(Repeats merchandise that first ran on Thursday)

* G20 leaders meet on the weekend, debt aid on agenda

* China key lender in some African nations

* Zambia turns into Africa’s first pandemic-era default

* Sub-Saharan Eurobond issuers see redemptions rise in 2024

By Karin Strohecker and Joe Bavier

LONDON/JOHANNESBURG, Nov 19 (Reuters) – African nations face one other debt disaster and can want extra long-term assist than the newest G20 debt plan presents them to thrust back bother forward and hold much-needed investments coming in, in accordance with policymakers, analysts and traders.

Round 40% of sub-Saharan African nations had been in or prone to debt misery even earlier than this 12 months, whereas Zambia turned the continent’s first pandemic-era default final Friday.

America, China and different G20 nations have supplied the world’s poorest nations – lots of that are in Africa – aid till not less than mid-2021 and sketched out guidelines for rescheduling authorities debt to assist fend off the danger of default within the wake of the coronavirus disaster.

However these plans to supply near-term respiration house won’t go far sufficient.

“In 2021 a sturdy liquidity and structural response, restoration and reset toolbox have to be developed in partnership between rising markets, the non-public sector and the G20,” warned Vera Songwe, govt secretary on the UN Financial Fee for Africa.

Songwe is pushing for measures to unlock $500 billion to assist keep away from leaving lasting scars resulting from extended funding gaps within the poorest economies.

The debt ratios of sub-Saharan African nations had already risen sharply earlier than COVID-19, simply over a decade after the Worldwide Financial Fund and World Financial institution launched the Extremely Indebted Poor International locations (HIPC) initiative that slashed the debt burdens of some 30 low-income nations on the continent.

Quick ahead to the 12 months of the pandemic and sub-Saharan Africa is on monitor for a report 3% financial contraction this 12 months, whereas debt-to-GDP ratios have doubled over the past decade to 57%, the IMF discovered.

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“We’re undoubtedly already in a debt disaster, there isn’t any query about that,” mentioned Bryan Carter, head of worldwide rising markets debt at HSBC, referring to poor nations across the globe.

“I fear about 2021. I fear a couple of deal through which many nations who will as soon as once more should finance themselves in a gradual and even recessionary financial surroundings the place a vaccine is just not but globally accessible. For a lot of nations, that’s one 12 months too many to finance themselves.”

CANCELLATIONS, SUSPENSIONS, LOWER BORROWING COSTS

Some nations will need assistance with their debt inventory, not simply with funds.

Politicians corresponding to Ethiopia’s prime minister and Ghana’s finance minister in addition to marketing campaign teams have pushed for outright debt cancellations, on high of widespread requires an extended suspension of servicing and compensation for the continent’s poorest nations.

Others corresponding to UNECA and a few non-public traders have additionally advised the power of improvement banks might be leveraged by loans and ensures to deliver down borrowing prices for nations below essentially the most strain.

“There are undoubtedly some nations, like Zambia and Angola or Ghana, which are in fairly fragile spots proper now,” mentioned S&P World Scores sovereign group managing director Roberto Sifon-Arevalo, including that the proposed plans didn’t deal with structural issues. “You want one thing rather more profound and deeper and holistic than this specific method.”

African nations make up half of the 73 nations eligible for the G20 Debt Service Suspension Initiative (DSSI).

A lot has modified because the HIPC initiative when cash was primarily owed to rich nations and multilateral establishments. Now, a plethora of collectors makes assist extra sophisticated.

China performs a key position: Its authorities, banks and corporations lent some $143 billion to Africa from 2000 to 2017, in accordance with Johns Hopkins College.

“About 10 African nations have a debt drawback with China,” mentioned Eric Olander, co-founder of The China-Africa Challenge, including that Chinese language lending was concentrated in a small variety of nations. “Djibouti, Ethiopia, Kenya, Angola, Zambia – all of them have very severe debt points.”

A 3rd of the $30.5 billion of public debt service funds due in 2021 by DSSI-eligible sub-Saharan African nations is owed to official Chinese language collectors whereas an extra 10% is linked to the China Improvement Financial institution, the Institute of Worldwide Finance calculated.

China signing as much as the G20 framework was extensively welcomed, though many have criticised a scarcity of transparency in its lending.

“For those who have a look at China, the loans are largely shrouded in secrecy,” mentioned Nalucha Nganga Ziba, Zambia nation director for anti-poverty charity ActionAid.

However shifting funds below the G20 deal from the near- to the medium-term may merely be pushing the issue down the highway. For instance, Scope Scores calculates that Angola collaborating within the DSSI may push up its debt-servicing necessities from 2022 to 2024 by greater than 1% of GDP per 12 months.

A bump in Eurobond funds following a debt sale bonanza that noticed the African hard-currency debt markets surpass the $100 billion mark in 2019 may add to the strain.

With dollar-bond yields hovering near double digits, governments corresponding to Angola, Ghana and Mozambique would wrestle to faucet markets for the time being.

Certainly, no sub-Saharan African authorities has offered Eurobonds since Gabon and Ghana in February, earlier than COVID-19 hit.

Nonetheless, entry to capital markets might be wanted to refinance but in addition to assist plug an exterior financing hole which the IMF estimates at as a lot as $410 billion over the following three years.

“The potential battle is actually going to be between nations eager to develop, and traders saying we have to speak about fiscal consolidation straightaway,” mentioned Andrew Macfarlane, EM credit score strategist at BofA. (Reporting by Karin Strohecker in London and Joe Bavier in Johannesburg; Further reporting by Tom Arnold in London; Modifying by Hugh Lawson)