Highly indebted African countries are facing stark trade-offs between servicing expensive debt, supporting high and growing development needs, and stabilising domestic currencies.
Government debt has risen in at least 40 African countries over the past decade. As a result, some are experiencing a bad combination of high debt, elevated development spending needs amid budget shortfalls, and unfavourable exchange rate pressures.
These issues have become more pressing since 2022, when persistently high inflation prompted major central banks around the world to embark on the most aggressive monetary tightening campaign in decades. Monetary policy tightens when central banks raise interest rates.
Since then, global interest rates…
