Information about Sub-Saharan Africa África subsahariana

1. Sustaining Growth Amid Shifting Global Forces

International Monetary Fund
Published Date:
April 2014
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Information about Sub-Saharan Africa África subsahariana
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Introduction and Summary

Economic growth in sub-Saharan Africa remains robust and is expected to pick up in 2014. After expanding by 4.9 percent in 2013, output looks set to expand by about 5½ percent this year. The region’s recent strong period of economic performance thus looks set to be sustained, supported by stronger global economic activity spurred by the improved outlook for the advanced economies. Importantly, the projections assume that the impact on the region of the expected growth slowdown in emerging markets and tightening global monetary conditions will be limited. Should these risks materialize, however, there would be consequential implications for growth in many countries in the region: slower emerging market growth would be certain to adversely impact export demand and commodity prices, while disorderly market conditions as unconventional monetary policies are unwound could trigger markedly higher financing costs. Beyond these latent external headwinds, more home-grown risks are also threatening growth prospects in several countries in the region. In a few cases policy missteps, such as large fiscal imbalances, threaten to undermine the hard-won macroeconomic gains of recent years that have supported growth. More problematic still, in a number of countries conflict is exacting a heavy toll, most acutely so in the Central African Republic and South Sudan. Against this background, the challenge for policy remains the steady pursuit of development objectives while promptly addressing emerging sources of macroeconomic vulnerability.

Strong economic performance continued in sub-Saharan Africa in 2013. The region’s economy expanded by a solid 4.9 percent, the same level as in 2012, underpinned by investment in natural resources and infrastructure, as well as higher agricultural production. An exception was South Africa, where tense industrial relations in the mining sector, tight electricity supply, anemic private investment, and weak consumer and investor confidence kept growth subdued. Reflecting moderate international food and fuel prices as well as largely prudent monetary policies, inflation continued to abate in most of the region, declining to an average of 6.3 percent in 2013 from about 9 percent in 2011–12. Overall, fiscal and external current account deficits widened in many countries, although with some marked disparities. Of particular note was weaker fiscal revenue among oil exporters. Since June 2013, the currencies of South Africa and some frontier economies have weakened, reflecting capital outflows as global monetary conditions have tightened and, in a few cases, pronounced external or fiscal imbalances.

The near-term outlook is expected to remain favorable. Growth is projected to accelerate to about 5½ percent in 2014, reflecting improved prospects in a large number of countries, including most oil exporters and several low-income countries and fragile states. In Nigeria, growth is expected to accelerate as production picks up after recent supply disruptions have been addressed. Elsewhere, growth accelerations are underpinned by improvement in the domestic political and security situation (Mali), large investments in infrastructure and mining (the Democratic Republic of the Congo, Liberia), and maturing investments (Mozambique, Niger). Economic activity in South Africa is also expected to improve modestly, reflecting stronger demand in its advanced country trading partners. Moderate food prices and prudent monetary policies should facilitate further declines in inflation in most of the region, while the fiscal balance is projected to improve in several countries; in particular, a recovery of revenue in Nigeria and further adjustment in Kenya are expected. Nevertheless, the average current account deficit is not expected to narrow, owing to relatively weak prospects for commodity prices and import demand volumes in emerging markets, and to continuing high levels of imports related to foreign direct investment (FDI).

This scenario is nevertheless subject to significant downside risks, as some factors that have underpinned the good performance in recent years are expected to be less benign in the near term. Although the strong growth performance of the last decade has mainly been driven by domestic factors in most countries, favorable external conditions have also played their part, including, most notably, higher growth in emerging markets and highly accommodative global financial conditions. These factors are now expected to weaken, with uncertain effects on sub-Saharan Africa.

  • Emerging market growth is expected to slow down. Robust economic growth in emerging markets in recent years has led to a significant share of sub-Saharan Africa’s trade taking place with these countries. One-third of non-oil exports of the region now go to the BRICs (Brazil, Russia, India, China), compared with less than 10 percent a decade ago. Apart from the direct demand channel, growth in the BRICs, notably China, has fueled growth in sub-Saharan Africa through high commodity prices and investment inflows. The slowing of emerging market economies and the rebalancing of China’s growth toward relatively more reliance on consumption and less on investment are likely to reduce demand and lower prices for commodities, especially for industrial inputs such as copper and iron ore. In addition, tightening financial conditions in China are likely to lead to higher funding costs for banks there, which could reduce the appetite of Chinese companies for investments abroad.
  • Global financial conditions are expected to tighten. In the wake of the global financial crisis, advanced economies deployed highly accommodative unconventional monetary policies, which led to high global liquidity and induced a sharp increase in capital flows to emerging and frontier market economies. This allowed some of these countries to issue international sovereign bonds for the first time. As unconventional monetary policies are rolled back, external financing conditions facing countries in the region are turning less favorable, with private capital inflows slowing or even reversing in some cases.

