Rapid economic growth in West Africa’s CFA-franc zone will keep debt loads manageable despite a recent wave of heavy borrowing by governments, the governor of the regional central bank told Reuters.
The Economic and Monetary Union of West Africa (UEMOA) plans to issue 2,865 billion CFA francs ($4.9 billion) in debt this year, down 22.4 percent from 2014 when both Ivory Coast and Senegal issued Eurobonds.
UEMOA comprises Benin, Burkina Faso, Ivory Coast, Mali, Guinea-Bissau, Senegal, Niger and Togo.
Amid a boom in Eurobonds across the continent, the International Monetary Fund has warned against excessive enthusiasm for such borrowing, saying African countries may face exchange rate risks and problems repaying dollar-denominated debt.
Tiemoko Meyliet Kone, governor of West Africa’s BCEAO central bank, acknowledged the dollar’s strength over the past year against the euro, to which the CFA franc is pegged. However, he said the IMF, in its most recent analysis of UEMOA debt, saw only a weak to moderate risk of overindebtedness for the zone’s members.
“What’s more, the union’s growth perspectives are favorable, with a medium-term growth rate above 7 percent, and show that the debt profile should continue to remain sustainable in the member states as a whole,” Kone said