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Rollover risk for Africa's economies
Risk of financing stress will increase for many African sovereigns amid deteriorating global financial conditions. CNBC Africa is joined by a David Rogovic, Senior Analyst at Moody's.
Wed, 29 Jun 2022 14:41:37 GMT
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AI Generated Summary
- African countries are grappling with a surge in borrowing costs and increased borrowing needs, exacerbated by the Russia-Ukraine crisis and higher commodity prices.
- The imminent maturity wall, with a spike in debt maturing from 2024 onwards, poses a formidable challenge for countries like Angola, Nigeria, Kenya, and Cote d'Ivoire.
- The key to mitigating rollover risk lies in implementing fiscal consolidation measures to stabilize debt levels and restore investor confidence for market access.
A looming specter of financing stress is casting a shadow over many African sovereigns as global financial conditions continue to deteriorate. With the risk of borrowing costs rising steeply, African countries are facing a challenging landscape of increased borrowing needs amidst a global economic downturn. David Rogovic, Senior Analyst at Moody's, shed light on the pressing issue of rollover risk for African economies in a recent interview with CNBC Africa. The vulnerability of many African countries stems from a combination of factors, including the Russia-Ukraine crisis, which has impelled higher commodity prices, further straining economic growth and increasing inflation. The impact of these challenges is compounded by the maturity wall on the horizon, with a significant surge in debt maturing starting in 2024 and extending throughout the rest of the decade. Countries like Angola, Nigeria, Kenya, and Cote d'Ivoire have faced setbacks in bond issuances due to market conditions and escalating borrowing costs. As the countries reel under the pressure of turbulent financial conditions, the need for immediate and strategic actions has become paramount. Economies at the brink of financial instability need to chart a course towards fiscal consolidation to bolster investor confidence and establish a foundation for market access. David highlighted the importance of implementing fiscal reforms to stabilize debt levels and pave the way for a gradual reduction in the medium term. The road ahead for African economies is fraught with challenges, but with prudent financial management, these nations can navigate through turbulent waters and emerge stronger in the face of adversity.
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