African countries issued a total of $15.7 billion in Eurobonds, demonstrating continued reliance on external debt markets.
While the first ten months totaled $6.2 billion, November and December alone added $7.5 billion, marking a sharp increase.
The total issuance jumped from $6.2 billion in October to $10 billion in November and then $13.7 billion in December, showing a drastic shift in borrowing.
Eight African countries drove this activity, as the borrowing is concentrated among key economies.
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.
External debt is set to surpass domestic debt by 2025, reaching a peak of 28.3% of GDP, which indicates a major shift in Ethiopia’s debt strategy.
Ethiopia’s external debt-to-GDP ratio dropped consistently from 26.8% in 2020 to 13.7% in 2024, but a sharp increase is projected for 2025.
Domestic debt peaked at 27.1% in 2021 before declining steadily to 18.7% in 2024, with a further decline expected in 2025 (14.5%).
The sharp rise in external debt in 2025 suggests a major policy shift, possibly driven by the need for foreign capital or declining domestic financing options.
The decline in domestic debt may indicate reduced government borrowing from local sources, which could have implications for local financial markets and inflation.
Foreign debt reliance increases exposure to currency risks and external economic conditions, which could affect Ethiopia’s financial stability in the long run.
FGN Bonds dominate Nigeria’s domestic debt service payments, rising from 66.6% in 2017 to 87.9% in 2024. This reflects a growing reliance on long-term debt financing.
Treasury Bills have seen a sharp decline in their share of domestic debt service, dropping from 30.1% in 2017 to just 6.4% in 2024. This suggests a shift away from short-term debt instruments.
Treasury Bonds, which peaked at 14.9% in 2022, also declined to just 5.6% in 2024.
By 2021, over 80% of domestic debt service payments were already allocated to FGN Bonds, showing a consistent pattern of prioritisation. The trend has only intensified in subsequent years.
The rising dominance of FGN Bonds means Nigeria is locking itself into long-term repayment obligations, potentially increasing the fiscal burden in the future.
This trend underscores the need for careful debt management policies to prevent a future where long-term commitments become a burden rather than a stabilising factor. 🚨
