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Debt risks increase as commodity prices stay low

According to the IMF and World Bank, 10 low income countries have seen an increased risk of not being able to pay their debts over the last year as global commodity prices have fallen. At the same time, 4 countries risk ratings have improved.

Cameroon, Dominica, Ghana, Mauritania and Mongolia have all seen their risk rating increase from moderate to high. The Republic of Congo, Ethiopia, Madagascar, Vanuatu and Zambia have all now been assessed as at moderate risk of not being able to pay debts, when previously they were listed as at low risk.

Those countries which are said to now be at reduced risk are all small states which may be benefiting from the fall in oil and commodity prices: Comoros, Haiti, the Maldives and Samoa.

In 2013 Cameroon was assessed to be at low risk, with external debt payments projected to be 3% of government revenue in 2016 and 2017. The IMF now says Cameroon will be spending 7% of government revenue on external debt payments this year, a doubling in just two years. Government revenues are now projected to be $5.1 billion rather than an expectation of $6.5 billion. And debt payments in 2016 have increased from an expected $190 million to $340 million.

The Mopani copper mine in Zambia. Copper makes up 60% of Zambia's exports, but its price has fallen by a third in the last 9 months (Flickr / photosmith2011).

The Mopani copper mine in Zambia. Copper makes up 60% of Zambia’s exports, but its price has fallen by a third in the last 9 months (Flickr / photosmith2011).

Zambia also used to be assessed as low risk but this has now increased to moderate. Back in 2012 the IMF predicted debt payments in 2016 would be 3.5% of government revenue. They are now expected to have trebled to 10.4%. Zambia has a huge shortfall in government revenue on what was previously predicted, $4.6 billion rather than $7.2 billion. In addition, debt payments are now expected to be $475 million rather than $250 million.

These IMF and World Bank reviews of countries debt situations tend to take place every one-to-two years. So more countries could be reported to have worsening situations as the impact of commodity price falls and a strengthening US dollar come to be seen in future assessments.


Cameroon, Comoros, Congo, Republic Of, Dominica, Ethiopia, Ghana, Haiti, Madagascar, Maldives, Mauritania, Mongolia, Samoa, Vanuatu, Zambia
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