Government borrowing costs are soaring globally, with US and UK 30-year bond yields hitting levels unseen since 2002 and 1998 respectively. While advanced economies grapple with rising yields, developing countries—particularly in Africa—face even steeper challenges, paying eye-watering rates to service debt that eats up an ever-larger share of public budgets.
At a ceremony in Mauritius, the Africa Credit Rating Agency was launched under a mandate from the African Union, aiming to provide fairer assessments of African economies. AU Commission chair Mahmoud Ali Youssouf said the agency will objectively assess risks and help the world better understand the continent’s potential. African governments argue that high borrowing costs stem partly from overly harsh ratings by the big three global credit agencies.
According to UN Trade and Development (Unctad), net interest payments consumed 15.7% of government revenues in sub-Saharan Africa last year—more than double the average for developing countries. Between 2020 and 2024, African countries’ average borrowing costs nearly doubled, squeezing spending on health and education. This year, energy market fallout and rising global bond yields have worsened the situation, compounded by cuts to foreign aid budgets.
A new blueprint from the Center for Global Development and the Rockefeller Foundation proposes a “growth and investment reset,” expanding IMF and World Bank support to help countries refinance expensive debt.
Source: Financial Times Markets · Summarized by HeadlinesBriefing