Angola's Leadership: Steering Africa Towards Financial Stability

Angola will utilize its African Union chairmanship to launch the African Financial Stability Mechanism (AFSM), aiming to avert a liquidity crisis due to soaring debt. The mechanism seeks to refinance debt, requiring $3 billion to begin operations, and $16 billion over the decade, fortifying economic stability.

As Angola takes the helm of the African Union, its finance minister has unveiled plans for a sweeping initiative aimed at bolstering financial stability across the continent. The proposed African Financial Stability Mechanism (AFSM) is poised to serve as a buffer against liquidity crises stemming from mounting external debts.

With African public debt surging by 170% over the past 15 years, regional leaders are facing unprecedented challenges. The AFSM's creation is a response to this escalation, designed to aid countries like Kenya and Angola, which are grappling with debt repayment difficulties amid sluggish economic growth.

Modeled on the European Stability Mechanism, the AFSM will focus exclusively on debt refinancing. Initial plans involve raising $3 billion in capital to provide refinancing loans, while securing an Aa/AA rating through non-African entity partnerships. Despite skepticism, supporters are optimistic about its efficacy in promoting long-term economic stability.

(With inputs from agencies.)