Our assessment is that the impact of these emerging external headwinds is likely to be limited in the near term in most countries. Particularly with the recovery in most advanced economies gathering momentum, and global growth accelerating as a result, the overall external demand conditions should remain supportive. However, the changing composition of global growth and, in particular, tighter global financial conditions, will adversely impact those countries in the region with large external financing requirements, forcing rapid adjustment in some cases. The next section in this chapter explores these issues in further detail.

In addition, important home-grown risks arise from fiscal vulnerabilities in a number of countries such as Ghana and Zambia, and from possible spillovers associated with increased political instability and a worsening security situation in the Central African Republic and South Sudan.

To address these risks and sustain high growth, macroeconomic and financial policies should aim at preserving stability, strengthening resilience, and avoiding the buildup of macroeconomic imbalances. Fiscal deficits that widened during the global financial crisis have remained elevated in many countries, despite growth and revenue reverting to precrisis levels (see the section below on Persistent Fiscal Deficits). Many countries should now take advantage of the growth momentum to strengthen their fiscal balances, rebuild buffers, and consolidate public finances, while preserving social safety nets and productive investment and keeping inflation under control. Where financial markets are more developed, monetary policy should be strengthened by adopting more forward-looking and flexible frameworks. Further advances in regional integration will also be critical to enhance growth sustainability. In this respect, the achievements of the East African Community (EAC), which recently reached agreement to establish a full monetary union within ten years (Box 1.1), set an encouraging example.

All in all, the economic outlook for most countries remains favorable, including over the medium term. Export activities and related investment have been important drivers of growth in many countries, and will continue to provide a positive contribution. As a side effect of investment, current account deficits have grown in many cases, but these deficits are expected to moderate as projects come into production. The main downside risk to this generally positive baseline scenario is the risk that growth in emerging markets might slow much more abruptly than currently envisaged. The recent experience of the frontier market countries in the region shows that the best way of mitigating the impact of an adverse external environment is by containing fiscal and external imbalances. Countries in the region that were affected the most in the May 2013 and January 2014 emerging market turmoil were those with large imbalances (Ghana, Zambia) and/or other sources of domestic policy uncertainty (Nigeria, South Africa).

The rest of this publication turns to two aspects of the longer-term development agenda facing countries in the region:

  • Chapter 2 considers the policy areas where attention is needed to make growth more inclusive and consequently, more sustainable. The analysis identifies expanding job opportunities and improved access to finance as important ingredients to sustain growth and build on the improvements in living standards and social indicators observed in recent years.
  • Chapter 3 focuses on emerging challenges to the conduct of monetary policy in some countries in the region. Increasingly, as financial markets develop, central banks will need to enhance their monetary policy by strengthening their analytical, forecasting, and liquidity management capacity so as to minimize liquidity and interest rate volatility.

Shifting Global Forces: What Do They Portend For Sub-Saharan Africa?

Growth in sub-Saharan Africa recovered quickly in 2010 and has been robust since then, supported by domestic factors and by the global recovery. However, despite the projected rise in global economic growth, certain changes in the global economic environment pose downside risks. The robust trade and investment flows between sub-Saharan African countries and emerging markets (including China) are likely to weaken as these economies slow, taking momentum off commodity prices. Also, the favorable financing conditions of recent years are expected to tighten as advanced economies phase out unconventional monetary policies. The impact of these developments will be felt differently across countries. Countries that are highly dependent on commodity exports and capital flows will likely be negatively affected, but those with close linkages to advanced economies are likely to benefit from the uptick in growth.

Growth has been robust, mainly driven by investment

Growth in 2013 remained robust in most of sub-Saharan Africa, attaining 4.9 percent in 2013, the same level as in 2012 (Table 1.1). This performance was mainly driven by domestic demand, supported by continued strong credit growth to the private sector in some countries (Figure 1.1). A major contribution to growth derived from buoyant public and private investment in mining activities, infrastructure for transport and communication, and energy production.1 These investments were accompanied by a general expansion in trade, communications, and other services, and several countries benefited also from improved agricultural production. External demand provided a relatively weaker contribution to growth in the region, as growth in the rest of the world and commodity prices remained relatively subdued during most of the year.

Table 1.1.Sub-Saharan Africa: Real GDP Growth(Percent change)
Sub-Saharan Africa, excluding South Africa7.
Sub-Saharan Africa (Total)
Of which:
Oil-exporting countries8.
Middle-income countries15.1−
Of which: South Africa4.9−
Low-income countries17.
Fragile states2.
Memorandum item:
World economic growth4.6−
Sub-Saharan Africa resource-intensive countries26.
Sub-Saharan Africa frontier and emerging market economies35.
Source: IMF, World Economic Outlook database.

Excluding fragile states.

