Africa's total public debt reached GHS 1.9 trillion ($1.9 trillion) in 2024. This represents an increase from GHS 1.6 trillion ($1.6 trillion) in 2020. Large public spending needs fueled this rise over the last four years. The African Development Bank (AfDB) released these figures in its latest African Economic Outlook.
The report highlights that Africa faces persistent debt pressures. This is happening even as the global way of financing has changed. The AfDB's outlook was presented at its Annual Meetings. These meetings took place in Brazzaville, Congo. The continent has vast natural resources. It also has a huge market with 1.3 billion people. However, these strengths are being challenged by debt burdens.
Despite the overall debt increase, the ratio of debt to the country's total economic output, known as the debt-to-GDP ratio, is expected to fall. It was around 63.9 percent on average in 2023-2024. It is projected to drop to 62 percent in 2025. By 2026, it is expected to be 61.4 percent. This expected decrease is thanks to stronger economic growth. It also reflects efforts by many countries to manage their finances better. However, new risks have emerged. These risks are linked to how public debt is structured.
The African Development Bank stated that the structure of debt has changed. This change has led to higher costs for servicing that debt. Debt servicing means paying back the money borrowed, including interest. These higher costs limit government spending. They take money away from social services and important infrastructure projects. Government revenue used for external debt payments rose significantly. It went up from 23.7 percent in 2017 to 31 percent in 2024. This is a stark indicator of the financial strain.
The future economic outlook for Africa depends on many factors. Global economic changes and issues within Africa will play a role. High prices for oil and fertilizers could slow down the world economy. This slowdown would negatively impact African nations. Inflationary pressures might also grow. This could force central banks to raise interest rates. Higher interest rates make borrowing more expensive. This would reduce the purchasing power of households. A weaker global economy and domestic challenges could make debt problems worse. They could also reduce the money governments have available for spending.