The Economist Intelligence Unit (EIU) has highlighted that Ghana, Tunisia, Egypt, Congo-Brazzaville, Zambia, Zimbabwe, and Mozambique are expected to grapple with significant debt-servicing burdens in 2023, which will consume a substantial portion of their revenue.

According to the EIU's Updated 2023 Africa Outlook Report, African governments have significantly increased their borrowing, both domestically and internationally.

This surge in borrowing has caused public sector debt ratios relative to GDP to approach levels last seen in the early 2000s, just before the extensive debt restructuring of 2005 carried out under the framework of the Heavily Indebted Poor Countries (HIPC) initiative.

“Ghana, Tunisia, Egypt, Congo-Brazzaville, Zambia, Zimbabwe and Mozambique have enormous amounts of debt (relative to GDP) and their governments will grapple with debt-servicing burdens that eat up a substantial share of their revenue in 2023”.

It was indicated that certain African countries will considerably exceed this threshold, with the average public-sector debt-to-GDP ratio for Africa remaining above 60% in 2022 and 2023.

“The need to service and roll over large amounts of debt at a time when domestic and international borrowing costs are on the rise will weigh heavily on some countries in 2023 and things could get even more painful in 2024 when more capital repayments fall due”, it added.

The EIU stated in other places that although the major economies of Algeria, Angola, Ethiopia, Gabon, Kenya, Nigeria, and South Africa have public debt levels that appear to be manageable, these nations will still face high and rising debt servicing costs, particularly Nigeria where the debt-to-GDP ratio is low but debt servicing is incredibly expensive.

“Consequently, pressure will mount to implement economic reforms—including changes to subsidy regimes and tax structures—and cut back on public-sector spending, although large-scale changes will most likely be put off until upcoming elections settle and the political path becomes clearer”, it concluded.