Includes Angola, Botswana, Cameroon, Central African Republic, Chad, Democratic Republic of Congo, Republic of Congo, Equatorial Guinea, Gabon, Ghana, Guinea, Mali, Namibia, Niger, Nigeria, Sierra Leone, South Africa, Tanzania, Zambia, and Zimbabwe.

Includes Côte d’Ivoire, Ghana, Kenya, Mauritius, Nigeria, Rwanda, Senegal, South Africa, Tanzania, Uganda, and Zimbabwe.

Source: IMF, World Economic Outlook database.

Excluding fragile states.

Includes Angola, Botswana, Cameroon, Central African Republic, Chad, Democratic Republic of Congo, Republic of Congo, Equatorial Guinea, Gabon, Ghana, Guinea, Mali, Namibia, Niger, Nigeria, Sierra Leone, South Africa, Tanzania, Zambia, and Zimbabwe.

Includes Côte d’Ivoire, Ghana, Kenya, Mauritius, Nigeria, Rwanda, Senegal, South Africa, Tanzania, Uganda, and Zimbabwe.

Figure 1.1.Sub-Saharan Africa: Credit to Private Sector, 2010–13

Source: IMF, African Department database.

Some countries—most prominently Côte d’Ivoire and Mali—benefited from post-conflict stabilization; and the smooth running of elections in Kenya highlights major gains in political stability. At the same time, a new internal conflict severely curtailed economic activity in the Central African Republic; and the outbreak of violence heightened uncertainty in South Sudan toward the end of the year. Growth rates also rose among oil exporters, despite declines in production in Chad and Equatorial Guinea; Nigeria experienced a broad-based growth that partly offset the losses associated with large-scale oil theft; and South Sudan resumed oil production in July after an 18-month suspension. In South Africa, growth continued to decelerate, owing to sluggish private investment, weak consumer and investor confidence, tense mining sector relations, and tight electricity supply.

What do weakening growth prospects in emerging market economies and softer commodity markets mean for the region?

Global growth is projected to strengthen from 3 percent to 3.6 percent in 2014 (Figure 1.2). Much of the impulse is expected to come from advanced economies, especially the United States. Although growth in emerging market economies as a whole is projected to pick up slightly in 2014, it is likely to remain relatively weak in some key trading partners of the region, such as Brazil and India, under the combined effect of policy tightening, reduced global liquidity, and structural bottlenecks, with adverse effects on commodity prices and demand for major African exports.

Figure 1.2.Selected Regions: Projected Real GDP Growth, 2008–18

Source: IMF, World Economic Outlook database.

Growth in some emerging market economies is expected to weaken in 2014, and this deceleration could be protracted over the medium term. The deceleration in Brazil, China, and India may be of a structural nature and therefore last for a prolonged period, beyond normal business-cycle fluctuations. In China, where the authorities are seeking to rein in credit and rebalance growth, growth is projected to remain at about 7½ percent. Even after 2014, China’s growth is not expected to return to the heady rates of years past; and some rebalancing in the drivers of growth from investment to consumption, facilitated by measures taken to slow credit growth and increase the cost of capital, is expected to take place in the next several years.

Softer demand from emerging markets and recent increases in global productive capacity are expected to maintain moderate commodity price increases. Compared with the October 2013 World Economic Outlook, the forecast for the composite price index of nonfuel commodities for 2014 has been increased by only about 1 percent, and the oil price forecast increased by 2.8 percent (the latter is most relevant for Angola, Equatorial Guinea, Nigeria, and other oil exporters). Although overall commodity consumption is expected to continue rising, demand growth rates for some primary commodities such as copper and iron ore are expected to moderate; this would affect countries such as the Democratic Republic of the Congo, Guinea, Liberia, and Zambia. Compared with the levels observed in 2013, iron ore and coal will have the largest downward adjustments, whereas cocoa and coffee prices will be higher (Figures 1.3 and 1.4). Lower gold prices in the next three years will particularly affect Burkina Faso, Ghana, Mali, and Tanzania, while exports from countries like Côte d’Ivoire, Ghana, Rwanda and Uganda should see a boost from higher cocoa and coffee prices.

Figure 1.3.International Commodity Prices, Agricultural Products, Average 2014–16 Compared with 2013

Source: IMF, World Economic Outlook database.

Figure 1.4.International Commodity Prices, Fuels and Metals, Average 2014–16 Compared with 2013

Source: IMF, World Economic Outlook database.

Weaker commodity prices and slower growth in emerging markets might also reduce net inflows of FDI, which are particularly important in natural-resource-rich low-income countries and fragile states. These factors could also reduce external investors’ interest in the exploration and development of new sources; and softening economic conditions in originating countries could result in the postponement or rescaling of some of these initiatives, particularly “greenfield” projects that are still in the early phases of development. This would reduce the growth stimulus produced by investment activity and delay the boost in supply that follows the completion of the projects.

