They cannot meet these needs only from their own resources, grants and concessional sources. They will have to tap international capital markets.Currently, 21 African countries have issued Eurobonds. In 2021, these foreign currency denominated bonds accounted for $144.7 billion of Africa’s total external debt stock of $789.8 billion. The payments due on these bonds will rise from about $5 billion in 2023 to over $10 billion a year in 2024 and 2025.
Instead, bondholder participation in the restructuring is voluntary. This essentially places the sovereign debtor in the position of a supplicant appealing to the kindness of its creditors. The bondholders are likely to show such “kindness” only if they think they can get more money out of the debtor by restructuring the bonds, than by enforcing their contractual right to payment.
The negotiating process further favours the bondholders because it treats the debt contracts in isolation from all the other obligations and responsibilities of the debtor. There is no space to explicitly address the obligations that the sovereign has to its own citizens under its constitutional and legal order, and its international treaties.African debtors and their supporters need to change the dynamics of these debtor-creditor discussions.
Such a framework exists. The DOVE Fund Principles offer a conceptual framework for sovereign debt restructuring that is balanced and respectful of the rights, obligations and responsibilities of all the stakeholders in African debt.First, the parties directly involved in a sovereign debt restructuring can use them to guide their decisions and actions in the debt restructuring.
Responsibility: the outcome accounts for all relevant economic, financial, environmental, social, human rights and governance issues.
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