African countries are borrowing too much.

Even though there is growing economic growth in Sub-Saharan African countries, the sub-region is at growing risk of debt distress because of heavy borrowing and gaping deficits, warns International Monetary Fund, IMF.

The Fund gave the warning on Tuesday in its economic outlook for the sub-region released in Ghana.

The sober assessment comes as African countries continue to borrow from overseas in foreign currencies as demand for debt equities grow.

Nonetheless, in its economic outlook for the region, the Fund projected the rate of economic expansion would rise to 3.4% this year, up from 2.8% in 2017, boosted by global growth and higher commodity prices.

Slower growth in South Africa and Nigeria - the continent’s two largest economies - weighed on the region-wide average, but the IMF expects growth to pick up in around two-thirds of African nations. However, Reuters reports that under current policies, that rate is expected to plateau below 4% percent over the medium term.

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Meanwhile, around 405 of low-income countries in the region are now in debt distress or at high risk of it, the IMF said. And refinancing that debt could soon become costlier.

“The current growth spurt in advanced economies is expected to taper off, and the borrowing terms for the region’s frontier markets will likely become less favourable ... which could coincide with higher refinancing needs for many countries across the region,” it said.

African governments issued a record $7.5 billion in sovereign bonds last year, 10 times more than in 2016. And they have issued or plan to issue over $11 billion in additional debt in the first half of 2018 alone, the report said.

Foreign currency debt increased by 40% from 2010-13 to 2017 and now accounts for about 60% of the region’s total public debt on average, IMF data showed.

Average interest payments, meanwhile, increased from 4% of expenditures in 2013 to 12% in 2017.

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