How will the tightening global liquidity conditions affect the region?

The effects of tightening global liquidity became evident in 2013 with the U.S. Federal Reserve’s “tapering announcement” in May 2013, which contributed to capital outflows from some sub-Saharan African frontier markets and exchange rate depreciations (Figure 1.5).2 Yields also rose in some bond markets (for example, Nigeria and South Africa) and some countries may have experienced net equity and bond outflows (Figures 1.6 and 1.7).3 Sovereign spreads and market interest rates rose (Figure 1.8), with the largest increases in Ghana and Zambia reflecting fiscal sustainability concerns of their own; but stock market valuations continued to increase in various countries (Ghana, Kenya, Rwanda, Zambia, the West African Economic and Monetary Union). International credit agencies downgraded the ratings of Ghana, Zambia, and, lately, Uganda, but the outlook for Rwanda was revised to positive, and Senegal was revised to stable. These developments increased borrowing costs for the governments of frontier economies, which contributed to the postponement of several sovereign bond issues totaling about US$4 billion originally planned for end-2013.

Figure 1.5.Sub-Saharan Africa: Nominal Exchange Rate Developments, U.S. Dollar per National Currency

Source: Bloomberg, L.P.

Figure 1.6.Sub-Saharan Africa: Equity Flows to Emerging Market and Frontier Economies

(Millions of U.S. dollars, cumulative since June 2004)

Source: EPFR Global database.

Figure 1.7.Sub-Saharan Africa: Bond Flows to Emerging Market and Frontier Economies

(Millions of U.S. dollars, cumulative since June 2004)

Source: EPFR Global database.

Figure 1.8.Emerging Market Spreads,1 2012–14

Source: Bloomberg, L.P.

1 The emerging market average includes the EMBIG spreads of Argentina, Brazil, Bulgaria, Chile, Colombia, Hungary, Malaysia, Mexico, Peru, Philippines, Poland, Russia, South Africa, Turkey, and Ukraine. Sub-Saharan Africa frontier markets includes the spreads of Angola, Nigeria, Rwanda, Senegal, Tanzania, and Zambia. Shaded areas correspond to Tantrum periods (May 21, 2013–June 24, 2013 and January 21–February 4, 2014).

Volatility was more pronounced in countries that had weak fiscal and external positions, suggesting investors discriminated depending on the soundness of policies and other fundamentals. Compared with emerging markets outside of the region, sub-Saharan Africa’s emerging and frontier markets that showed higher fiscal and current account deficits were generally more affected (Figure 1.9). The South African rand fell about 13 percent against the U.S. dollar between May 2013 and June 2013 and maintained a downward trend in the context of persistent economic slack and current account deficits, and lackluster growth prospects. The Ghanaian cedi fell by about 15 percent during 2013 (and more rapidly after May), in line with concerns about low external reserves and the slower-than-expected fiscal adjustment. Fiscal concerns were also reflected in the depreciation of the Zambian kwacha (7 percent); the Rwandan franc depreciated by about 7 percent in the face of a current account deficit of about 7 percent of GDP. In Nigeria, the authorities were able to defend the naira by using reserves accumulated earlier, although the naira came under pressure in February 2014 because of policy uncertainty. Currencies weakened again in January 2014, following a renewed bout of volatility in global financial markets.

Figure 1.9.Sub-Saharan Africa: Current Account Balance and Fiscal Balance, 2013

Sources: Bloomberg, L.P.; and IMF, World Economic Outlook database.

Note: See page 64 for country name abbreviations.

Renewed bouts of currency depreciation, extended to middle-income countries, could in some cases reignite inflation pressures, which generally eased in 2013 amid favorable conditions, such as prudent monetary policies, good harvests, and more stable international food and fuel prices (Table 1.2; Figure 1.10). Aside from this risk, in 2014, moderate food prices and prudent monetary policies (supported, in a number of countries,4 by reformed monetary frameworks that focus more sharply on market signals) should facilitate further declines in inflation. Consumer prices for the region are projected to reach annual increases of 6.2 percent in 2014 and 5.8 percent in 2015, but the pass-through to domestic prices of potential currency depreciations may result in renewed upward pressures on prices (for example, in Malawi). Additional pressures could also arise from delayed effects of recent and planned wage increases (Tanzania), from abundant liquidity or rapidly rising private sector credit (Mozambique), or in countries still in the process of consolidating their public finances (Ghana, Zambia).

Table 1.2.Sub-Saharan Africa: CPI Inflation(Percent Change, End of Period)
Sub-Saharan Africa (Total)
Of which:
Oil-exporting countries9.511.410.
Middle-income countries17.
Of which: South Africa6.
Low-income countries110.17.17.418.
Fragile states11.315.
Memorandum item:
Source: IMF, World Economic Outlook database.

Excluding fragile states.

