Trésor-Info - Publications de la direction générale du Trésor - Economie-emergente

Debt in Sub-Saharan Africa

2022-01-25T00:00:00+01:00

Following the cancellations of sovereign debt in the early 2000s under the Heavily Indebted Poor Countries Initiative, Sub-Saharan African countries' external debt stocks have increased sharply once again. These debts have increased threefold since 2006, the year that saw the lowest levels following the cancellations.

The composition of creditors has changed, with private-sector creditors holding a share of sovereign debts which soared by 14 percentage points between 2009 and 2019. This change reflects the increasing number of countries issuing debt securities on international capital markets. Furthermore, China is now the largest bilateral creditor for Sub-Saharan Africa (SSA), holding 62% of the region's bilateral debt in 2019.

This rapid rise in new debts is a source of severe vulnerabilities because of the complexity of the debt instruments used. The reliance on capital markets has created significant refinancing and exchange rate risks. Furthermore, the lack of transparency surrounding collateralised loans may increase the risk of debt distress and make any potential debt treatments more complex.
The COVID-19 pandemic has exacerbated pre-existing vulnerabilities. In early 2020, uncertainty and foreign investors' perception of greater risks deprived some Sub-Saharan African countries of access to foreign capital markets, before the situation returned to normal in the second half of 2020. On this occasion, multilateral institutions stepped up and played a countercyclical role by releasing massive emergency funds ($230bn between April 2020 and mid-2021).

In addition, the Debt Service Suspension Initiative (DSSI), introduced by the G20 and the Paris Club, enabled low-income Sub-Saharan African countries to free up large amounts of liquidity to cope with the pandemic. The G20 and the Paris Club members have agreed for the first time to go beyond a temporary measure and set up the Common Framework for Debt Treatments beyond the DSSI for these countries

World economic outlook in autumn 2021: Catching up at uneven paces

2021-09-07T00:00:00+02:00

In 2021, the global economy is expected to rebound sharply by 6.0% and economic activity is projected to return to pre-pandemic levels, underpinned by vaccine rollouts and fiscal and monetary policy support measures. Global growth is envisioned to reach a still-strong 4.5% in 2022. The pace of the recovery is likely to be uneven: the US and major emerging economies – China, India, Brazil and Russia – are projected to recover to their pre-crisis levels on an annual average basis in 2021, while other major advanced economies – Germany, Italy, Spain and the UK – are not expected to see a recovery until 2022.

Hindered by pandemic restrictions put in place in 2021, economic activity in the euro area is not forecast to surpass pre-pandemic levels until 2022, by 2.3% above its average 2019 level. Germany is projected to see a quick recovery and Italy will also likely return to its pre-crisis level, whereas Spain is expected to barely regain it.

The UK was hard hit by the pandemic and the impact of Brexit in 2020, but the country is expected to grow by a strong 7.0% in 2021 and exceed its 2019 average level in 2022 (by 1.5%). The US, which experienced a lesser decline in activity than Europe in 2020, is forecast to report sharp growth in 2021 (up 6.2%) and 2022 (up 4.4%), fuelled by substantial fiscal support.

Global trade in goods is forecast to recover in 2021, increasing by 11.4% after a 6.7% contraction, underpinned by the rebound in global economic activity. Trade in services, however, is expected to feel the lasting effect of the shock to tourism. Catch-up effects are projected to fade in 2022 and goods trade looks set to rise by a moderate 5.0%.

This scenario is subject to considerable uncertainty, on both the upside and the downside. Beyond pandemic-related developments, the strength of the rebound will depend on the size and timing of fiscal support programmes and on lasting accommodative financial conditions.