The International Monetary Fund (IMF) revealed on Thursday, July 10, that public debt ratios in Sub-Saharan Africa have been stabilizing, despite a challenging economic environment. In an analytical note cited by Lusa, the IMF highlighted that several countries in the region, such as Cabo Verde, have made significant progress in reducing debt levels in recent years.
According to the Fund’s economists, many of these countries managed to stabilize or reduce their debt ratios without resorting to restructuring. In several cases, the reductions were consistent and substantial, with declines of over 10% of Gross Domestic Product (GDP), sustained over time.
One example mentioned in the report is the Democratic Republic of Congo, where the debt-to-GDP ratio dropped by 15% between 2010 and 2023. Cabo Verde is also highlighted as a positive case, having achieved one of the most significant reductions—with a drop of more than 30% in the same indicator between 2021 and 2023—demonstrating that public debt can be reduced in a stable manner even during times of economic uncertainty.
Despite these gains, the IMF warned that the region remains vulnerable due to tighter global financial conditions and high financing costs. Nevertheless, it acknowledged that countries have implemented effective harmonization measures, which have helped, on average, to control public debt levels.
The IMF noted that debt reductions tend to be more sustainable when countries have strong institutions and benefit from a favorable global economic environment. Additionally, the presence of fiscal adjustment programs contributes to fiscal consolidation, reinforcing the importance of external support. To ensure that budgetary improvements lead to effective and sustainable debt reduction, IMF economists stressed the need for sustained effort over time. They therefore recommend that fiscal harmonization be accompanied by structural reforms that promote economic growth and strengthen domestic institutions.
The Fund also suggested that countries use this moment to improve the efficiency of public financial management. In this regard, it recommends strengthening budgetary balances, broadening the tax base, and eliminating ineffective tax exemptions—measures deemed essential for more effective management of state resources.
In the case of Cabo Verde, the IMF maintained an optimistic outlook for the economy, forecasting a growth rate of 5% in 2025. The inflation forecast was revised downward from 2% to 1.5% for this year. Regarding public debt, the IMF expects it to continue falling, projecting a debt-to-GDP ratio of 109.6% in 2025 and 81.8% by 2030, down from a peak of nearly 150% at the beginning of the decade.
Source: DE
