’s founding editor Caroline Southey talks to dean and economics professor Philippe Burger about the danger of debt problems some African countries face.

What’s behind the spike in debt servicing repayments?
For most countries experiencing new highs in debt servicing costs, it is not so much a spike, but rather a gradual increase over several years. As Figure 1 which uses data from the International Monetary Fund (IMF) shows, the Gross Debt of General Government (which includes central, provincial/state, and local government levels) steadily increased as percentage of GDP over the last 15 years (for brevity we will call this ratio the debt ratio). This period includes the global financial crisis as well as the COVID periods.
This trajectory can also be seen in individual countries. In Zambia the debt ratio was a mere 21.9% in 2007, but increased to 140.2% in 2020, when the government defaulted. In Ghana it was 22.6% in 2007, before quadrupling to 88.8% in 2022. The increase in the debt ratios in Zambia and Ghana can also be seen in the increase in their governments’ interest payments as percentage of GDP. In the case of Ghana, it increased from 1.4% in 2007 to 7.2% in 2022, while in Zambia it increased from 1.4% to 6%.

Ghana and Zambia have defaulted: what impact will this have?
A default often has a significant fallout in the economy, with governments, companies and households facing forced austerity. Governments must then cut back significantly on their expenditure, often in the face of shrinking tax revenues.
This often negatively affects social expenditure, for instance health and education. If such a country must knock on the door of the IMF for assistance, as both Ghana and Zambia had to do, the institution usually prescribes several tough policy and economic adjustments.
In early 2023 eleven of the top-20 borrowers from the IMF were African countries.
Egypt is the second largest borrower from the IMF, incurring loans in the aftermath of the political and economic instability that followed the Arab Spring in 2011.
The period leading up to a default is also often characterised by companies and households facing much higher inflation. This inflation often originates from a deep depreciation of the local currency because of capital flight of foreign and domestic investors losing confidence.
Both the Ghanaian Cedi and Zambian Kwacha depreciated significantly in the period leading up to their government’s default.