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The World Bank
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The World Bank’s Pulse report doesn’t name the 18 but a report in
The Economist says Kenya is among the 18 countries where government debt is
above 50 per cent of GDP.
The Economist says Kenya is among the 18 countries where government debt is
above 50 per cent of GDP.
The bank has also expressed
concern that tax receipts are not meeting the cost of debt repayments in
several countries.
concern that tax receipts are not meeting the cost of debt repayments in
several countries.
It warns that the consequences
may be severe if action is not taken to address the issue in the coming years.
may be severe if action is not taken to address the issue in the coming years.
This is because from 2021
international bonds start maturing and large repayments pose “significant
refinancing risks” to the region, the bank says.
international bonds start maturing and large repayments pose “significant
refinancing risks” to the region, the bank says.
Public debt
rising
rising
The World Bank says that public
debt relative to GDP is rising throughout most of sub-Saharan Africa, and the
composition of debt has changed.
debt relative to GDP is rising throughout most of sub-Saharan Africa, and the
composition of debt has changed.
More countries have shifted
away from traditional concessional sources of financing toward more
market-based ones.
away from traditional concessional sources of financing toward more
market-based ones.
From 2013, the dynamics and
composition of public debt changed significantly.
composition of public debt changed significantly.
Public debt increased from an
average of 37 per cent of gross domestic product (GDP) in 2012 to 56 per cent
in 2016, with more than two-thirds of the countries experiencing an increase of
more than 20 percentage points.
average of 37 per cent of gross domestic product (GDP) in 2012 to 56 per cent
in 2016, with more than two-thirds of the countries experiencing an increase of
more than 20 percentage points.
Debt sustainability risks in
the region “have increased significantly” over the past few years, the report
says.
the region “have increased significantly” over the past few years, the report
says.
“Higher debt burdens and the
increasing exposure to market risks raise concerns about debt sustainability,”
the report says.
increasing exposure to market risks raise concerns about debt sustainability,”
the report says.
Eighteen countries were
classified at high-risk of debt distress in March 2018, compared with eight in
2013.
classified at high-risk of debt distress in March 2018, compared with eight in
2013.
The report is however more
optimistic about economic growth across the region which is projected to reach
3.1 percent in 2018, and to average 3.6 percent in 2019–20.
optimistic about economic growth across the region which is projected to reach
3.1 percent in 2018, and to average 3.6 percent in 2019–20.
Growth
forecasts
forecasts
The growth forecasts are
premised on expectations that oil and metals prices will remain stable, and
that governments in the region will implement reforms to address macroeconomic
imbalances and boost investment.
premised on expectations that oil and metals prices will remain stable, and
that governments in the region will implement reforms to address macroeconomic
imbalances and boost investment.
Following a dip in 2017, growth
prospects have improved in most of East Africa, including Kenya, Rwanda, and
Uganda, owing to improving agriculture sector growth following droughts and a
rebound in private sector credit growth.
prospects have improved in most of East Africa, including Kenya, Rwanda, and
Uganda, owing to improving agriculture sector growth following droughts and a
rebound in private sector credit growth.
“Growth has rebounded in
sub-Saharan Africa, but not fast enough. We are still far from pre-crisis
growth levels,” said Albert G. Zeufack, World Bank Chief Economist for the
Africa Region.
sub-Saharan Africa, but not fast enough. We are still far from pre-crisis
growth levels,” said Albert G. Zeufack, World Bank Chief Economist for the
Africa Region.
“African Governments must speed
up and deepen macroeconomic and structural reforms to achieve high and
sustained levels of growth.”
up and deepen macroeconomic and structural reforms to achieve high and
sustained levels of growth.”
However, although per capita
GDP growth in the region will turn positive this year, it remains well below
its long-term average and is inadequate to reduce significantly the region’s
high poverty levels.
GDP growth in the region will turn positive this year, it remains well below
its long-term average and is inadequate to reduce significantly the region’s
high poverty levels.
Very poor
people
people
The total number of very poor
people, at the international poverty line ($1.90/day at 2011 Purchasing Power
Parity exchange rates), is projected to decline only slightly, with more than
one-fifth of African countries still having poverty rates well over 50 per
cent.
people, at the international poverty line ($1.90/day at 2011 Purchasing Power
Parity exchange rates), is projected to decline only slightly, with more than
one-fifth of African countries still having poverty rates well over 50 per
cent.
While there was a rise in the
number of countries experienced growth rates above 5.4 per cent in 2015–18 (11
as opposed to seven countries in April 2017), these countries represent less
than a third of the region’s population.
number of countries experienced growth rates above 5.4 per cent in 2015–18 (11
as opposed to seven countries in April 2017), these countries represent less
than a third of the region’s population.
They do, however, include the
three East African countries of Kenya, Tanzania and Rwanda as well as Ethiopia.
three East African countries of Kenya, Tanzania and Rwanda as well as Ethiopia.
Growth for most of the
high-performing countries in the region was driven by the performance of
investment and export, the report says.
high-performing countries in the region was driven by the performance of
investment and export, the report says.
“For many African countries,
the economic recovery is vulnerable to fluctuations in commodity prices and
production,” said Punam Chuhan-Pole, World Bank Lead Economist and the author
of the report.
the economic recovery is vulnerable to fluctuations in commodity prices and
production,” said Punam Chuhan-Pole, World Bank Lead Economist and the author
of the report.
“This underscores the need for
countries to build resilience by pushing diversification strategies to the top
of the policy agenda.”
countries to build resilience by pushing diversification strategies to the top
of the policy agenda.”
“By fully embracing technology
and leveraging innovation, Africa can boost productivity across and within
sectors, and accelerate growth,” said Zeufack.
and leveraging innovation, Africa can boost productivity across and within
sectors, and accelerate growth,” said Zeufack.
Direct
investment
investment
In terms of investment, the
report says that foreign direct investment (FDI) flows by companies are
projected to remain relatively subdued but that non-resident portfolio FDI
inflows increased substantially in South Africa and Nigeria, as well as in
other frontier market economies, such as Ghana and Kenya.
report says that foreign direct investment (FDI) flows by companies are
projected to remain relatively subdued but that non-resident portfolio FDI
inflows increased substantially in South Africa and Nigeria, as well as in
other frontier market economies, such as Ghana and Kenya.
Other good news concerned
inflation, which continued to ease across most of the region in the first quarter
of 2018, and the median inflation rate is projected to decline to 4.9 per cent
over the coming year.
inflation, which continued to ease across most of the region in the first quarter
of 2018, and the median inflation rate is projected to decline to 4.9 per cent
over the coming year.
culled from Ghana news
