Fitch Projects Sub-Saharan Africa Debt-to-GDP Ratio to Decline Amid Growth and Reforms
Fitch Ratings has forecast that stronger economic growth and fiscal reforms will help reduce Sub-Saharan Africa’s (SSA) government debt-to-GDP ratio, while easing monetary policy is expected to lower domestic borrowing costs.
However, the UK-based agency warns that median financing costs are likely to climb further, with interest-to-revenue ratios remaining precariously high for several countries in the region.
Debt Restructurings and Credit Ratings
Ghana and Zambia, both rated CCC+, exemplify the financing challenges faced by lower-rated sovereigns in the region. Fitch expects debt restructurings under the G20 Common Framework for these two nations, alongside one other country, to conclude in 2025.
For the first time in nearly a decade, barring a brief period at the start of 2023, Fitch has assigned only one Negative Outlook across SSA sovereigns. Meanwhile, two countries, Nigeria and Seychelles, hold Positive Outlooks, reflecting strides in economic reforms and fiscal consolidation.
Divergent Outlooks Highlight Policy Challenges
Nigeria’s Positive Outlook reflects progress in implementing reforms to address structural distortions and enhance policy credibility. In Seychelles, robust fiscal discipline has led to a sharp reduction in its debt-to-GDP ratio, underpinning its favorable outlook.
By contrast, Cameroon continues to struggle with liquidity pressures and weaknesses in public financial management (PFM), exacerbated by political and social challenges. Its Negative Outlook has been in place throughout 2024.
Regional Financing Stress Lingers
Fitch notes that six SSA sovereigns are rated at levels where no Outlook is assigned, matching mid-2021 levels. This reflects the enduring fiscal stress in some countries, often compounded by inadequate public financial management systems.
The outlook for SSA sovereign credit remains mixed, with Fitch emphasizing that while some nations are making progress, systemic vulnerabilities continue to weigh heavily on the region’s fiscal and economic performance.
