Africa Expert Panel chair Manuel says debt crisis in emerging economies cannot be deferred any longer

JOHANNESBURG - Chairperson of the Africa Expert Panel, Trevor Manuel, says the debt crisis in emerging economies cannot be deferred any longer as the G20 finance track meets in KwaZulu-Natal (KZN).

High debt servicing costs are crowding out important social spending on health and education, sparking further calls for significant debt relief to unlock the necessary funding to meet some development goals.

Manuel is heading the expert panel established earlier this year to address the unprecedented debt crisis affecting many African countries.

Manuel joined Finance Minister Enoch Godongwana and Reserve Bank Governor Lesetja Kganyago in Zimbali on Tuesday to discuss policy.

This year, African countries will pay close to $89 billion in external debt service alone, with 20 low-income countries at risk of debt distress.

External debt has climbed to more than $650 billion, and debt servicing costs reached nearly $90 billion in 2024.

The Africa expert panel will add to the G20’s policy directives on debt sustainability.

Manuel said part of the discussion is the cost of capital.

“When countries borrow and interest rates are very high, and they increase in time, then there’s a bigger problem going forward.”

He said Africa must better develop domestic capital markets.

“If countries could borrow in their own currencies, then they don’t carry the exchange rate burden because when you have a fluctuation, many countries borrow in dollars or euros, and when their own currencies depreciate against those hard currencies, then the interest rate burden becomes unsustainable.”

At the start of South Africa’s G20 presidency, the country proposed a cost of capital commission to level the playing field.