The global landscape today is marked by a series of complex and interconnected crises that have significantly impacted economic stability worldwide. As economies gradually recover from recent disruptions, they grapple with persistent challenges that have led to uneven growth, exacerbating global disparities. Among these challenges, the alarming rise in global public debt has emerged as a major concern for the international community.
Although many African nations experienced a post-Covid economic rebound, geopolitical tensions and an overreliance on external resources have undermined their stability. Furthermore, rising interest rates and a strengthened US dollar have fuelled inflation and public debt, further straining trade balances.
African countries face difficult trade-offs between servicing their debts and pursuing essential development goals. In sub-Saharan Africa alone, governments paid approximately $84bn in debt service costs in 2021, while the Middle East and North Africa incurred debt costs of around $45bn.
The World Bank projects that by 2024, global debt service costs will increase by approximately 12%, with Africa expected to pay $163bn just to service its debts. Although debt servicing is projected to peak in 2024 before tapering off, it will still remain above pre-pandemic levels for the foreseeable future.
Interestingly, Alexander Hamilton, one of the Founding Fathers of the United States in the 18th century, posited that a national debt, if it is not excessive, will be a national blessing. Indeed, public debt, when managed effectively, can serve as a vital tool for development, financing expenditures that pave the way for a brighter future.
