Member states in the East Africa region have increased external debt to $73 billion from $19.9 billion over the past 10 years.
According to the International Debt Statistics 2021 report by the World Bank, external borrowing rose between 2009 and 2019.
During the period, Kenya was the biggest borrower lifting the stock of external debt to $34.2 billion from $8.5 billion, followed by Tanzania recording $19.5 billion from $7.6 billion.
The report indicates that Uganda accumulated $13.9 billion from$2.7 billion and Rwanda $6.2 billion from $1.1 billion in external debt during the period.
For Uganda, $166 million went into principal repayment and $115 million in interest repayment, while Rwanda spent $31.5 billion and $133.2 million respectively.
However, Burundi witnessed a decline in its external debt stock to $578.4 million in 2019 from $607.2 million in 2009.
“The overhang of debt may slow investment and growth for years to come, a burden on the poor that now needs to be addressed by creditors across the world taking prompt steps to permanently cut unsustainable debt stocks for the poorest countries,” said David Malpass, the World Bank Group President.
In EA region, the report shows that in 2019, Kenya spent $3 billion in principal repayments and $1.2 billion in interest repayments, whilst Tanzania spent $1.1 billion and $200 million respectively.
The report says that with almost half of all low-income nations either already in debt distress or at a high risk of it, the burden of debt is bound to worsen with countries borrowing more to tackle the COVID-19 pandemic.
Many countries applied for debt relief with the International Monetary Fund (IMF) in October, granted a six-month extension to 28 low income nations with Rwanda being among the beneficiaries.
Total external debt stocks of low-income countries eligible for debt service suspension rose by 9 per cent to $744 billion in 2019, equivalent to one-third of their combined gross national income.
“The risk is that too many poor countries will emerge from the Covid-19 crisis with a large debt overhang that could take years to manage,” said Malpass.
According to him, to build durable economic recoveries, countries will need to achieve long-term debt sustainability.
The report shows that the external debt stock of 120 low and middle income countries rose by 5.4 per cent to $8.1 in 2019 trillion, a rate of accumulation almost identical to that in 2018, but close to half the 10.5 per cent rise in external debt stock recorded in 2017.
The increase in external debt stocks in 2019 was the outcome of net debt inflows of $383 billion.
Countries in sub-Saharan Africa accounted for the largest share of net long-term inflows at 24 per cent, followed by the East Asia and Pacific region.