Latest news with #externaldebt
Zawya
3 days ago
- Business
- Zawya
Emerging countries' debt payments to private lenders dwarf those to China
Lower-income countries' external debt payments to private lenders remain three times higher than payments to China, research shows, shedding light on the complex, costly web of creditors they face as they struggle to keep up repayments. The research, by advocacy group Debt Justice UK, underscores the power private lenders - from bondholders to commodity trading houses - have in countries across the developing world which juggle debt repayments with spending on other needs, from education to infrastructure. Tim Jones, policy director at Debt Justice, said the data countered a narrative that China has played a primary role in creating debt crises in lower-income countries. China has lent hundreds of billions of dollars for infrastructure and other projects in developing countries and has used earnings of commodity exports, or cash held in restricted escrow accounts, from borrower nations as security for the loans. "Commercial high-interest lenders are receiving the greatest debt payments by lower-income countries," Jones said in a statement. "Where debt payments are too high, all external creditors need to cancel debt, in proportion to the interest rates they charged." While a post-pandemic wave of defaults has largely crested, developing countries still struggle with unsustainable debt as concessional financing shrinks, borrowing costs remain high and spending needs for infrastructure and climate resilience rise. Ethiopia is locked in debt restructuring negotiations with bondholders who have rejected taking haircuts, while Ghana and Zambia are still negotiating deals with some private creditors. The International Monetary Fund also recently wrote that Malawi was in default on $439 million in loans to Afreximbank and $464 million to Trade and Development Bank. Debt Justice's research, using World Bank data, found that between 2020 and 2025, 39% of external debt payments by 88 lower-income countries and small island developing states - a total of $354 billion - went to private lenders, compared with 34% to multilaterals, 13% to Chinese public and private lenders and 14% to repay bilateral loans to other governments. Of the 32 countries with the highest external debt payments, 21 of them sent more than 30% of payments to private lenders. Only six of them - Angola, Cameroon, Congo Republic, Djibouti, Laos and Zambia sent more than 30% of external debt payments to Chinese lenders. The data also showed a sharp increase in repayments to multilateral lenders - from $30 billion in 2020 to $70 billion in 2025. Jones said the rise followed a rapid increase in multilateral lending from 2019, which accelerated during the COVID-19 pandemic. Many of those loans are starting to come due now, he said, while those with floating interest rates would have become more expensive during the global interest rate hiking cycle.
Reuters
3 days ago
- Business
- Reuters
Emerging countries' debt payments to private lenders dwarf those to China
LONDON, Aug 11 (Reuters) - Lower-income countries' external debt payments to private lenders remain three times higher than payments to China, research shows, shedding light on the complex, costly web of creditors they face as they struggle to keep up repayments. The research, by advocacy group Debt Justice UK, underscores the power private lenders - from bondholders to commodity trading houses - have in countries across the developing world which juggle debt repayments with spending on other needs, from education to infrastructure. Tim Jones, policy director at Debt Justice, said the data countered a narrative that China has played a primary role in creating debt crises in lower-income countries. China has lent hundreds of billions of dollars for infrastructure and other projects in developing countries and has used earnings of commodity exports, or cash held in restricted escrow accounts, from borrower nations as security for the loans. "Commercial high-interest lenders are receiving the greatest debt payments by lower-income countries," Jones said in a statement. "Where debt payments are too high, all external creditors need to cancel debt, in proportion to the interest rates they charged." While a post-pandemic wave of defaults has largely crested, developing countries still struggle with unsustainable debt as concessional financing shrinks, borrowing costs remain high and spending needs for infrastructure and climate resilience rise. Ethiopia is locked in debt restructuring negotiations with bondholders who have rejected taking haircuts, while Ghana and Zambia are still negotiating deals with some private creditors. The International Monetary Fund also recently wrote that Malawi was in default on $439 million in loans to Afreximbank and $464 million to Trade and Development Bank. Debt Justice's research, using World Bank data, found that between 2020 and 2025, 39% of external debt payments by 88 lower-income countries and small island developing states - a total of $354 billion - went to private lenders, compared with 34% to multilaterals, 13% to Chinese public and private lenders and 14% to repay bilateral loans to other governments. Of the 32 countries with the highest external debt payments, 21 of them sent more than 30% of payments to private lenders. Only six of them - Angola, Cameroon, Congo Republic, Djibouti, Laos and Zambia sent more than 30% of external debt payments to Chinese lenders. The data also showed a sharp increase in repayments to multilateral lenders - from $30 billion in 2020 to $70 billion in 2025. Jones said the rise followed a rapid increase in multilateral lending from 2019, which accelerated during the COVID-19 pandemic. Many of those loans are starting to come due now, he said, while those with floating interest rates would have become more expensive during the global interest rate hiking cycle.
Zawya
23-06-2025
- Business
- Zawya
Egypt aims to cut external debt by $1-2bln annually, presidency says
Egypt is targeting an annual reduction in the external debt of its budget authorities by $1bn to $2bn, the Egyptian Presidency said on Tuesday, as part of a plan to enhance fiscal discipline for the 2024-2025 fiscal year. The target was announced following a meeting between Egypt's President Abdel Fattah Al-Sisi, Prime Minister Mostafa Madbouly, and Finance Minister Ahmed Kouchouk. During the meeting, the finance minister also presented results from a tax facilitation initiative, which has yielded EGP 54.76bn in additional declared taxes. The div came after more than 450,000 new or amended tax returns were submitted. The presidency statement noted that 110,000 requests to voluntarily settle tax disputes had been submitted as of 19 June2025, reflecting what the minister described as taxpayers' confidence and positive engagement with the 52,901 taxpayers have applied for incentives and tax breaks available to projects with an annual turnover not exceeding EGP 20m. A review of the fiscal performance from July 2024 to May 2025 showed a large primary surplus and a reduced overall deficit. Tax revenues grew by 36%, which was attributed to improved economic activity and an expanded tax base without imposing new burdens, alongside continued spending rationalisation. The finance minister also reviewed the progress of reforms under the International Monetary Fund (IMF) programme and the ongoing negotiations to reach an agreement on the fifth review and the disbursement of its related tranche. The discussion addressed global economic volatility and the impact of geopolitical events, particularly the conflict between Iran and Israel, on market uncertainty, shipping costs, and some commodity prices. According to the spokesman, President Al-Sisi directed the government to learn from successful international experiences to stabilise fiscal and tax policies, aiming to improve the business climate, expand the tax base, attract investment, and boost production, exports, and employment. The president also called for continuing efforts to enhance fiscal discipline while supporting allocations for social protection and human development, urging that all necessary financial and commodity precautions be taken in light of regional developments.
