1.18 Fiscal Balance in Sub-Saharan Africa

industry, since the non-oil sector has not been able to make up for the loss. The deficit is predicted to remain stable in non-resource-rich countries, at 5.5 percent in 2022. It will widen in mineral and metal resource-rich countries by 0.8 percentage point this year and narrow to 3.9 percent of GDP in 2024 as the consolidation process becomes effective.

The Republic of Congo will enjoy the biggest surplus of 4.8 percent of GDP in 2022, which is expected to dissipate gradually and settle at 2.6 percent in 2024. This performance is on account of rising revenue propelled by increasing oil prices. In addition, reforms undertaken by the country that have supported revenue growth include improving the efficiency of government spending, promoting a moderate rise in the public sector wage bill, introducing electronic payment systems, and collecting tax arrears. Similarly, Angola (1 percent), Chad (2.8 percent), Equatorial Guinea (1.3 percent), and Gabon (1.2 percent) will record fiscal surpluses this year, which will gradually decline over time. By contrast, the deficit in Ghana will remain elevated (-7.9 percent).

The country with the highest fiscal deficit is Zambia (9.3 percent), followed by Cabo Verde (9 percent). The deficit rose sharply in Cabo Verde after the pandemic crisis of 2020, jumping from 1.7 to 9.1 percent of GDP in 2020, and it is projected to stay elevated until 2023. Fiscal consolidation will eventually bring the deficit down to 5.8 percent in 2024. Across WAEMU members, the deficit is set to widen back to the pre-pandemic levels, at 4.1 percent, far above the convergence target of 3 percent. In South Africa, fiscal consolidation will be gradual. Higher government spending on social grants, reconstruction of infrastructure after flooding, increased interest expenditure, wage pressures, and the cut in the fuel levy will weigh on the budget deficit this year and next year. The deficit is projected at 5.8 percent of GDP in 2022.

Debt Levels and Debt Vulnerabilities Rising debt in the Sub-Saharan Africa region predated the COVID-19 pandemic. Countries benefited from low interest rates globally, which entailed low debt servicing cost. Public debt rose sharply with the pandemic as policy makers stepped up to alleviate the effects of the health crisis and the subsequent economic implications for the hardest hit. Government debt is forecast to remain elevated across the continent at 59.5 percent of GDP, down from 62 percent in 2021, and to stabilize at a high level for the remainder of the forecasting period

FIGURE 1.18: Fiscal Balance in Sub-Saharan Africa (% of GDP)

2 1 0

Percent of GDP –1 –2 –3 –4 –5 –6 –7

2016 2017 2018 2019 2020 2021 2022e 2023f 2024f Sub-Saharan Africa, median Oil exporting countries in SSA Mineral and metal exporters in SSA Non-resource-rich countries in SSA Source: World Bank staff projections. Note: e = estimate; f = forecast; GDP = gross domestic product; SSA = Sub-Saharan Africa. The fiscal deficit for the region is projected to ebb slightly down to 4.8 percent in 2022. Oil producers are expected to register a surplus of 1.2 percent of GDP.