East Africa Debt Load Is Pain For Future Generations

Grand infrastructure projects are great if you can afford them. In our context however, the current push of corruption-laden projects amounts to transferring the price of our folly to future generations. ILLUSTRATION | JOHN NYAGA | NMG

By The EastAfrican

The latest economic outlook reports from the World Bank and the International Monetary Fund paint a mixed forecast for African countries.

Oil dependent economies will continue to feel the pinch from depressed energy prices. That will suppress their growth, while their less commodity-reliant counterparts, in which East Africa falls, will continue to enjoy growth rates above 5 per cent.

Despite that, both groups face potential headwinds.

How they maneuverer to sustain growth while minimizing fiscal risk will largely determine whether they all get home in one piece.

A major component of the downside risk relates to the debt that many African countries have accumulated. The average debt ratio across sub-Saharan African is now running at the critical margin of 55 per cent of gross domestic product.

The IMF and World Bank are now warning that East Africa’s economies are heading towards economic asymmetry—a situation in which debt servicing will be met at the expense of equally pressing social commitments…

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