Source: IMF, World Economic Outlook database.

Excluding fragile states.

Figure 1.10.Sub-Saharan Africa: Inflation

Sources: IMF, African Department database; and IMF, International Financial Statistics.

With the economic recovery gaining momentum, in December 2013 the United States Federal Reserve started “tapering” its exceptionally accommodative monetary policy and, over time, other advanced economies should follow suit. At the same time, some key emerging market countries could raise their policy rates to contain rising asset prices (China) or capital flight. In this environment, the recent reversal of capital flows from most emerging and frontier markets is likely to continue for some time as investors find again a better risk-return combination in advanced markets. Low- and middle-income countries could also see a reduction in inflows of FDI (particularly from highly leveraged private sector companies) as a result of tightening monetary conditions in some emerging markets (including China).

Over the medium term, however, global interest rates are not likely to rise by a large amount, because some of the factors keeping rates down in the last several years should remain operative, as argued in Chapter 3 of the April 2014 World Economic Outlook. In particular, savings rates in emerging Asia should remain strong. Investment rates in much of Europe are likely to remain moderate, contributing to maintaining a global saving-investment balance consistent with real interest rates which would still be relatively moderate by long-term historical standards. On balance, and despite near-term volatility associated with advanced economies exiting unconventional monetary policies, for most countries in the region, the effects of these trends are likely to be moderate in the medium term, even if they pose new direct challenges for emerging and frontier markets.

Persistent Fiscal Deficits: A Matter of Concern?

Most countries in the region were able to avoid procyclical fiscal policy for the first time in 2009, and some were even able to provide countercyclical stimulus thanks to fiscal strength built up over many years. This way, fiscal deficits widened in much of the region as growth fell, exerting a stabilizing influence during the crisis. Today, however, many countries continue to exhibit large fiscal deficits even though growth and revenue are back to (or near) precrisis levels. In most cases, this reflects policies favoring the much-needed expansion of capital expenditure while maintaining sustainable debt levels. In others, it reflects a recomposition of public expenditure away from investment that has resulted in further increases in public debt. These developments have raised concerns that some countries may be following policies that are less supportive of stability objectives while building undue fiscal vulnerabilities.

Fiscal countercyclicality for the first time in 2009

In a previous edition of this publication, fiscal policy in sub-Saharan Africa was analyzed through the lens of sustainability.5 One of the main findings was that for the majority of countries in the region fiscal sustainability was not a major concern, as they were found not to be constrained by high debt levels.6 This section looks more closely at the evolution of the composition of public spending in the aftermath of the global crisis of 2008–09, as fiscal adjustment appears to be slow and uneven across the region.

In 2009, for the first time, sub-Saharan Africa was able to use fiscal policy as a tool to mitigate the effects of the global downturn.7 With the exception of fragile states, most countries in the region saw a significant deceleration of economic activity at the onset of the crisis, with median real GDP growth for the region falling below its 2004–08 trends (“growth gap”) by about 2 percentage points (Figure 1.11). That same year, the fiscal position in many countries deteriorated markedly relative to precrisis years (Figure 1.12), reflecting their ability to sustain or even increase public expenditure in spite of lower revenue—with much needed capital and social spending generally protected during the downturn. Real revenue declines relative to 2004–08 averages (“revenue gap”) occurred in all country groups, but appeared most pronounced among middle-income and especially oil-exporting countries (Figure 1.13).

Figure 1.11.Sub-Saharan Africa: Real GDP Growth Gap, 2009–15

Source: IMF, World Economic Outlook database.

Note: Growth gap is defined as the difference between real GDP growth in a given year and 2004–08 average real GDP growth. Excludes South Sudan owing to data availability.

Figure 1.12.Sub-Saharan Africa: Overall Fiscal Balance, 2004–13

Source: IMF, World Economic Outlook database.

Figure 1.13.Sub-Saharan Africa: Real Total Revenue Excluding Grants Growth Gap, 2009–15

Source: IMF, World Economic Outlook database.

Note: Real revenue gap is defined as the difference between real revenue growth in a given year and 2004–08 average real revenue growth.

Sluggish and uneven fiscal consolidation in the aftermath of the crisis

In spite of the recovery in economic growth, region-wide deficits have remained broadly unchanged since 2010 (Figure 1.12), although there are considerable cross-country differences. Revenue improved rapidly as economic activity picked up, reaching precrisis levels in 2013 (Figure 1.13), but sub-Saharan Africa’s overall fiscal balance remained unchanged. In a few cases, there has been additional deterioration in government finances in recent years, accompanied by rapid increases in public debt in a number of countries. These developments have not affected public debt substantially at the regional level as debt indicators remain benign in most countries (Table 1.3), but the number of countries with increasing debt-to-GDP ratios rose from 25 in 2010 to 31 in 2013 (Figure 1.14),8 with policies increasingly favoring current expenditure over investment in some cases.

