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Africa Debt Rising

Mar 20 '16 | By La Afrique Media | Views: 62 | Comments: 0
Average gross domestic product (GDP) growth in Africa is second only to that of South Asia. The improvement of macroeconomic and public sector management since the 1990s is widely praised. Substantial investment in infrastructure is now among the most pressing priorities. Public debt levels are mostly well below 50% of GDP, a rule of thumb being that 40% is sustainable in emerging economies. Global investors’ hunt for yield has enabled many African countries to tap international bond markets for the first time. While Eurobond issues are often depicted as evidence of the continent’s economic resurgence, they should also encourage close scrutiny of public financial management and debt sustainability. Against a backdrop of falling commodity prices, the US dollar’s strength and forecasts for higher global interest rates, this Counterpoint highlights the pitfalls of rising debt levels in Africa and underscores measures for mitigating risk.
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