The Evaluation of the Debt Risk of African Countries

　　Zhang Chunyu, Li Xinfeng, Li Ruoyang

　　Abstract

　　In the mid-1990s, Africa's economy entered the longest and most stable period of development since its independence. The average annual growth rate of African economies was 3.98 percent between 2012 and 2017, higher than the global average growth rate. Africa's rapid economic growth partly depended on the large inflows of foreign capital, and its national debt has accumulated rapidly. 2005 marked a significant inflection point for Africa's national debts. Since this year, most African countries began to face higher liability ratio, foreign debt ratio and debt servicing ratio, and some countries approached or exceeded the international warning line. They have been challenged by debt issues, including debt growth, interest payments, and debt sustainability. In 2018, the international community's concerns about the debt risk of African countries intensified; false claims emerged, accusing loans from China for increasing the debt burden of African countries. The economic and trade cooperation between China and African countries is close, and the current situation of African countries' debt burden is not conducive to the long-term interests between China and African countries. In order to refute the false accusations against China, to help African countries reduce debt risks, and with the vision to achieve Africa's economic growth and the sustainable development of China-Africa economic and trade cooperation, this report systematically analyses the debt issues of African countries. We review the history of African countries' debt issues, sort out the current situation, and evaluate the debt risk of some African countries. The evaluation bases on the existing assessment framework of national risk debt. Then we review the debt crisis in Latin America, Central and Eastern Europe, and Asia since the 1970s and their countermeasures, and explore their warning and reference significance to African countries. At the end of this report, we comprehensively refute the false accusations that China has intensified the debt burden of African countries, made by some international organizations and media with ulterior motives. We also put forward corresponding suggestions on preventing and dealing with potential debt risks and on further promoting China-Africa economic and trade cooperation in the future.

　　Key words

        Africa, Debt Crisis, Debt Servicing Ratio, Liability Ratio