No fewer than 20 countries in sub-Saharan Africa are either at high risk of debt distress or already in debt distress, according to the International Monetary Fund, IMF.
The Head of the Regional Studies Division in the African Department of IMF, Papa N’Diaye disclosed this in a new podcast released by the multilateral lender, stating that debt burden in the region was very heavy at a time when the social and development needs are very large.
African countries in high risk of debt distress were listed earlier as Burundi, Cabo Verde, Cameroon, Central African Republic, Comoros, Djibouti, Ethiopia, The Gambia, Ghana, Guinea Bissau, Kenya, Malawi, Sierra Leone, and Zambia.
Of the eight countries in debt distress globally, all but Grenada are from Africa. They include Chad, Congo Republic, Mozambique, Somalia, South Sudan, Sudan and Zimbabwe.
The IMF official said the debt service as a ratio to revenue has been increasing, adding that the debt burden is very heavy at a time when the social and development needs are very large.
Despite its N39.556 trillion ($95.77 billion) public debt profile as at December 31, 2021, and over 80 per cent debt service-to-revenue ratio, Nigeria is neither classified as a nation in debt distress nor high risk of debt distress.
N’Diaye of the IMF said: “So for countries in the region, the space to deal with the impact of the war in Ukraine is very limited, and there will be a need to make difficult choices. First, for us, the priority is really for countries to help the most vulnerable populations mainly through targeted transfers, if possible, especially those countries that have good social safety nets.
“Those that don’t have those safety nets could resort to food subsidies and tax cuts. But these will definitely need to be contained both in scope and in time, given the limited fiscal space that countries have.”
N’Diaye of the IMF stressed that Sub-Saharan African countries would need to try to create more room by improving domestic revenue mobilisation, a s well as making sure that they get the best bang for their bucks by increasing the efficiency of public spending.
According to him, “Sub-Saharan African economies were growing very strongly in 2021. We were expecting the region’s average growth to come out at around 3.7 per cent for 2021. It turned out to be 4.5 per cent. And most of that positive surprise, or that momentum, started in the second half of the year.
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