In a global financial landscape plagued by turmoil, Morocco has emerged as a notable exception, conspicuously absent from the list of developing countries grappling with debt crises.
Many developing nations are grappling with debt issues due to high interest rates, increased investor caution, and a surge in borrowing. This problem is expected to be a top priority at the IMF and World Bank meetings in Marrakech.
Here’s a quick rundown of some of the developing countries dealing with debt troubles:
Tunisia:
Since the 2011 revolution, Tunisia has faced numerous challenges that have pushed the North African country into a severe economic crisis. While most of its debt is domestic, there is a significant concern regarding a €500 million eurobond that is set to mature this month, and credit rating agencies have warned of the possibility of Tunisia defaulting on its obligations.
President Kais Saied has criticized the conditions imposed to access a $1.9 billion loan from the IMF, describing them as “dictatorial,” and he also rejected a €127 million offer from the European Union, deeming it insufficient.
Egypt:
Egypt is confronted with the challenge of settling approximately $100 billion in foreign-currency debt over the coming five years. More than 40% of its income is dedicated to interest payments, and it requires $24 billion to meet its fiscal requirements in the year 2023/2024.
Egypt has initiated a $3 billion program with the IMF and has depreciated its currency by around 50% since February 2022.
Ukraine:
Following Russia’s invasion in 2022, Ukraine suspended its debt repayments and has indicated that it will make a decision in the early part of the next year regarding whether to attempt an extension of that agreement or explore other options.
Top organizations have projected that the cost of reconstruction after the war will be no less than 1 trillion euros, and the IMF has estimated that Ukraine requires a monthly influx of $3 to $4 billion to sustain the country’s operations.
Lebanon:
Lebanon has been in a state of default since 2020, and there are limited indications that it will be able to rectify its severe economic crisis in the near future.
In the previous month, the IMF expressed its approval of certain changes made to the central bank’s operations in Lebanon. However, the IMF emphasized that more substantial reforms were necessary, especially given the country’s challenging and uncertain economic prospects.
The IMF has also warned that if the current situation persists, Lebanon’s public debt could skyrocket to 547% of its GDP by the year 2027.
Ghana:
In late 2022, Ghana experienced a significant economic crisis, which marked the worst in a generation, leading to a default on a substantial portion of its foreign debt. Ghana became the fourth nation to pursue debt restructuring through the Common Framework.
Ghana has made relatively rapid advancements in the restructuring of both its internal debt and the $30 billion of external debt. Additionally, in May, it successfully obtained a $3 billion bailout package from the IMF.
Kenya:
At the conclusion of 2022, the East African nation had a public debt equivalent to 67.4% of its GDP, as reported by the World Bank, placing it in a precarious position with a high risk of debt-related challenges.
The considerable rise in oil prices has led to increased inflation, and the national currency has depreciated by more than 16% against the U.S. dollar this year, raising doubts about the government’s capacity to continue implementing reforms.
Kenya, which faces the obligation of repaying a $2 billion eurobond in the upcoming year, is currently engaged in discussions with both the African Development Bank and the World Bank regarding potential financial support for its budgetary needs.