IMF urges African economies to tap into domestic financial markets to reduce reliance on foreign debt

The IMF urged African and other emerging economies to develop domestic financial markets to reduce reliance on volatile external borrowing.

In its April 2025 Global Financial Stability Report,the IMF warns that high real interest rates globally have made external financing more expensive and less accessible,especially for frontier markets in Africa.

Tunisia was identified in the report as one of the African countries facing elevated sovereign debt vulnerabilities along with Ghana,Zambia,Ethiopia,Kenya,Nigeria,Egypt,and Angola.

As global interest rates remain high and geopolitical tensions persist,the IMF highlighted that real financing costs in emerging and frontier markets,including many in Africa,are at their highest levels in over a decade,leading to strained public finances and increased risk of sovereign debt distress.

The report also noted that capital flows to African economies remain volatile,with investor sentiment sensitive to global risk conditions.

Countries with high external debt and limited fiscal space are particularly exposed to refinancing shocks.

The Fund recommends that African states implement reforms to improve market infrastructure,legal frameworks,and investor protections,which are essential to attract long-term domestic investment and deepen financial intermediation.