US Think Tank To Raise 50 Billion In Debt Management Plan

Some African countries are on the verge of defaulting as a result of the economic effects of the COVID-19 pandemic and Russia's military action in Ukraine.

A think tank backed by the Bill & Melinda Gates Foundation is looking for 50 billion dollars to help distressed debt-ridden African countries reenter the capital markets and guard against future defaults.

According to Daniel Cohen, chairman of the Paris-based Finance For Development Lab, which was established last month, the sum is the “median estimate” of what is required.

According to Cohen, the funds would be used to “enhance” the quality of debt by providing guarantees.

They might also be used to assist African commodity exporters and importers in hedging against price changes.

Some African countries are on the verge of defaulting as a result of the economic effects of the COVID-19 pandemic and Russia’s military action in Ukraine.

These countries rushed into the capital markets as global interest rates fell to record lows. Already, Zambia has defaulted on its debt.

Investors are forcing the most vulnerable nations to pay a high-risk premium, pricing them out of the market as they prepare for a wave of restructurings.

A commonly accepted definition of debt distress is met by the average trading price of the sovereign dollar bonds of African countries, which is 1,007 basis points higher than the yield on US Treasury securities.

Debt levels in Ghana are 1,989 basis points, 3,489 basis points in Ethiopia, and 3,699 basis points in Zambia.