The United Nations Economic Commission for Africa (UNECA) said on Saturday that the increase in debt to GDP, from 57% in 2019 to 66% this year, is hampering the recovery of African economies.

"The covid-19 pandemic and the Russia-Ukraine war is having a negative impact on the fiscal performance of African countries, where the debt-to-GDP ratio has increased from 57% in 2019 to 66% in 2022, due to the health expenditure and social costs that countries have faced in the wake of the lockdown," said the Director of the Macroeconomics and Governance division, Adam Elhiraika.

According to a UNECA statement, the Director also stressed that with the weakening of national currencies and growing external debt, "the multifaceted global crisis has exacerbated over-indebtedness in several African countries", which therefore need to mobilize innovative financing to develop development and debt management programmes.

UNECA points out that for oil-importing African countries the debt ratio is already at 73% of GDP "due to the fact that energy costs have skyrocketed because of the crisis in Ukraine", which has had among its main economic consequences the reduction in the supply of cereals and the rise in the price of oil and gas for African countries.

The International Monetary Fund (IMF), in its latest report on sub-Saharan Africa, recommends that the G20 renew the Debt Service Suspension Initiative (DSSI) and UNECA points out that of the 73 countries eligible for this initiative, 52% are in Africa, with 48 countries participating in the action that has succeeded in suspending payments worth almost 13 billion dollars between May 2020 and December 2021.

To help the most indebted countries, UNECA launched the Liquidity and Sustainability Facility last year to reduce liquidity premiums and improve countries' access to international debt markets through a bond buy-back market.

"This mechanism has the potential to save African countries around 11 billion dollars over the next five years in debt costs, and has already attracted interest from international investors, with potential savings of up to 30 billion dollars in the first year," the statement reads. (Sapo)