Africa’s new debt crisis: levels surpass 2001 peak
Debt levels in Africa are at their highest since 2001, with 18 countries either undergoing or at immediate risk of an acute debt crisis, according to the World Bank. Declines and fluctuations in commodity prices have impacted many countries, but two of the most significant factors in the issue are lack of the infrastructure needed to drive development and new donor countries like China and Saudi Arabia entering what used to be a predictable group of creditors that negotiated with each other and kept to specific policies. “Previously, it was only the so-called Paris Club creditors that gathered at the tabled,” said Germany’s Executive Director for the World Bank. “That is not longer the case because neither the private creditors nor the new players such as China or Saudi Arabia are sitting at that table.” China now owns 14% of debt in Africa. In this crisis, countries are turning to the IMF, which, if they do agree to help specific countries, will impose austerity measures that will become politically difficult in many of these countries. In the 1990s debt crisis in Africa, ensuing austerity measures mostly hurt the poor, something that the IMF says it is seeking to avoid but may be powerless to prevent.