The report states that several governments in Sub-Saharan Africa will continue to rely on borrowing from both domestic and foreign sources to cover budget deficits in 2025, despite the region’s progress on fiscal consolidation.
Of the countries in the region, the report spotlighted Uganda, Nigeria, and Ghana. These three countries are projected to have significant budget deficits.
”Budget shortfalls will be substantial in Uganda, Nigeria, and Ghana, while progress on fiscal consolidation will remain slow in South Africa and Tanzania,” the report reads.
Furthermore, the report points out that the quarterly average of SSA 10-year government bonds weighted by GDP shows that rates increased to 12.63% in Q2 2024, surpassing the previous high of 12.62% in Q4 2022.
A number of different regional variables, such as monetary tightening in Nigeria, contributed to the widening of the gap with 10-year US Treasuries.
Additionally, the report highlighted that despite the fact that domestic and foreign yields are still high, international capital markets are back in action
“In 2023, historically high interest rates in developed markets, alongside elevated risk aversion, led to a sharp decrease in emerging and frontier market debt issuance, with no SSA governments tapping international capital markets in that year,” the report reads.
“In 2023, historically high interest rates in developed markets, alongside elevated risk aversion, led to a sharp decrease in emerging and frontier market debt issuance, with no SSA governments tapping international capital markets in that year,” it adds.
Nigeria Uganda and Ghana’s debt
Very recently, it was reported that Nigeria was looking to procure a $500 million loan from the World Bank to bolster basic education, primarily for out-of-school children, amongst other things.
This was part of the World Bank’s $1.57 billion financing package to Nigeria for a new program aimed at boosting the country’s health and education sectors.
In Q1 of 2024, the National Bureau of Statistics revealed that Nigeria’s total debt stood at t N121. 67 trillion (US$91.46 billion), from N97. 34 trillion (US$ 108.23 billion) the previous quarter, indicating a growth rate of 24.99% on a quarter-on-quarter basis.
Similarly, Ghana this year secured a $3 billion loan from the International Monetary Fund, to be disbursed incrementally.
According to Ghana’s Ministry of Finance, as of the end of June 2024, the total amount of central government debt was GH¢742.0 billion ($46.2 billion), or 70.6% of GDP.
This shows a 22.0 percent rise as a result of the devaluation of the Cedi and creditor payments.
Meanwhile, the Bank of Uganda projects that external debt servicing will account for 35 percent of the country’s GDP in 2024/2025.
As seen in a report by Reuters, Uganda’s Finance Minister Matia Kasaija in a budget reading noted that the overall public debt was $24.7 billion at the end of the previous year and was expected to increase to $25.7 billion by the end of June.