The World Bank Group has projected a positive trend for African countries, noting that their public debt will drop in 2024.
Low-income African countries have been stuck in a loop of debt servicing instead of channelling funds to national development. The World Bank thinks 2024 could be a positive year for public debt in Africa.
In its latest report tagged: “Tackling Inequality is Necessary for Growth and Poverty Reduction”, the World Bank posited that just like the continent’s economic growth, Africa’s public debt status was on the cusp of a positive trend.
It said over half of African countries suffer unsustainable debt burdens, and financial issues and are actively trying to restructure debts, adding that African governments of such countries heavily rely on market financing and non-Paris club loans which directly increase their public debt service.
The World Bank noted that Sub-Saharan Africa (SSA)’s national debt has 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 pandemic disrupted things.
“Total debt service increased by US$46.6 billion between 2012 and 2022,” the report pointed out.
The World Bank believes the public debt will drop significantly in 2024 but despite the drop the risk of debt challenges remains high in the continent.
“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 stated.
