1. South Africa
South Africa had not experienced net foreign direct investment outflows since 1991 but inflows varied widely. To ascertain the cash or near-cash deposits of foreign investors in South Africa the net foreign transactions as reported by the Bond Exchange of South Africa (BESA) and net foreign transactions in equities were subtracted from the net foreign direct investment inflows into South Africa. It has been ravaged by a financial crisis caused by the government taking on too much external debt, much of it in secret.
It defaulted on a $727 million (Sh74 trillion) Eurobond in January last year and still has not begun formal restructuring talks with creditors. The country has its external debt stock at $146.040 billion (Sh14.9 trillion). With a population of 56.505 million, each individual has an outstanding debt of Sh263,100.
The country has been facing economic recession over the past few years due to political turmoil and relevant security issues, which led to declining tourism and foreign investments amid growing budget deficit, inflation rate and foreign and domestic debts. Egypt started in late 2016 a three-year reform programme including subsidy cuts, tax hikes and full floatation of the local currency.
Although the Egyptian pound lost half of its value in the liberalisation move, it gradually boosted the country’s foreign currency reserves and partially contained dollar shortage.
Egypt’s economic reform programme is encouraged by a $12 billion loan (Sh1.2 trillion) from the International Monetary Fund. It has an external debt stock of $67.214 billion (Sh 6.8 trillion) to be shared by the country’s population of 92.275 million people.
Morocco recorded a government debt equivalent to 64.70 per cent of the country’s gross domestic product (GDP) in 2016. Government debt to GDP in Morocco averaged 61.79 per cent from 1965 until 2016, reaching an all-time high of 117.71 per cent in 1985 and a record low of 21.66 per cent in 1965. It has an external debt of $46.265 billion (Sh4.7 trillion) to be shared among a population of 34.852 million people.
Lawmakers this February approved a 9.6 trillion kwanza ($45.69 billion) state budget for this year, forecasting 4.9 per cent economic growth, well beyond the 1.6 per cent expected by the International Monetary Fund. The country has an external debt stock of $35.365 billion (Sh3.6 trillion) to be shared within a population of 28.180 million people.
A review of the total foreign debt profile of the Federal, the 36 state governments and the Federal Capital Territory, commonly known as FCT, or loosely as FCT-Abuja shows a continuous rise since the coming of the present administration, from $10.718 billion (Sh1.1 billion) in 2015, to $11.406 billion (Sh1.2 trillion) in 2016 and $15.047 billion (Sh1.5 trillion) in 2017.
Out of the current total figure of Sh1.5 trillion, the Federal Government accounts for $11.106 billion (Sh1.1 trillion), or about 74 per cent, while the 36 states of the federation and FCT, Abuja owe about $3.94 billion, (Sh401.1 billion) or 26 per cent.
Its external debt stock is $31.152 billion (Sh3.l trillion) to be shared the country’s population of 188.686 million people.
The government’s budget for this year increased taxes and price of basic goods, including food and gasoline. In January last year, inflation was at 3.8 per cent, but by the end of the year, it nearly doubled to 6.4 per cent and national inflation is expected to reach between 9 and12 per cent this year.
In 2016, the IMF agreed to a four-year, $2.8 billion (Sh285 billion) agreement with the country, which in turn agreed to increase the independence of its central bank, restructure three public banks and adopt an equity-enhancing tax strategy.
From when the country signed an IMF loan in 2014, until an IMF country review in July 2017, the currency lost 49 per cent of its value compared to the US dollar. Its external debt stock currently stands at $28.11 billion (Sh2.9 trillion) for its population of 11.338 million people.
7. Ethiopia Addis
Ababa earned $2.9 billion (Sh295.2 billion) in the 2017/2018 fiscal year, versus a target of $4 billion (Sh407.2 billion). The central bank said it raised the main interest rate to seven per cent from five per cent to stimulate savings as well as to counter inflation.
Inflation rose slightly to 10.8 per cent year-on-year in September from 10.4 per cent a month earlier. Its current external debt stock stands at $23.06 billion (Sh2.3 trillion) for a population of 92.656 million people.
Public debt has surged to more than 50 per cent of gross domestic product (GDP) from less than 40 per cent eight years ago as the government borrowed to plug a budget deficit that widened to a revised estimate of 10.2 per cent of GDP in 2016/17 financial year.
Half of the debt is owed to external creditors. An explosion in public borrowing has seen the debt burden on each Kenyan grow 73 per cent over five years, from Sh34,116 to Sh58, 859 in 2016.
The IMF, in its review of the country a year ago, said risk of external debt distress remains low but noted there is need for reduction in the deficit over the medium term. Current external debt stock stands at $22.33 billion (Sh2.3 trillion) for a population of 46.7 million people.
The country turned to the IMF for an almost $1 billion (Sh101.8 billion) bailout in 2015 and has negotiated an extension of the programme until the end of this year.
The $45 billion (Sh 4.6 trillion) economy is the seventh biggest in sub-Saharan Africa and will probably expand 8.3 per cent this year, the fastest growth rate on the continent, according to World Bank projections, on increased oil output and stronger credit growth.
That is after growth slumped to a more than two-decade low of 3.5 per cent in 2016. Current external debt stock stands at $21.4 billion (Sh2.9 trillion) for a population of 28.278 million people.
The country’s annual inflation rate soared to 52 per cent in January, on the back of food price rises that have triggered protests and a security crackdown on opposition groups.
The inflation rate more than doubled the 25-per cent figure recorded in December. The country is in debt distress and is eligible for debt relief under the Heavily Indebted Poor Countries (HIPC) Initiative.
The large external debt and arrears and economic sanctions hinder access to external financing and weigh heavily on development. It sorely needs a financial lifeline from donors but it is unable to borrow from the IMF after failing to pay back previous loans and efforts to reschedule debts it owes other countries have faltered.
The country’s external debt, which IMF describes as unsustainable, is expected to reach $56.5 billion (Sh5.8 trillion) this year. Current external debt stock stands at $21.08 billion (Sh2.1 trillion) for a population of 40.783 million people.