The World Bank Group has predicted a positive trend for African countries, noting that their public debt will drop in 2024.
Low-income African countries have been stuck in a loop of debt servicing instead of channelling funds to national development. The World Bank thinks 2024 could be a positive year for public debt in Africa.
According to the latest World Bank report entitled, Tackling Inequality is Necessary for Growth and Poverty Reduction the global financier argued that just like the continent’s economic growth, Africa’s public debt status is on the cusp of a positive trend.
The World Bank further explained that more than half of African countries suffer unsustainable debt burdens, and financial issues and are actively trying to restructure debts.
African governments of such countries heavily rely on market financing and non-Paris club loans which directly increase their public debt service.
The World Bank noted that Sub-Saharan Africa (SSA)’s national debt has tripled since 2019 due to increased domestic and external debt levels. Sub-Saharan Africa’s median public debt-to-GDP ratio rose from 29% in 2012 to 53% in 2019 before the COVID-19 pandemic disrupted things.
However, the World Bank stated in its latest report that public debt in Africa will drop in 2024 kickstarting a positive trend for Africa in this sector.
The World Bank believes the public debt will drop significantly in 2024 but despite the drop the risk of debt challenges remains high in the continent.
The World Bank plays a critical role in Africa by fulfilling its obligation of fighting poverty by financing developing economies to improve the standard of living of its citizens.