Rising Debt Poses Great Risks To Africa’s Biggest Economies, IMF Warns
Besides huge political uncertainty, another troubling development haunting Africa’s biggest economies is rising public debts.
In simple terms, the governments of Africa’s biggest economies, Nigeria and South Africa, are borrowing too much and may get their economies into trouble.
A trend IMF believes should not continue.
Both countries have been advised to diversify from dependence on commodities and oil, implement fiscal reforms to stimulate growth and attract private investment.
The IMF said public debt in the Sub-Saharan Africa region would rise to 53% of GDP this year from 48% in 2016.
But what is even more worrying is that most countries are borrowing from local banks, which could distabilise the domestic financial sector and fuel inflation.
Also Read: Nigeria’s Economy Still In Bad Shape - IMF
Debt servicing costs were also up, but high debt levels were in particular complicating the economic outlook for six nations, including Zimbabwe, which is gripped by a crunch forex shortage, the Fund said in a report launched on Monday.
“Debt servicing costs are becoming a burden, especially in oil-producing countries ... and are expected to absorb more than 60% of government revenues in 2017,” IMF said.
According to IMF, “While some countries had made progress in reducing their fiscal deficits, others, like Africa’s most advanced economy South Africa would see the deficit widen.”
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