Africa’s public debt is projected to remain above pre-pandemic levels through 2024 and 2025, with numerous countries facing the risk of debt distress due to challenges in servicing international loans, a U.N. official reported on Wednesday.
Speaking at a United Nations Commission for Africa (UNECA) conference in Victoria Falls, Adam Elhiraika, the agency’s director of macroeconomics and governance, highlighted that eight countries were experiencing debt distress and another 13 were “expected to be at risk of debt distress”.
The continent has encountered multiple economic challenges since 2020, including the impact of the COVID-19 pandemic, the conflict in Ukraine, and increasing U.S. interest rates, which have placed governments under severe financial and political strain.
“Debt will (stay) above the pre-pandemic level. This is huge,” Elhiraika stated, noting that the debt-to-GDP ratio for the continent stood at 62.5% at the end of 2022.
This ratio had already doubled to 57% in the decade leading up to 2020 and is anticipated to increase by 10 percentage points over the next five years without a change in Africa’s fiscal policies, as per a recent report by the International Monetary Fund (IMF).
“There is need for African countries to work with international partners to address debt distress,” Elhiraika emphasised.
He also mentioned that Africa’s fiscal deficit worsened to 4.6% of GDP in the previous year, with expectations for it to expand to 5% in 2024, although he did not provide figures for prior years.
As a consequence, many African nations are reducing expenditure, even as the cost of interest payments continues to escalate.
Zimbabwe’s Finance Minister Mthuli Ncube advocated for a revision of the global financial system during the conference.
“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 stated.
Notably, Zambia was the first African country to default on its debt during the late stages of the COVID-19 pandemic in 2020, with Ghana and Ethiopia following suit in 2022 and the latter in December of the same year, respectively.
