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Tuesday, 18 January 2022

Poorest countries inch closer to debt crisis as pandemic relief program ends

Low-income countries are in peril over debt, World Bank warns: Developing countries are facing a 45% surge in debt repayments this year compared to 2020, as pandemic-era borrowing comes home to roost, the World Bank said in its latest semi-annual economic outlook. A group of 74 low-income countries will see repayments surge to around USD 35 bn this year, leaving nations including Sri Lanka, Ghana, El Salvador and Tunisia at risk of default, investors told the Financial Times. A covid-era debt relief program launched by the G20 group of major economies came to a close at the end of 2021, meaning 42 countries must resume paying the USD 12.7 bn that was deferred under the scheme.

About 60% of the countries are at risk of needing to restructure their debts, according to the World Bank, which called for renewed efforts to relieve the developing world’s debt burden. The spike in debt servicing costs has come at the worst possible time, the bank added, with developing countries facing an increasingly constrained fiscal space as major economies look to tighten policy to tackle inflation.

China’s economy registered its highest growth rate since 2011 last year, with GDP expanding at an 8.1% clip, according to government data released yesterday. The full-year figure comes despite growth hitting a one-year-and-a-half low in 4Q2021, recording 4%.

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THE CLOSING BELL-

The EGX30 rose 0.2% at yesterday’s close on turnover of EGP 701 mn (40.6% below the 90-day average). Regional investors were net sellers. The index is down 0.8% YTD.

In the green: Rameda (+5.5%), Raya Holding (+4.3%) and Speed Medical (+3.3%).

In the red: MM Group (-3.2%), Cleopatra Hospital (-2.0%) and EFG Hermes (-1.8%).

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