Eswatini, Lesotho with the lowest public debt in the CMA

Eswatini and Lesotho are the only CMA members with public debt below the world threshold of 60 per cent and Eswatini also has a public debt below the SADC threshold of 45 per cent.

Eswatini’s public debt is at 39 per cent of GDP and the Lesotho public debt is at 57 per cent of GDP.

The South African Reserve Bank Deputy Governor Fundi Tshazibana said although the SSA region had displayed resilience to global shocks, these improvements were still fragile and insufficient to bolster the region’s attractiveness for external investment.

Too high

Tshazibana said firstly, the inflation remained too high in many SSA economies among the 10 largest economies in the region, six still had double-digit year-onyear inflation rates as of September.

She stated that recent currency depreciation in many SSA countries (where a large part of the consumer goods basket is imported, and where inflation expectations are often poorly anchored) risks perpetuating high inflation, in terms of triggering additional foreign exchange losses.

“Many countries in the SSA region tend to suffer from ‘twin deficits’ (fiscal and external) which raise the cost of debt servicing and refinancing at a time when global investors are more risk-averse and more sensitive to deteriorating fiscal dynamics,” she said.

She explained that according to the IMF, over half of the SSA countries were either at a high risk of debt distress or already in debt distress.

Issuing Eurobonds

She said no country in the region had been issuing Eurobonds since April 2022, suggesting that the refinancing of external debt could be particularly challenging in the next few years.

“Finally, economic performance in the SSA region remains uneven and generally falls short of the performance seen two decades ago, a period when investment in the region increased steadily,” she said.

The deputy governor stated that South Africa was one of the laggards in the region – the SARB only expects growth to accelerate to 1.0 per in 2024 amid continued constraints from insufficient electricity production and inefficient transport networks and other CMA countries also look set to fall short of the regional average. Tshazibana said the IMF noted a tendency for resource-intensive economies to underperform, highlighting the lingering problem of the SSA’s insufficient downstream integration into value chains.