Moody’s Investors Service said the debt burden for Sub- Saharan Africa will increase due to its low revenue generating capacity induced by Covid-19 pandemic.
Moody’s said this in its outlook published on Wednesday.
Kelvin Dalrymple, Vice President– Senior Credit Officer at Moody’s Investors Service said,”We do not expect debt burdens to come down in the foreseeable future as revenue generation capacity remains weak.
“Higher debt loads, lower government revenue, and higher interest costs will increasingly challenge debt affordability. Contingent liabilities from state-owned enterprises also pose an additional risk.
“Most Sub-Saharan African governments’ debt burdens will stabilise at materially higher levels in 2021, with the average debt burden for the region at around 64 per cent of GDP in the near to medium term.”
Nigeria’s debt alone as of 2020 amounts to N32.22trn ($84.57bn) partly heightened by a plunge in oil revenues. The country allocated N3.27trn on debt servicing in the same year.
Details from the approved N13.59trn 2021 budget reveal that Nigeria would spend N3.32trn on debt servicing.
But the New York based firm said, “The negative 2021 outlook for Sub-Saharan African sovereigns reflects the severe economic challenges the region will grapple with in the fallout from the coronavirus shock.”
Sub-Saharan African countries also face a wide range of institutional and governance challenges, limiting their ability to deal with the coronavirus shock, Moody’s said.
The pandemic had triggered huge job losses and income inequality across the continent with Nigeria taking its share of the fallout.
Moody’s said it would likely increase social risks across several countries.
“Non-energy commodity exporters in East Africa and West Africa will remain the most dynamic economies, with growth driven by domestic demand and high public investment rates,” Moody’s added.
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