Africa's debt to stay above pre-pandemic levels, UN says
Thursday February 29 2024
Many African governments are having to slash spending, while interest payments are growing faster. PHOTO | SHUTTERSTOCK
Africa's public debt will stay above pre-pandemic levels in 2024 and 2025, with many countries still at risk of falling into debt distress as they continue to struggle to service international loans, a UN official said on Wednesday.
Addressing a United Nations Commission for Africa (Uneca) conference in Victoria Falls, the agency's macroeconomics and governance director Adam Elhiraika said eight countries were in debt distress, while 13 were "expected to be at risk of debt distress".
Africa has been hit by repeated economic shocks since 2020, from the Covid-19 pandemic to Russia's invasion of Ukraine and rising US interest rates, putting cash-strapped, debt-laden governments in a political and fiscal bind.
Read: Africa economic growth fell to 3.2pc in 2023
"Debt will (stay) above the pre-pandemic level. This is huge," Elhiraika said, adding that the continent's debt-to-GDP ratio was 62.5 percent at the end of 2022.
This ratio doubled to 57 percent in the decade to 2020 and could rise 10 percentage points in the next five years if Africa's fiscal trajectory does not change, according to a recent International Monetary Fund (IMF) report.
"There is need for African countries to work with international partners to address debt distress," Elhiraika said.
Africa's fiscal deficit deteriorated to 4.6 percent of GDP last year, Elhiraika said, without citing previous years' figures, and is set to widen further to 5 percent in 2024.
Many African governments are having to slash spending, while interest payments are growing faster.
Zimbabwe Finance Minister Mthuli Ncube called for a rethink of the global financial system.
Read: Askew global financial system puts Africa in debt crisis
"Access to finance for Africa must be made cheaper and easier. Hence, there is a need to re-look at the international financial architecture to ensure that it is fit for purpose," Ncube said, addressing the conference.
Zambia became the first African nation to default on its debt in late 2020, during the Covid-19 pandemic. Ghana followed in 2022, while Ethiopia became the latest last December.