Emerging from the global financial crisis, history was about to repeat itself. A fourth wave of a debt cycle followed, marked with similarities to the previous oscillations. It was fuelled by low global interest rates, a rise in regional banks, increased demand for local currency-denominated bonds, and increased demand for EMDE debt issued by an expanding non-bank financial sector.
African countries have been, and continue to be, active participants in the new debt wave. According to the IMF’s Fiscal Monitor, the average general government debt ratio for low-income SSA countries increased from 22% of GDP in 2010 to 43% of GDP in 2019. Even before the shock of COVID-19, public debt ratios were on the rise in the region.