Debt relief: the state of play and what’s next

There has been much less progress towards debt relief for African economies than many had hoped. And governments’ diverse array of creditors means that the “Common Framework” recently unveiled by the G20 to help debt distressed EMs will struggle to gain traction. Most governments are likely to have to live with higher debt burdens, which will come at the cost of austerity and weak growth. The few that find themselves in severe stress in the future may follow Zambia down the path of a disorderly default.
Jason Tuvey Senior Emerging Markets Economist
Continue reading

More from Africa

Africa Economics Weekly

FX orthodoxy in Nigeria? Strikes in SA, Ethiopia’s conflict

Comments by Nigeria’s vice president endorsing a more market-based exchange rate regime reflect growing concern about the distortionary effects of the current FX system, but there is no evidence that key officials backing the existing currency arrangements are also shifting tack. In South Africa, ongoing industrial action in the steel industry will probably dampen manufacturing output in Q4, in another hit to the recovery in the sector and the wider economy. Finally, escalating tensions in Ethiopia raise the spectre of more severe strains in the balance of payments.

15 October 2021

Africa Data Response

Nigeria Consumer Prices (Sep.)

The drop in the headline inflation rate in Nigeria, to 16.6% y/y in September, will ease pressure on the central bank to raise rates and allow policymakers to focus on supporting the economic recovery.

15 October 2021

Africa Data Response

South Africa Activity Data (Aug.)

South Africa’s hard activity data for August point to a bumpy recovery following a large hit to the economy in July, adding to reasons to think that interest rates are unlikely to be raised imminently.

13 October 2021

More from Jason Tuvey

Emerging Europe Economics Update

Turkey’s inflation risks mount, CBRT to delay rate cuts

Turkish inflation hit a two-year high in June and recent domestic energy price hikes will cause it to rise even further over the next couple of months. High inflation and signs of a quick recovery from May’s lockdown mean that the central bank will probably delay the start of its easing cycle until later this year. We now expect the one-week repo rate to be lowered to 17.00% by end-2021 (previously 14.00%).

7 July 2021

Emerging Europe Data Response

Turkey Consumer Prices (Jun.)

The fresh rise in Turkey’s headline inflation rate to 17.5% y/y in June, coupled with signs of a strong rebound in activity after May’s three-week lockdown, means that an interest rate cut in the next couple of months is increasingly unlikely. An easing cycle is now more likely to commence later this year when inflation looks set to fall sharply.

5 July 2021

Emerging Europe Economics Weekly

Turkey dollarisation, Ukraine-IMF, Russia & Poland rates

Turkey’s central bank took steps this week to tackle deposit dollarisation in the banking sector, although these efforts will fail to make headway in the absence of a stronger commitment to rein in high inflation. Meanwhile, Ukraine’s government still has work to do to secure the next tranche of its IMF loan, but the economy can muddle through without help from the Fund for some time. Finally, other developments this week suggest that Poland’s central bank may stick to its recent dovish rhetoric while Russia looks like it could accelerate the pace of monetary tightening.

2 July 2021
↑ Back to top