By Marc Jones
LONDON (Reuters) – Rising government debt levels and global interest rates are increasing the risk of credit rating downgrades in as many as 10 African countries, Fitch has warned, with Kenya, Ghana, Lesotho, Namibia, Rwanda and Uganda most at threat.
In a new report published on Thursday, Fitch forecast that debt-to-GDP ratios would continue to rise both this year and next in more than half of the 19 Sub-Sahara African countries it rates.
Drivers include a mix of lacklustre growth, socio-political instability and a lack of public investment, while a wave of interest rate hikes in major economies like the United States this year will push up global borrowing costs.
“A rise in government debt/GDP would be a potential negative rating action trigger for most SSA sovereigns, particularly those whose ratings are on negative outlook,” Fitch’s report said.
Those already on a downgrade warning, or ‘negative outloook’ as it is known in rating agency parlence, include Kenya (B+/Negative), Lesotho (B/Negative), Namibia (BB/Negative), Rwanda and Uganda (B+/Negative).
Fitch also has Ghana’s ‘B-’ rating on negative outlook. With worries growing about a possible default https://www.reuters.com/article/ghana-debt-idUSL8N2TS5AW there, Fitch said triggers for further downgrades were more likely to be related to the fact it is no longer able to borrow on international capital markets.
The report wasn’t all gloom though. Angola and Gabon have seen their ratings upgraded in recent months, helped by the surge in global oil prices which boosts their finances, and Congo is also benefiting from that rise.
Benin is expected to see rapid economic growth, while tourism hotspots Seychelles and Cabo Verde are finally expected to see a recovery in visitor numbers this year as coronavirus travel restrictions ease.
“Our forecasts for Sub-Saharan Africa general government debt trajectories diverge more widely over 2022-2023, as pandemic-related pressures recede and economic recoveries gather momentum,” Fitch said.
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Africa (debt) rising https://tmsnrt.rs/3LhpeWq
Drowning in debt https://tmsnrt.rs/3L7CmgT
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(Reporting by Marc Jones; Editing by Emelia Sithole-Matarise)
