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The African Development Bank (AfDB) is poised to launch a regional refinancing facility aimed at assisting African nations burdened with maturing international bonds, according to AfDB President Akinwumi Adesina, on January 29.
The African Financial Stability Mechanism, which has already been approved by Finance ministers, will soon receive the final nod from Heads of State during the African Union Summit in mid-February. Once activated, the facility will provide a much-needed lifeline to African countries struggling with debt repayments, offering them a chance to refinance their obligations on global capital markets.
Adesina highlighted the urgency of the facility, pointing to the $20 billion in repayments that African countries will need to make annually over the next three years. He emphasised that unlike the International Monetary Fund (IMF) and other multilateral development banks, which do not provide refinancing options, this new facility will be tailored to Africa’s unique needs. It aims to reduce refinancing risks for the continent while ensuring that participating countries implement necessary macroeconomic and fiscal reforms.
The facility will offer loans at concessional rates, which will ease the financial burden on African governments already grappling with economic pressures. The AfDB president’s comments come at a time when African nations face increasing difficulties in managing their debt, and the new facility is seen as a critical tool in addressing the continent’s mounting financial challenges. The expected approval by African leaders is set to mark a significant step in improving Africa’s financial stability and supporting its economic recovery.