Financial rating agency Fitch Ratings has named Angola, Cabo Verde, and Mozambique as among the five countries with the highest ratio of debt to GDP in sub-Saharan Africa – all with more than 100%.
“Fitch estimates that the ratio of public debt to GDP will be highest at the end of this year in Cabo Verde, with 157% of GDP, followed by the Republic of Congo with 115%, Mozambique with 113%, Zambia with 110% and Angola with 108%,” a report on the economies of sub-Saharan Africa published on Tuesday reads.
In the document, sent to investors and to which Lusa has had access, analysts from Fitch Ratings, which is owned by the same owners as Fitch Solutions, said that the rise in this ratio since 2012 was highest in Zambia, where it rose 86 percentage points, followed by Angola (82 points) and Mozambique, with 73 percentage points.
“The debt burden for sub-Saharan African governments is rising at a faster pace and to higher levels than other emerging markets, highlighting the risk of further downgrades in the rating and financial defaults,” the analysis says.
The effects of the spread of the Covid-19 pandemic and the oil shock are having a severe impact on the region, Fitch says, pointing out that real GDP is expected to fall 2.1% on average this year, and budget deficits are expected to widen from 4.9% last year to 7.4% this year.
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The worsening economic conditions in these countries, which include Portuguese-language countries Angola, Cape Verde and Mozambique, did not start with the pandemic, Fitch Ratings says, commenting that macroeconomic conditions have worsened for a decade, and will be difficult to reverse.
Since the beginning of March, Fitch has downgraded the ratings of seven of the 19 countries to which it attributes an opinion on sovereign credit quality, reflecting both the severity of the impact of the new coronavirus and the limited resilience of the countries after the rapid rise in debt and other credit vulnerabilities.
The trend, they said, is likely to continue with the increase in the debt burden, the impact of the new coronavirus and the oil shock point putting more downward pressure on the ratings of sub-Saharan African countries.
Source: Lusa via Club of Mozambique