The International Monetary Fund warned on Tuesday cautioned Sub-Saharan African nations over heavy borrowing and gaping deficits, despite an overall growth in economic growth being recorded in most of the economies.
The Breton Woods institution, in its Economic Outlook Report released in Ghana, noted that
The economies would be plunged into another era of debt burden as the governments continue to tap international debt markets and issue record levels of debt in foreign currencies.
The Fund had projected that the rate of economic expansion would rise to 3.4 percent this year, up from 2.8 percent in 2017, boosted by global growth and higher commodity prices.
While noting that sluggish growth in South Africa and Nigeria, the continent’s two largest economies, has overall implications for the overall growth rate, the IMF still expected growth to pick up in around two-thirds of African nations.
It reported further that under current policies, that the growth rate was expected to be lower than 4 percent over the medium term.
The Fund reported: “The current growth spurt in advanced economies is expected to taper off, and the borrowing terms for the region’s frontier markets will likely become less favourable … which could coincide with higher refinancing needs for many countries across the region.”
The IMF also reported that debt profiles of countries in the continent showed that 40 percent of low-income countries in the region were now in debt distress or at high risk of it, adding that re-financing such debt could soon become more costly.