SSA Debt Profile: 2019 Review and 2020 Outlook

Friday, January 31, 2020 / 3:00 PM / United Capital Research / Header Image Credit: BMI

The fiscal narratives across Sub Saharan Africa (SSA) region in 2019 was broadly similar, as fiscal deficit widened, owing to shortfalls in actual revenue generation amid rising expenditures. Thus, to cater for the rising recurrent spending and spur economic activities, public debt levels stayed elevated in 2019. More countries continued to tap into the international debt capital market without necessarily neglecting funds from traditional concessional sources. Notably, Benin was the "new kid on the block" as the West African country issued its debut sovereign Eurobond in H1-19 while the DRC received its first IMF lending since 2012, in H2-19.

In 2020, the borrowing spree is expected to pick as we anticipate a wider fiscal deficit - spurred by continued rise in overall expenditures during the period. Specifically, we expect the implementation of an upward review of national minimum wage to add further pressure on Nigeria and Ghana's government financing needs. Also, we expect the currently low interest rates environment in the developed market to spur commercial borrowings by SSA countries. However, the increased magnitude of market-based borrowings has a higher risk content, as captured by greater vulnerability to commodity prices, global interest rates, and currency movements.

Accordingly, to make these external borrowings sustainable, we expect government to implement policies and reforms that could build resilience to these risks and use foreign capital to raise medium-term potential growth.

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Looking Forward

Angola

Jan-20 CPI YoY - February  9th

Ghana 

Dec-19  Gross Reserves - February 4th

Jan– 20 CPI YoY - February 12th

Kenya

Dec-19 Overseas Remittances YoY - February 10th-17th

Jan-19 Inflation Rate - January 31st  

Morocco

Q4-19 unemployment rate - February 7th

Nigeria

Jan-20 Markit/Stanbic IBTC Bank PMI  - Feb. 5th

South Africa

Jan-20 Gross Reserves - February 7th

Q4-19 South Africa Unemployment - Feb. 11th  

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