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Moody’s 2020 Sub-Saharan Africa Outlook Remains Negative

14 January 2020 – A report published by rating agency Moody’s on Monday found that increasing external risks, muted growth and weak public finances were responsible for the continued negative outlook on the creditworthiness of sub-Saharan Africa sovereigns.

Weak government finances would continue to pose a constraint and a less predictable external environment would aggravate existing challenges, making sovereigns more vulnerable to event risk, according to the report.

It found sovereigns had made limited progress in reducing risks linked to elevated debt burdens and debt servicing needs, and growth would not be strong enough to meaningfully buttress income or increase economic resilience.

“The less predictable external environment is aggravating Sub-Saharan African sovereigns’ existing challenges and makes them more vulnerable to event risk,” said senior analyst and a Moody’s vice president, David Rogovic, who also co-authored the report.

“Most governments’ limited capacity to respond to even modest negative external shocks exacerbates the region’s sensitivity to the more negative global environment.”

The agency expected modest fiscal consolidation for the region, it said, with the median fiscal deficit improving to 3 percent of gross domestic product (GDP) in 2020 compared with 3.3 percent in 2019.

The debt burden would decline to 51 percent of GDP compared with 54.5 percent of GDP in 2019, but was still considerably higher than 40 percent of GDP five years ago.

Economic growth was forecast to accelerate modestly, with regional real GDP (weighted average) growth rising to 3.5 percent in 2020 from 3.1 percent in 2019, weighed down by sluggish growth in the region’s largest economies, Nigeria and South Africa.

Growth remained below what was needed to raise incomes significantly or to increase economic resilience, while risks were tilted to the downside given the less predictable external environment, stated the report. Source (Africa News Agency)