Figure 1.13: General Government Debt-to-GDP Ratio, 2020

country faces tremendous challenges, such as unemployment, high inequality, poor education, skill shortages, and relatively high poverty. The government should step in to provide assistance where needed. Failure to do this may lead to social unrest like that witnessed after the arrest of former president Jacob Zuma. Financial injection to support struggling small and medium-size enterprises will revive the dormant private sector and boost consumption in a country with a large informal sector.

Countries like Angola, Mozambique, and Zambia, which were already vulnerable before the pandemic, have seen further deteriorations in their public finance (figure 1.13). Oil wealth allowed Angola to engage in large-scale borrowing, but the debt burden rose sharply once oil prices and the currency declined, reaching a peak of 134 percent of GDP in 2020. Debt remains a concern over the medium term, despite a partial rescheduling of external debt service, including under the DSSI. Mozambique, the Republic of Congo, and Zambia have been negatively affected by opaque management of their debts during boom periods. With little access to financing, these countries will struggle to launch an effective recovery.

Even economies with broadly sound fiscal policies before the crisis such as Ghana and Rwanda, are not immune to the COVID-19 financing issue. These countries—known for their effective management of public finance—saw their public debts projected to soar, respectively, from 63 and 62 percent of GDP in 2019 to 81 and 71 percent of GDP in 2020. With a vaccination rate of closer to 5 percent of the population, Rwanda needs more government spending to accelerate the pace of immunization. Industrial production dropped by 14.2 percent month-over-month in June, reflecting the effects of the restriction measures imposed by the government to fight surging infection cases of the Delta variant. Similarly, the IHS Markit PMI in Ghana declined for two consecutive months, from 51 in June to 49.7 in July and 48.9 in August. This drop is partly attributed to a decrease in new orders amid COVID-19 restrictions.

FIGURE 1.13: General Government Debt-to-GDP Ratio, 2020 (percent of GDP) 250

200

Percent 150

100

50

Elevated debts constrain SubSaharan African countries to consolidate public finance.

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Eritrea Sudan Cabo Verde Mozambique Mauritius Angola São Tomé and Príncipe Seychelles Congo, Rep. Ghana Namibia Rwanda Guinea-Bissau Zambia Gambia, The Gabon South Africa Sierra Leone Senegal Kenya Burundi Mauritania Togo Malawi Liberia Lesotho Ethiopia South Sudan Benin Zimbabwe Mali Uganda Madagascar Burkina Faso Côte d’Ivoire Niger Chad Central African Republic Eswatini Equatorial Guinea Cameroon Guinea Tanzania Comoros Botswana Nigeria Congo, Dem, Rep.

Source: World Bank staff estimates.