Debt servicing: A thorn in the foot of sub-Saharan Africa

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In Nigeria, Gabon, and Angola, debt servicing should take up more than 60% of public revenues this year. This is quite a heavy burden according to the International Monetary Fund (IMF).

These are not the only countries of sub-Saharan Africa to be concerned by this challenge. The Fund notes that at the end of 2016, public debt had already exceeded 50% of GDP in 22 countries, resulting in some budgetary risks.

According to the IMF, budgetary pressures pose risks for Nigeria’s financial sector and that of some other nations in the region. This calls for a need for African leaders to initiate major budget sanitation measures.

The debt weighs considerably on public investments that are likely to boost the region’s economies which are still affected by the drop in prices of commodities. Also, even if 15 out 45 nations keep recording a growth rate of more than 5%, growth across the whole region barely exceeds demographic growth rate. Meanwhile, in 12 countries totaling more 40% of the sub-Saharan African population, earning per capita should decrease in 2017.

However, in 2018, growth is expected to soar to 3.4%, driven by investments. A forecast which is not really likely, again, to be concretized, given the actual indebtedness level of the region.

 

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SOURCE: ECOFIN AGENCY

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