Combined with higher oil prices compared to the past several years – a boon for the hydrocarbon exporters of the region, but a dangerous burden for net importers – higher debt servicing costs will impede governments’ ability to initiate essential investment, potentially weighing on long-term growth.
This is not to say that these countries are at the brink of crisis. The trajectory in terms of fiscal deficits is broadly in the right direction, much of their debt is of a concessional nature, and they have significant international support. Nevertheless, the rising burden of interest payments could weigh on their ability to make crucial long-term investment in physical and human capital, impeding future growth rates and economic development.
In this edition of Inside AB, Jeremy Lawrence and Shayan Shakeel crunch the numbers to ask what rising rates mean in terms of rising debts.
(Source: Arabianbusiness.com YouTube channel)