Togo : Public debt less exposed to foreign exchange risk, Ministry of finance says

Public finance
Tuesday, 02 July 2019 12:52
Togo : Public debt less exposed to foreign exchange risk, Ministry of finance says

(Togo First) - At the end of December last year, Togo’s public debt was XOF2,191 billion according to a recent report released by the Ministry of Finance. This is nearly 74% of the country’s GDP. 

The national public debt committee which wrote the report indicates that 73% of this debt is denominated in the local currency while 27.% is in foreign currency. According to the document’s author, this makes the debt less exposed to exchange rate risk.

However, the committee notes that while the risk is minimal, “external debt portfolio is still influenced by the fluctuations of some currencies like the US dollar (32%), the Yuan (27%) and Special Drawing Rights or SDR (21%).”  Hence, a too high depreciation of the US dollar against the Euro could augment medium-term debt.

A 30% depreciation of the dollar against the Euro would deviate debt-to-GDP ratio from an estimate of 59.89% in 2023 to 63.91%,” reads the report.

Regarding outstanding domestic debt, denominated in the local currency, it stood at XOF1,597.8 billion at the end of December 2018. Meanwhile, external debt, denominated in foreign currencies, was valued at XOF593.2 billion.

By 2023, in line with Togo’s medium-term debt strategy, external debt should constitute about 45% of public debt whereas domestic debt would represent the remaining 55%.

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