Table 1.3.Sub-Saharan Africa: Debt Indicators
Debt risk index1Public debt level (2013)Changes in debt2External debt to official creditors level (2013)Changes in external debt2Interest-payment-to-revenue ratio (2007)Interest-payment-to-revenue ratio (2013)
Sub-Saharan Africa (Total)19,18,5,234.24.610.2−1.56.4%7.7%
Of which:
Oil-exporting countries5,1,1,−0.43.3%5.1%
Middle-income countries6,5,0,
Low-income countries7,7,0,036.73.321.92.76.2%7.0%
Fragile states (HIPC)31,5,4,034.3−53.316.9−59.613.7%6.1%
Fragile states (non-HIPC)0,0,0,−15.212.6%5.1%
Sources: IMF, World Economic Outlook Database; and IMF staff estimates.Note: HIPC = Heavily Indebted Poor Countries. Excludes South Sudan.

Number of countries with low (L), moderate (M), high (H), and in debt distress (D) categories from debt sustainability analysis. The index for nine middle-income and oil-exporting countries is based on the recent Article IV staff reports and the staff’s discretionary assessment. Excludes South Sudan (unrated).

Changes from end-2007 to end-2013.

Countries that received debt relief under the HIPC Initiative and the Multilateral Debt Relief Initiative from end-2007 to end-2013.

Sources: IMF, World Economic Outlook Database; and IMF staff estimates.Note: HIPC = Heavily Indebted Poor Countries. Excludes South Sudan.

Number of countries with low (L), moderate (M), high (H), and in debt distress (D) categories from debt sustainability analysis. The index for nine middle-income and oil-exporting countries is based on the recent Article IV staff reports and the staff’s discretionary assessment. Excludes South Sudan (unrated).

Changes from end-2007 to end-2013.

Countries that received debt relief under the HIPC Initiative and the Multilateral Debt Relief Initiative from end-2007 to end-2013.

Figure 1.14.Sub-Saharan Africa: Total Public Debt, 2009–13

Source: IMF, World Economic Outlook database.

Note: Excludes South Sudan.

Fiscal consolidation has taken place in some countries since 2010, in some cases achieved by reducing public investment. Fifteen countries in the region have been able to reduce primary spending in percent of GDP in 2010–13 (Figure 1.15).9 The largest reductions in government expenditure-to-GDP ratios have taken place in Chad among oil exporters; Botswana among middle-income countries; Sierra Leone in the low-income group;10 and Burundi and São Tomé and Príncipe among fragile states.11 Note, however, that, except for Burundi, Chad, and Uganda, these countries have cut back capital expenditure substantially.

Figure 1.15.Sub-Saharan Africa: Change in Primary Expenditure Items, 2010–13

Source: IMF, World Economic Outlook database.

Note: Excludes Nigeria and South Sudan owing to data availability. Côte d’Ivoire is excluded because of a reclassification of primary expenditure in 2011. Cabo Verde is excluded because of a reclassification of primary expenditures in 2011. The data for Uganda does not include two hydropower projects amounting to some 3.5 percent of GDP.

In contrast, primary spending has increased in the other 27 countries. In most cases, this reflects higher capital expenditure, particularly among oil exporters (except Equatorial Guinea and Chad to a lesser extent). However, compensation of employees has increased notably in some countries, in many cases exceeding capital expenditure growth (Malawi, Mozambique, Namibia). In other countries (Madagascar, Malawi, Namibia, Zimbabwe), capital expenditure has in fact declined. Finally, other primary expenditures also rose rapidly in a number of countries, especially oil exporters and some middle-income countries (Namibia, Swaziland).12 Worth noting is that revenue-to-GDP ratios increased in about half of the countries in sub-Saharan Africa in 2010–13 (Figure 1.16). Some exceptions among oil exporters are Angola, where tax revenue has effectively declined, and Equatorial Guinea. A different picture is observed among middle-income countries, as in most cases revenue ratios have risen, in some reflecting strong tax revenue (Lesotho). Revenue-to-GDP ratios have declined particularly in Angola among oil exporters, and fragile states—notably the Central African Republic (reflecting political unrest in that country), Burundi, and São Tomé and Príncipe. In this group grants have declined in percent of GDP during the period.

Figure 1.16.Sub-Saharan Africa: Change in Total Revenue and Grants, 2010–13

Source: IMF, World Economic Outlook database.

Note: Excludes Nigeria and South Sudan owing to data availability. Côte d’Ivoire is excluded because of a reclassification of primary expenditure in 2011. Cabo Verde is excluded because of a reclassification of primary expenditures in 2011.

