Global rating agency Moody’s has maintained a negative outlook on Sub Saharan African economies according to a research report released by the company today. The negative outlook is based on the severe economic hurdles Sub Saharan countries are facing currently.
Moody’s Investor Services predicts that African countries will experience wider fiscal deficits and higher debt levels in 2021 due to slow economic growth and weak revenue collection as a result of the pandemic.
“Most Sub-Saharan African governments’ debt burdens will stabilise at materially higher levels in 2021, with the average debt burden for the region at around 64% of GDP in the near to medium term,” says Kelvin Dalrymple, Vice President – Senior Credit Officer at Moody’s Investors Service.
“We do not expect debt burdens to come down in the foreseeable future as revenue generation capacity remains weak. Higher debt loads, lower government revenue, and higher interest costs will increasingly challenge debt affordability. Contingent liabilities from state-owned enterprises also pose an additional risk.”
The credit rating agency adds that Sub-Saharan African nations face high unemployment rates, income inequalities, and political instability, factors likely to affect their economic recovery.
Economies that heavily rely on oil exports like Nigeria, Angola, and Algeria are expected to record slower economic growth than non-oil exporting countries particularly in the East African region.