Several African countries are currently experiencing record levels of debt, to the point that the IMF classifies more than half of the continent’s low-income countries as being at high risk or in debt distress. This surge in debt is putting increasing pressure on public budgets, where debt servicing is now competing with essential areas such as health and education.

The Most Indebted Countries According to the IMF

Looking at recent IMF data, some countries stand out with particularly high debt-to-GDP ratios or outstanding debt. These figures reflect both the burden of accumulated debt and the vulnerability of their economies to external shocks.

In terms of debt-to-GDP ratio, Sudan tops the list with a level exceeding 200%, with some calculations even suggesting over 270%. Countries like Senegal and Zambia have surpassed Cape Verde and Mozambique, with debt reaching 100% of their GDP, according to the latest IMF estimates.

In terms of absolute external debt, South Africa (approximately $170 billion), Egypt (approximately $165 billion), Morocco, Angola, Nigeria, and Tunisia are among the continent’s largest borrowers.

When does debt servicing strangle budgets?

Beyond the gross amounts, it is the annual debt service burden that illustrates the severity of the situation. The higher and more expensive the debt, the more interest and principal repayments absorb public revenue, to the detriment of social and investment spending.

• Fifteen African countries are among the top 20 countries in the world with the highest external debt service-to-public revenue ratio, including Angola, Zambia, Egypt, Djibouti, Tunisia, and Benin.
• Between 2019 and 2021, twenty-five African countries spent more on net debt interest payments than on healthcare, according to analyses based on IMF data.
• The IMF notes that for many countries, the share of revenue allocated to debt service has more than doubled since the early 2010s.

Why has African debt skyrocketed?

The explosion of African public debt is the result of a series of crises and structural choices. The Covid-19 pandemic, the war in Ukraine, soaring commodity prices, and the sharp rise in global interest rates have further strained already precarious public finances.

• Sub-Saharan Africa’s average debt has risen from around 30% of GDP in the early 2010s to nearly 60–70% today, according to consolidated estimates based on IMF data.
• The fragmentation of lenders (IMF, World Bank, China, bond markets, private privileges, regional institutions, etc.) has multiplied sources of financing, but also the risks and costs of renegotiation.
• The strengthening of monetary policy in developed countries increases the cost of refinancing, making each new loan more expensive for already heavily indebted states.

The (Limited) Role of International Initiatives

Faced with these tensions, international initiatives have so far produced mixed results. While mechanisms such as the Debt Service Suspension Initiative (DSSI) and the G20 Common Framework have offered some respite, they have not addressed the solvency problems of several African countries in depth.

• The G20 Common Framework has reduced the debt of high-risk countries by only about 7% on average for the few states that have used it (Zambia, Ghana, Ethiopia, Chad).
• Many over-indebted countries will continue to prioritize repayment to maintain credibility in the markets, rather than requesting restructuring, which is considered slow and uncertain.
• The joint IMF-World Bank Debt Sustainability Assessment Framework now conditions access to concessional resources (grants, highly concessional loans) based on the level of debt-over-indebtedness risk.

What are the challenges for the future of African economies?

This rise in debt poses several major challenges for the continent’s development. It limits states’ capacity to finance infrastructure, the energy transition, and social policies, and increases the risk of financial crises and political instability.

• For the IMF, the priority is to improve debt transparency, broaden the tax base, and strengthen the quality of public spending in order to maximize the impact of each loan.
• Economists also advocate for a thorough reform of the international financial architecture to provide faster and fairer restructuring mechanisms for over-indebted countries.
• For African governments, the challenge will be to find a balance between relying on external financing, mobilizing domestic resources, and increasing use of innovative instruments (green bonds, performance-linked financing, and climate-debt swaps).