Growing fiscal imbalances in Ghana and Zambia

Countries that have depended on favorable international capital flows to finance expanded fiscal and/or current account deficits, such as Ghana and Zambia, are particularly vulnerable to the changing international environment. In Ghana, the increase in primary spending in 2010–13 resulted primarily from a rise in the payroll as a result of a new salary structure, as well as higher capital spending (Figure 1.17).13 Similarly, in Zambia, a significant loosening of fiscal policy took place in 2010–13, mainly as a result of overspending on recurrent items, primarily subsidies and wages, the latter of which rose by about 45 percent in 2013 (Figure 1.17). This has resulted in lower credit ratings by international agencies, and may have significant adverse implications for these countries’ debt sustainability.

Figure 1.17.Ghana and Zambia: Contributions to Real Primary Expenditure Growth, 2010–13

Source: IMF, World Economic Outlook database.

In sum: country-specific fiscal imbalances; less of a regional issue

The observed sluggishness in the fiscal adjustment in sub-Saharan Africa reflects a recomposition of public spending in some countries that could imply risks, but does not represent a major source of concern at the regional level. Most countries in sub-Saharan Africa have maintained policies favoring the much-needed expansion of capital expenditure in the aftermath of the crisis while maintaining debt-to-GDP ratios at sustainable levels. Others, where recent oil and gas discoveries promise to boost future revenue, may be able to accommodate larger fiscal deficits in the medium term without jeopardizing debt sustainability, provided appropriate institutional frameworks are established for transparent and rigorous management of this wealth. Notwithstanding this, a number of countries—especially Ghana and Zambia—have undertaken excessive fiscal expansions (some favoring current spending) partly financed by foreign borrowing, thereby increasing their vulnerability to sudden capital flow reversals. Indeed, debt-to-GDP ratios in most countries remain relatively low, suggesting these high levels of public expenditure—accompanied by a recomposition away from investment—is not a concern for the region as a whole. However, in many countries where fiscal policy has weakened, debt-to-GDP ratios have risen rapidly (Figure 1.18), and the risk of debt distress is increasing, the composition of primary spending should be revised, as otherwise fiscal policy might jeopardize longer-term public debt sustainability and macroeconomic stability.

Figure 1.18.Sub-Saharan Africa: Change in Total Public- Debt-to-GDP Ratio, 2012–13

Source: IMF, World Economic Outlook database.

Near-Term Outlook, Downside Risks, and Policy Recommendations

Near-term outlook

Growth in sub-Saharan Africa is projected to accelerate further, to about 5 ½ percent in 2014 and 2015, although concerns remain regarding how this growth could be made more inclusive. Several countries stand to reap the benefits of investments in transport and telecommunications, an expansion of production capacity (most notably in extractive industries and energy generation), and/or rebounds in agriculture. Investments in infrastructure and mining will continue to add to the domestic demand for goods and services, even if demand related to the public sector slows as several countries move toward fiscal consolidation. Overall, sub-Saharan Africa’s growth rate should remain in the top 30 percent in the world (Figure 1.19). At the same time, poverty rates remain high throughout the region, amid widespread inequality, and many Millennium Development Goals are unlikely to be met by the target date of 2015 in several countries.

Figure 1.19.Sub-Saharan Africa: Real GDP Growth, Rates and World Percentile

Source: IMF, World Economic Outlook database.

1 Percentile of the weighted average growth rate in sub-Saharan Africa in the distribution on IMF member country growth rates.

Growth is expected to accelerate in all country groups, especially fragile states and oil exporters:

  • In Nigeria, growth is expected to be broad based, rising to about 7 percent in 2014 and 2015, as major oil pipelines are repaired and non-oil output continues to expand, supported by recent reforms in the energy sector.
  • Growth in middle-income countries is projected to increase by about 0.3 percentage points in 2014 and accelerate further in 2015, helped by sustained exports (especially to advanced economies), ongoing investments, and improved business confidence. Growth in South Africa is projected to improve modestly, supported by strengthening external demand but dragged by tightening global financial conditions and domestic monetary policies, soft commodity prices, tense industrial relations, and continuing supply bottlenecks, including in energy.
  • Among low-income countries, growth is projected to accelerate markedly in fragile states, on the assumption of greater stability in the Democratic Republic of the Congo and reflecting the improved domestic political and security situation in Mali. In other countries, growth is set to remain strong or accelerate with the help of massive investments in infrastructure (Ethiopia) and mining (Liberia, Mozambique, Uganda), improved transportation (Mozambique), and expanded productive capacity in the energy sector (Ethiopia, Tanzania) and mining (Democratic Republic of the Congo, Ghana, Mozambique, Niger, Sierra Leone).

As in 2013, investment will provide continued support to domestic demand. Total investment is projected to remain at 23.8 percent of GDP in 2014 and 2015, strengthening somewhat among low-income countries and fragile states, where it is expected to be supported by FDI in extractive industries and infrastructure. Besides FDI, public investment in infrastructure will expand (Côte d’Ivoire, Ethiopia), as will investment by domestic private enterprises partly financed with bank loans (Botswana).

