African debt and macroeconomic stability

African public finances have shown signs of recovery, with government debt stabilizing and budget deficits narrowing. In Sub-Saharan Africa, the typical debt-to-GDP ratio reached approximately 57% in 2025, and primary fiscal deficits decreased significantly from 2020 levels. Some nations, including Ghana and Zambia, have made progress in exiting debt distress.

However, high borrowing costs and rising debt-service obligations continue to strain national budgets, often limiting spending on infrastructure, education, and healthcare. The World Bank has noted that domestic debt has become the primary source of government financing since 2021, increasing exposure to higher interest rates. Furthermore, a strong US dollar and elevated global interest rates are placing pressure on African currencies.

To manage these challenges, several nations are utilizing International Monetary Fund (IMF) financing to bolster foreign exchange reserves and support macroeconomic stabilization. While these programs provide immediate financial relief, they also increase long-term repayment obligations. For example, Guinea-Conakry reached an agreement for a US$422 million programme, and Liberia is utilizing various facilities totaling several hundred million dollars. These arrangements carry risks to fiscal flexibility if commodity prices fall or currencies depreciate.