Calls from numerous sub-Saharan African countries to suspend debt interest payments amid the COVID-19 pandemic has called attention to the disturbing fact that some governments spend much more on interest repayment every year than they spend on healthcare. Often, health budgets have to be cut so debt repayments can be met.
Ghana spends five times as much on debt interest as it does on healthcare.
An analysis done by Yvonne Mhango at Renaissance Capital found that Kenya’s annual interest on debt is twice as much as its health budget, and Nigeria’s three times as much. Even worse, Ghana spends five times as much on debt interest as it does on healthcare.
Freeing up funds that would otherwise be spent repaying interest would allow Africa’s poorest nations some leeway to rehabilitate weak healthcare infrastructure and minimize the fallout from the ongoing economic contraction. The International Monetary Fund and the World Bank have called on Western governments to suspend the collection of debt interest from countries that request it. Complicating such relief efforts, however, is the varied mix of private creditors that hold African debt.