Nigeria, SSA peers received $39bn long-term debt inflows in 2019 – World Bank

Countries in Sub-Saharan Africa accounted for the largest share (24 per cent) of $162 billion net long-term inflows to low- and middle-income countries, excluding China, in 2019, the World Bank has said.

The bank, in its International Debt Statistics 2021 report, noted that before the onset of the COVID-19 pandemic, rising public debt levels were already a cause for concern, particularly in many of the world’s poorest countries.

It said responding to a call from the World Bank and the International Monetary Fund, the G20 endorsed the Debt Service Suspension Initiative in April 2020 to help up to 73 of the poorest countries manage the impact of the COVID-19 pandemic.

According to the report, the total external debt of DSSI-eligible countries climbed 9.5 percent to a record $744 billion in 2019 from the previous year, highlighting an urgent need for creditors and borrowers alike to collaborate to stave off the growing risk of sovereign-debt crises triggered by the COVID-19 pandemic.

It said the pace of debt accumulation for these countries was nearly twice the rate of other low- and middle-income countries in 2019.

The Bretton Woods institution said net debt inflows to low- and middle-income countries continued their downward trajectory in 2019, falling to $383bn, 28 percent below the 2018 level and well below half the comparable inflows in 2017.

It said the decline was primarily the outcome of a severe contraction in short-term debt inflows, which fell 86 percent to $30 billion from $219 billion in 2018.

Net long-term debt inflows from bilateral creditors were directed primarily at Sub-Saharan Africa (41 percent) and Europe and Central Asia (26 percent), according to the report.

It said those from multilateral creditors were concentrated in Latin America and the Caribbean (41 percent), reflecting the large IMF inflow to Argentina, and in Sub-Saharan African (26 percent).

The President, World Bank Group, David Malpass, said, “The risk is that too many poor countries will emerge from the COVID-19 crisis with a large debt overhang that could take years to manage.

“To build durable economic recoveries, countries will need to achieve long-term debt sustainability. They will need to achieve a much greater level of productive investment and financing — for infrastructure, health, education, and employment.”