Un Economist: African Countries Interest Payments Skyrocket

African countries are increasingly allocating more of their revenue to pay interest on their debt, according to a United Nations economist. Raymond Gilpin, the Chief Economist and head of the strategy, analysis, and research team at the UN Development Programmes regional bureau for Africa, discussed this issue at the African Economic Conference in Botswana. He explained that over the past two decades, Africa's shift from concessional low-interest loans to commercial lending has resulted in a sharp rise in the interest payments that countries must make. This shift, Gilpin added, is diverting funds away from essential sectors like education and healthcare. This year, African nations are expected to pay around 163 billion in debt service, compared to 61 billion in 2010. Furthermore, more than half of the countries on the continent are now spending more on servicing their debt than on key areas such as health and education, which is not sustainable, he warned. Gilpin emphasized that the solution lies in reforming the global financial system to ensure that Africa has access to more affordable, concessional financing, and that commercial debt is priced more fairly. He pointed out that African countries are currently paying too much for the debt they take on from international markets. The institutions responsible for assessing the risk of lending to African countries, he added, often lack a clear understanding of the continent's economic realities, making it harder to accurately determine an economy's ability to repay.