Sub-Saharan Africa’s public debt load is stabilising but the region’s economies face mounting headwinds due to slowing global growth that will weigh on exports, the International Monetary Fund (IMF) said on Friday.
The IMF has previously warned of the continent’s rising debt burden, largely the result of borrowing to plug gaping budget deficits in mineral- and oil-producing countries that followed commodities and crude oil slumps.
In its regional economic outlook, the Fund said public debt as a percentage of GDP had settled at about 55 per cent on average. “What we’ve seen overall in the region is, by and large, debt levels beginning to stabilise,” Abebe Aemro Selassie, director of the IMF’s African Department, told Reuters.“Going forward I expect it to remain stable provided countries implement the budgets that they’ve formulated.”
Still, seven countries - Eritrea, Gambia, Mozambique, Congo Republic, Sao Tome and Principe, South Sudan and Zimbabwe - are in debt distress, the IMF said. Nine others including Ethiopia, Ghana and Cameroon are at high risk of debt distress.
The IMF projected regionwide economic growth of 3.2 per cent this year, trimming an April forecast of 3.5 per cent. It sees growth accelerating to 3.6 per cent next year compared to its April projection of 3.7 per cent. Those forecasts are more optimistic than World Bank projections released this month.
The Fund blamed the downward revision on suppressed global growth linked to trade tensions between the United States and China as well as output disruptions in African oil-exporting countries and weaker than expected growth in South Africa. “The region is not unaffected by what’s going on globally,” Selassie said.
The continent’s most developed economy, South Africa is expected to grow just 0.7 per cent this year and 1.1 per cent in 2020, according to the report. Leading oil exporter Nigeria will grow 2.3 per cent this year and 2.5 per cent next.
The region’s third biggest economy, Ethiopia, which is pursuing an ambitious reform programme under Nobel Prize-winning Prime Minister Abiy Ahmed, is on track to record growth of 7.4 per cent this year, the Fund said.That will slow slightly to 7.2 per cent in 2020.
More generally, non-resource intensive African economies are expected to grow at an average of six per cent this year.