Eurobonds have risen to prominence in Africa because they have opened a window for governments to diversify their funding sources from traditional concessionary loans offered by the International Monetary Fund (IMF) and foreign aid, both of which are declining. In addition, multilateral loans were becoming unpopular because they set strict conditions about austerity which are designed for governments to reduce spending. To date, 21 African countries have issued Eurobonds worth a combined total of an estimated US$155 billion on international bond markets. Institutional investors from Europe and the US buy these instruments. Experts on Africa’s sovereign debt, say the system isn’t working in favour of African countries.
Source: The Conversation