Africa’s public finances are showing signs of recovery, with government debt stabilising and budget deficits narrowing after years of mounting pressure. However, high borrowing costs and rising debt-service obligations continue to constrain spending on infrastructure, healthcare, education and social protection.
The typical government debt-to-GDP ratio in Sub-Saharan Africa stood at about 57% in 2025, while the primary fiscal deficit fell from 3.1% of GDP in 2020 to approximately 0.5% in 2025. Several countries, including Ghana and Zambia, have also made progress in moving out of debt distress.
Despite these gains, the structure of government borrowing has become more challenging. The World Bank’s October 2026 Africa Economic Update notes that “domestic debt has become the main source of government financing since 2021”, while external creditors have become more diverse and fragmented.
The shift has increased exposure to higher interest rates, shorter repayment periods, and more complicated debt restructuring processes. Consequently, governments are spending a growing share of their revenue servicing existing obligations rather than financing development priorities.
Fiscal consolidation has helped improve budget balances, with the World Bank expecting primary fiscal deficits in Sub-Saharan Africa to be near balance by 2026–2028, following sustained fiscal consolidation efforts since 2021. However, overall deficits are projected at 3.5% of GDP in 2026 and 3.1% over the following two years, largely because interest payments remain high.
However, overall deficits are projected at 3.5% of GDP in 2026 and 3.1% over the following two years, largely because interest payments remain high.
This gap highlights the limits of fiscal adjustment. Governments may bring spending closer to revenue before interest payments, yet continue running significant deficits because of the cost of servicing existing debt.
The pressure also leaves countries more vulnerable to economic shocks, including rising energy prices, weaker export earnings and slower growth, which can disrupt budget targets and increase borrowing needs.
Maintaining these gains will require governments to broaden their revenue base, improve disclosure of public debt and align borrowing with their capacity to repay. For countries emerging from debt distress, credible restructuring agreements will be essential to rebuilding investor confidence and reducing the cost of future borrowing.
