Fitch Ratings has stated that improved growth and fiscal reforms should reduce Sub-Saharan African governments' debt to Gross Domestic Product (GDP) ratio, while lower policy rates will ease domestic financing costs.
However, the median average financing costs will rise further, and interest/revenues will be uncomfortably high for many countries in the region.
According to the UK-based firm, financing challenges will remain, particularly for those at the lower end of the rating scale including Ghana and Zambia, but the three Common Framework restructurings are expected to be completed in 2025. Both Ghana and Zambia have ratings of CCC+.
Two sovereigns in the region have Positive Outlooks, and one has a Negative Outlook.
According to the UK-based firm, this is the first time in nearly a decade, apart from a brief period at the start of 2023, that there has only been one Negative Outlook for Fitch-rated SSA sovereigns.
Six sovereigns are rated at levels for which Fitch does not assign Outlooks, matching a level that was last in half of 2021. This reflects ongoing financing stress in the region that is in some cases, aggravated by weaknesses in public finance management.
Cameroon’s Negative Outlook has been in place all year and reflects liquidity and PFM risks from budgetary pressures, exacerbated by political and social challenges.
Nigeria and Seychelles are the two countries with Positive Outlooks.
For Nigeria, this reflects the implementation of a reform programme that is reducing distortions and enhancing policy credibility; for the latter, it reflects strong budgetary performance, leading to a marked fall in the debt/GDP ratio.
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