DAR SALAAM: The International Monetary Fund (IMF) has warned African countries against rushing to issue Eurobonds, saying they may face exchange rate risks and problems repaying debts.

African governments facing falling levels of foreign aid are on a borrowing spree to pay for new roads, power stations and other infrastructure, prompting concern from many analysts that this could raise debt levels and undermine growth.

“It comes with some risks,” the director of the IMF’s African Department, Antoinette Sayeh, told Reuters in an interview on Monday.

“Whereas what it costs the countries to issue these bonds can often look lower than what they would pay on domestic borrowing ... the real cost in the final analysis will also depend on the evolution of exchange rates in the course of the life of the bond issuance.”

In 2007, Ghana became the first African beneficiary of debt relief to tap international capital markets, issuing a $750 million 10-year Eurobond.

Published in Dawn, October 22nd, 2014