Figure 1.24: Debt Recording Dimensions and Share of Countries That Meet the Requirement

Improving debt transparency remains a critical challenge. Significant gaps persist in cash flow forecasting and cash balance management, and loan guarantees and on-lending derivatives. There has been some

FIGURE 1.24: Debt Recording Dimensions and Share of Countries That Meet the Requirement progress, although Legal Framework slow, in the process of 80% debt relief through the Common Framework for Segregation of Duties, Sta Capacity and BCP Debt Treatments beyond the DSSI. Official bilateral

Debt Administration and Data Security creditors reached a preliminary agreement on Chad’s debt restructuring in June. Acceptance of debt restructuring under the Common Framework terms and conditions is awaited from private creditors Source: World Bank. Note: Share of Sub-Saharan African countries that meet the minimum requirement. to allow the process to move to its conclusion. On September 16, 2021, Ethiopia’s creditors’ committee held its first meeting to discuss the country’s debt restructuring under the Common Framework. Subsequent meetings will determine the amount of debt to be restructured and the treatment of the private sector debt. The Government of Ethiopia has also officially requested an IMF program for which debt sustainability will be a precondition.12 The IMF approved a general allocation of Special Drawing Rights (SDRs) equivalent to US$650 billion (about SDR 456 billion) in August 2021, to address the long-term global need for reserves, build confidence, and foster the resilience and stability of the global economy. About US$275 billion (about SDR 193 billion) of the new allocation will go to EMDEs, including low-income countries, and it will particularly help vulnerable countries reduce their reliance on more expensive domestic or external debt. After reaching record levels in April, sovereign spreads declined notably, particularly in countries with high debt-to-GDP ratios, such as Zambia and Angola. The risk of default subsided in Zambia after the country started negotiating a program with the IMF. Sovereign bond yields declined further upon the election of opposition leader Hakainde Hichilema. Market participants expect the new president to accelerate market-friendly reforms, adopt sound macroeconomic policies, and put emphasis on fighting corruption, enhancing transparency, and striking a deal with the IMF. As a result, the kwacha appreciated by 19 percent against the US dollar. Similarly, sovereign spreads in Angola retreated from their high levels in April due to fiscal consolidation efforts (as reflected by a reduction in nonessential expenditure) and prospects of a persistent rise in oil prices. In Ghana, sovereign bond yields increased as public debt rose to 77.1 percent in June. Domestic currencies in the region depreciated against the US dollar in July, except for the Zambian kwacha (figure 1.25).

Debt Records

Cash Flow Forecasting and Cash Balance Management Loan Guarantees, on Lending Derivatives External Borrowing Domestic Borrowing

Managerial Structure 60% Debt Management Strategy 40% 20% Debt Reporting and Evaluation 0% Audit Coordination with Fiscal Policy Coordination with Monetary Policy

12 Details on the features and participation of African economies on the Common Framework as well other mechanisms of debt relief such as the Debt Service Suspension

Initiative (DSSI) and the Sustainable Development Finance Policy (SDFP) are provided in Africa’s Pulse volume 23.