Abdullahi
Most African countries are dealing with a severe debt crisis with the likes of Ghana failing to honour its foreign debt obligations.
According to the IMF, the higher interest rate environment exacerbates macroeconomic imbalances, including high levels of public debt and inflation, which are eroding household purchasing power and adding to social pressures.
The report suggests that the lack of financing is already impacting the regions economic recovery, with growth expected to decline to 3.6in 2023 down from the 3.9 projected last year.
It also points out that the funding squeeze will have a longterm impact, potentially forcing countries to reduce resources for critical development sectors such as health, education, and infrastructure, which could weaken the regions growth potential.
The Fund claims the global slowdown, higher interest rates, and a dramatic pickup in global inflation have pushed many countries closer to the edge.
The report highlights the challenges that subSaharan African countries face due to the funding squeeze.
It states that higher borrowing costs and tighter monetary policies, combined with a decline in aid budgets, have led to rising interest burdens on public debt.
Keypoints
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Related
- Impact on inflation
- Impact on Exchange Rate
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