unfavorable terms of trade as the rand price of exports of goods and services declined while import prices increased, supported by the surge in oil prices. South Africa is estimated to have registered a surplus of 3.7 percent of GDP in 2021 thanks to favorable terms of trade, and it is expected to narrow in 2022 (0.4 percent). The current account balance is expected to record a deficit of 1.5 percent of GDP in 2024. South Africa’s long history of weak competitiveness— attributed to labor and product market rigidities—constitutes a challenge over the medium term. Bold reforms are needed to boost export volumes and gain even more from favorable commodity prices while generating more and better jobs in the formal and informal sectors (annex A). Incoming data for Botswana show a current account deficit of 2.1 percent of GDP in 2021, brought down mainly by a marked decrease in diamond exports in 2021Q4, from small surpluses in the first three quarters. The economy could revert to its trade surplus pattern with favorable terms of trade associated with commodity prices. However, as rising oil prices place noticeable pressure on the import bill and China’s demand for diamonds softens, the current account balance could be under pressure in 2022. In Mauritius, travel bans on Southern African countries are expected to have slowed the recovery in services receipts in 2022Q1. Services receipts gained momentum following the full reopening of borders in October 2021. The current account deficit is expected to widen in Senegal to 10.8 percent of GDP in 2022 from 10.2 percent in 2021. However, this deficit is projected to narrow in 2024 to 5.8 percent of GDP from the oil price dynamics, which will also raise foreign exchange reserves and support the currency. Fiscal Deficit
Percent of GDP
The median fiscal deficit is expected to remain unabated at -5.5 percent of GDP in 2021 and narrow to -4.9 percent of GDP in 2022 (figure 1.32). Deficits are set to decline more in metal and mineral exporters (-4.6 percent of GDP) given the gains from the terms of trade compared with non-resource-rich countries (-5.3 percent of GDP) in 2022. The fiscal account in oil-rich countries is projected to recover from a deficit in 2021 to a small FIGURE 1.32: Fiscal Balance in Sub-Saharan Africa (% of GDP) surplus in 2022. The Russia3 Ukraine war is expected 2 to exert more pressure on 1 government spending in 0 non-resource-rich countries, -1 especially those with fuel -2 subsidies. However, given -3 their elevated debt, Sub-4 Saharan African countries -5 do not have enough -6 fiscal space to provide -7 the support needed to 2016 2017 2018 2019 2020e 2021e 2022f 2023f 2024f vulnerable households and Sub-Saharan Africa, median Oil exporting countries in SSA firms without jeopardizing Non-resource-rich countries in SSA Mineral and metal exporters in SSA debt sustainability. Source: World Bank staff projections. Assistance from multilateral Note: e = estimate; f = forecast; GDP = gross domestic product; SSA = Sub-Saharan Africa. donors will still be required
The elevated price of oil will generate fiscal surplus in oilrich countries, while the fiscal deficit will decline steadily elsewhere.
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