1. International Monetary Fund
July 31, 2019
Rising External Borrowing in Africa: Challenges of Debt Sustainability and Implications for Monetary Policy
Tobias Adrian
Financial Counsellor and Director Monetary and Capital Markets Department

2. 9/5/2019
SSA seeing increased international bonds with rising share of weak issuers
Issuance of below investment grade sovereign bonds is increasing globally…
…particularly in Sub-Saharan Africa 2

3. Increasing number of SSA countries with high debt vulnerabilities
9/5/2019
Increasing number of SSA countries with high debt vulnerabilities
16 countries breached high risk on debt distress
Sub-Saharan Africa: Debt Risk Status for PRGT Eligible Low-income Developing countries,
Debt service payments consume a growing share of tax revenue
Sub-Saharan Africa: Interest Payments 3

4. 9/5/2019
Rising commercial and non-Paris Club lending may be heightening debt risks
Commercial lending has become much more significant in SSA
Increasingly complex debt structures in at-risk countries
External Creditor Composition of Post-HIPC Countries in Debt Difficulty
(Percent of Public and publicly guaranteed external debt) 4

5. FX debt will face significant rollovers in coming years
9/5/2019
FX debt will face significant rollovers in coming years
Share of foreign currency debt has increased in SSA
Rollover risks on international bonds will increase substantially
Sub-Saharan African Frontier and Emerging Market Economies: Maturity of International Sovereign Bonds 5

6. Monetary policy challenges with external debt
9/5/2019
Monetary policy challenges with external debt
Rising international bonds accompanied by greater volatility in bond flows
Sub-Saharan African Frontier and Emerging Market Economies: Volatility of Equity and Bond Flows, and
More than half of SSA countries are short of adequate reserve buffers
Sub-Saharan Africa: Reserve Buffers 6

7. Changing global market structure may be heightening risks
9/5/2019
Changing global market structure may be heightening risks
Nonbank investors now dominate the global EM sovereign market…
…with passive investment strategies potentially amplifying volatility
Cumulative Purchases of EM Sovereign Debt by Non-Residents
(US$ billions)
Estimated Outflows from Benchmark-Driven Investors in Response to a 1 Standard Deviation Shock
(US$ billions) 7

8. Monetary policy challenges with domestic debt
9/5/2019
Monetary policy challenges with domestic debt
Monetary policy tightening has resulted in higher domestic funding costs for some sovereigns
Financing conditions: 10-year government bond yields
EMDEs are seeing a rising share of bank exposure to government debt
Share of EMDEs with above-median government debt and bank claims on the government 8
Source: World Bank, 2019:
Source: World Bank, 2019: