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Africa Is Set to Shed Off Some of Its Public Debt in 2024 – World Bank

Africa Is Set to Shed Off Some of Its Public Debt in 2024 – World Bank

Africa’s public debt has been a thorn in the side of the continent’s development. Some countries on the continent have been overwhelmed with servicing their debts as opposed to allocating funds for national development. And considering the low-income status of some countries in the region debt servicing can prove to be particularly cumbersome.

Fortunately, a report by the World Bank has revealed that much like the continent’s economic growth, Africa’s debt status is set to tread a positive path.

As the World Bank relays, more than half of African countries suffer financial issues, unsustainable debt burdens, or want to restructure debts. Governments on the continent rely on market financing and non-Paris Club loans, which significantly increases their public debt service.

The global lender noted that Sub-Saharan Africa’s national debt tripled since 2019 due to increased domestic and external debt levels. Sub-Saharan Africa’s median public debt-to-GDP ratio rose from 29% in 2012 to 53% in 2019 (before the COVID-19 shock) and is projected to reach 61% by 2023.

“Sub-Saharan Africa’s debt service levels have steadily increased since 2012, adversely affecting fiscal space and increasing vulnerability to shocks, especially for countries that have gained access to the international bond market and other non-concessional financing sources. Total debt service increased by US$46.6 billion between 2012 and 2022,” as seen in the World Bank’s report.

However, the World Bank via its latest Africa Pulse report, revealed that the continent’s public debt is expected to drop in 2024. The public debt, according to the report would drop from 61% in 2023 to 57% in 2024.

This is notwithstanding the fact that the debt risk on the continent remains high. “Public debt in Sub-Saharan Africa is expected to decline from 61 percent of GDP in 2023 to 57 percent of GDP in 2024. However, the risk of debt distress remains high,” the report reads.

Business Insider


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