The interest rates demanded by investors to trade African sovereign debt have fallen below 10% for the first time since 2015, following a drop in Mozambique’s rates to under 1,000 basis points.
According to Lusa, citing financial news agency Bloomberg, Mozambique was the last African country to bring the spread between its interest rate and that of U.S. Treasury bonds to under 1,000 basis points — the threshold generally used to signal a debt crisis.
The decade of widespread borrowing, which began in 2015 and was fueled by cheap loans and expansionary fiscal policies, peaked during the COVID-19 pandemic years, when Zambia, Ghana, Malawi, and Ethiopia defaulted on their debt payments due to the heavy burden of healthcare-related expenses.
Since the end of the pandemic, Africa’s economic situation has improved. Public debt levels have stabilized around 60% of GDP, inflation has steadily decreased, and countries like Zambia and Ghana have been able to restructure their debt and regain access to international markets, supported by programs from international financial institutions such as the International Monetary Fund (IMF).
Source: Jornal de Angola
