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Sub-Saharan Africa: States’ sovereign rating could deteriorate further (Fitch)

The financial rating agency Fitch Ratings announced on Tuesday June 30 that the rating of sub-Saharan African states is likely to deteriorate in the medium term if the coronavirus pandemic continues. The agency stressed that African oil-exporting countries including Angola, the Republic of Congo, Gabon and Nigeria would be the main concerned. These nations, she said, were particularly affected by the drop in oil prices, significantly affecting their budgets, depending mainly on oil revenues.

Fitch also estimated that the countries mainly dependent on tourist receipts, in particular Cape Verde and Seychelles, are in the lot. The Fitch agency predicts a rating of “CC” in Zambia, and of “CCC” in Mozambique, Gabon, and the Republic of Congo. Of the thirteen other sovereigns belonging to the single “B” range, seven have a “negative” outlook on their rating.

“Although emergency assistance from the International Monetary Fund and the G20 Debt Service Suspension Initiative (DSSI) provided useful budgetary and external financing, these programs were” moderate in size “at around 0 , 9% and 1.2% of GDP respectively ”. “They were not designed to cope with outstanding debt and the medium-term risks for debt sustainability,” opposes Fitch. Fitch estimates that the median public debt relative to the GDP of the 19 sovereigns it noted in the region would increase to 71% by the end of 2020, compared to 26% in 2012. As for the ratio of median debt to other emerging markets, it should climb to 57%.

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