Sub-Saharan African economies must urgently increase domestic revenue collection to safeguard their development efforts amid mounting global economic turbulence, the International Monetary Fund (IMF) has warned.
Abebe Aemro Selassie, Director of the IMF’s African Department, emphasized that relying on debt financing is becoming increasingly risky in the current environment. “There are periods where depending on debt to finance development is simply not sustainable,” Selassie told Reuters in an interview. He stressed that policymakers must look inward to find new and more affordable sources of capital.
The warning comes as the IMF, in its latest World Economic Outlook report, trimmed its 2025 growth forecast for the region to 3.8%, down from the 4.2% projected earlier. The downward revision was largely attributed to the ripple effects of escalating global trade tensions, particularly following the U.S. administration’s aggressive tariff policies.
Recent U.S. trade moves, including sweeping tariffs announced by former President Donald Trump, have triggered a sell-off in riskier assets. This has driven up bond yields across much of Sub-Saharan Africa, making it costlier and more difficult for frontier markets to access international capital markets.
“To meet development and social spending needs, countries must increasingly turn to internal resources,” Selassie said. “Policies that strengthen economic resilience are more vital than ever.”
The IMF noted that while the region’s average debt-to-GDP ratio remained relatively stable last year at under 60%, high debt-servicing costs continue to strain countries like Kenya. Moreover, although the United States is not a major trading partner for most African nations, its broader approach to international trade is exerting indirect pressure on foreign exchange rates and external balances across the continent.
Selassie pointed to falling global oil prices as an added source of vulnerability. “Countries like Nigeria and Angola, two of the region’s largest economies, are likely to see a reduction in economic activity as a result,” he said.
This slowdown threatens to derail what the IMF described as a “hard-fought economic recovery” from the multiple shocks of the COVID-19 pandemic, global inflation surges, and rising interest rates, which had already limited many African nations’ access to international finance.
Despite these challenges, the IMF acknowledged that Sub-Saharan Africa demonstrated considerable resilience last year. Regional growth reached 4% in 2024, exceeding the Fund’s earlier projection of 3.6%. Macroeconomic conditions also showed signs of improvement, with inflation declining and debt levels stabilizing in many countries.
“We have seen quite a lot of resilience in the region,” Selassie noted, highlighting that 11 of the world’s 20 fastest-growing economies are expected to be in Sub-Saharan Africa this year.
As global uncertainties persist, the IMF’s message is clear: for Sub-Saharan Africa to maintain momentum and secure long-term development gains, boosting domestic revenue and building economic resilience must become top priorities.
