Sub-Saharan Africa urgently needs new forms of liquidity, debt relief

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New forms of liquidity, debt relief
New forms of liquidity, debt relief

Due to multiple external shocks since the outbreak of the COVID-19 pandemic, sub-Saharan Africa (SSA) is facing acute debt distress and new highs in the cost of foreign capital. Concomitantly, the region needs to mobilize a stepwise level of financing to meet shared climate and development goals, under the Paris Agreement climate targets and the UN 2030 Sustainable Development Goals (SDGs).

Do SSA countries have the fiscal space necessary to achieve the Paris Agreement commitments and SDGs while also servicing their external debt?

A new working paper published by the Debt Relief for a Green and Inclusive (DRGR) Project outlines the levels of sovereign external debt and service payments between 2023-2030 for SSA countries, finding the region urgently needs new forms of liquidity, concessional and grant finance, as well as comprehensive debt relief to meet shared climate and development goals.

Main findings:

External debt in SSA has more than tripled since 2008, with the region experiencing the largest deterioration in debt sustainability indicators across the Global South.
External Public and Publicly Guaranteed (PPG) Debt on the Rise in SSA

By 2021, total SSA debt stock amounted to $539.1 billion, of which a combined 40 percent is owed to bondholders and other private creditors, 28 percent to multilateral development banks (MDBs) and 11 percent to China.

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