Afrexim Research projections show that long-term debt will continue to dominate, making up 76.4% of Africa’s total debt by 2028

Key takeaways:

  • By 2028, 76.4% of Africa’s debt will be long-term, up from 75% in 2023.
  • The share of long-term debt will consistently rise each year.
  • Short-term and IMF debts will shrink to 23.6% by 2028, indicating reduced reliance on short-term borrowing.
  • The trend towards long-term debt reduces the immediate financial strain on governments but requires careful management to avoid excessive interest accumulation.
  • Countries must ensure that extended debt periods are matched with productive investments to justify future repayments.
  • A higher share of long-term debt could expose African economies to potential interest rate hikes in the future.
  • While long-term borrowing offers temporary relief, debt sustainability remains a key issue that policymakers must address.

Africa's debt is shifting further toward long-term obligations, with projections indicating that by 2028, 76.4% of the continent’s total debt will be long-term. This slow but steady increase underscores a preference for extended repayment periods, reducing the burden of short-term debt repayments but potentially increasing overall costs due to prolonged interest payments.
In everyday terms, this is similar to how businesses or individuals prefer long-term loans over short-term ones to ease immediate financial pressure. While long-term financing offers breathing space, it requires strong fiscal discipline to ensure that repayments remain sustainable in the future.

Source:

Afreximbank

Period:

2024 - 2028
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Key Takeaways:
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