African Union Approves Financial Stability Mechanism to Address Continent's Debt Refinancing Needs

The African Union (AU) approved the African Financial Stability Mechanism (AFSM) at its 38th summit in Addis Ababa. The initiative, championed by the African Development Bank (AfDB), aims to bolster financial stability and aid in debt refinancing for African nations. The AFSM seeks to address liquidity needs for debt refinancing. The AfDB estimates the mechanism could save up to $20 billion by 2035. According to a UN report, African countries' external debt service reached $89.4 billion in 2024. The AfDB projects African debt refinancing needs will reach $10 billion annually over the next decade. The AFSM complements efforts such as increased Special Drawing Rights from the International Monetary Fund (IMF) for Africa.