Fiscal balances are expected to improve between 2013 and 2015 in most of the countries in the region, as many of them are planning fiscal adjustments to rebuild buffers in anticipation of potential shocks (Botswana, Kenya, and Nigeria), to contain the rise in public debt (Senegal), or to bring their public finances to a more sustainable footing (Ghana, Zambia). This adjustment will be pursued primarily through expenditure restraint, although revenue mobilization will also play an important role in some cases (Guinea, Nigeria).

With robust growth, sustained public demand, and increasing investment, the average current account deficit for the region widened from 2.6 percent of GDP in 2012 to 3.5 percent of GDP in 2013. By 2015, despite the strengthening of the global recovery, current account balances in the region are expected to worsen further (Table 1.4). This would reflect an increase in imports in countries undertaking major investments, as well as lower exports from oil-exporting countries. Thus, the contribution of net exports to growth is expected to weaken further. Imports of goods and services are projected to increase in low-income countries that continue to expand their production capacity, such as the Democratic Republic of the Congo, Guinea, and Mozambique. At the same time, exports are projected to decline in percent of GDP in a large number of countries, partly reflecting a lower demand for commodities from emerging markets, but they are projected to increase in countries that have recently expanded their mining production capacity, such as Liberia, Mozambique, and Sierra Leone. Moreover, critical supply and infrastructure bottlenecks may prevent some countries from taking full advantage of the increase in demand from advanced economies (for example, South Africa).

Table 1.4.Sub-Saharan Africa: Other Macroeconomic Indicators
(Percent change)
Inflation, end of period8.
(Percent of GDP)
Fiscal balance1.90.3−4.0−1.3−2.2−4.2−3.3−3.0
Of which: Excluding oil exporters−0.7−1.7−4.5−3.9−4.0−4.4−4.3−4.0
Current account balance0.7−1.6−1.0−1.0−2.7−3.6−3.6−3.9
Of which: Excluding oil exporters−5.0−3.0−4.3−5.0−7.7−8.0−7.8−7.6
(Months of imports)
Reserves coverage4.
Source: IMF, World Economic Outlook database.
Source: IMF, World Economic Outlook database.

Downside risks

The risks to the outlook remain largely to the downside. Four main near-term risks could threaten the economic outlook for the region:

Home-grown risks are increasing…

  1. Fiscal vulnerabilities have increased in a number of countries, notably in Ghana and Zambia. In both countries, spending has been growing at unsustainable levels. In Zambia civil servants’ wages increased sharply in 2013. In Ghana, twin deficits (fiscal and current account) in the context of weak foreign reserves will make 2014 particularly challenging, and in some countries facing elections (for example, Malawi and Nigeria) policy uncertainty could rise amid intensifying spending pressures. Finally, in countries with high debt levels, such as Cabo Verde, The Gambia, and Seychelles, there is relatively limited room to maneuver in the face of shocks.
  2. Deteriorating security situation. The sharp increase in political instability and the deteriorating security situation in the Central African Republic and South Sudan are causes for concern. Apart from their humanitarian impact, the conflicts in these two countries will lead to a sharp markdown in their growth prospects. The spillovers from these conflicts could significantly affect trade flows (for example, for Kenya and Uganda), and possibly increase security-related outlays in neighboring countries.

…and external risks deserve greater attention

  • 3. Softening growth in emerging markets. This risk is particularly important for natural-resource exporters (including South Africa), which could suffer from weakening commodity prices and slowing demand, especially for low-value commodities. In addition, the expected rebalancing of growth sources in China, from consumption to investment, in the years to come will contribute to weakening the demand for investment-related commodities. Tightening financing conditions in China—a major source of new financing for governments and FDI for sub-Saharan Africa—are likely to increase borrowing costs and potentially affect FDI and FDI-related demand, especially in greenfield mining projects.
  • 4. Monetary normalization and eventual tightening in the United States and other advanced economies. The reversal of capital flows as a result of tightening global monetary conditions is a source of downside risks for the region, especially for frontier market countries with weak fundamentals. The main channels of transmission include pressures on asset prices, interest rates, and especially exchange rates. These pressures, in turn, could strain some banks and financial systems, reduce domestic demand, and reignite inflation. The key transmission channels and potential implications are:
    • Increased borrowing costs and refinancing risk for governments. An exit of foreign investors would reduce liquidity in local bond markets, increasing borrowing costs. At the same time, tightening liquidity and a repricing of risk would increase both benchmark interest rates and spreads in international Eurobond markets, making it harder for frontier markets to carry out their existing bond issuance plans. The government interest bill would rise, and some governments (Ghana, Zambia) could face increasing difficulties in refinancing maturing bonds and financing their deficits. Tighter financing conditions could thus precipitate sharper-than-planned fiscal adjustment and/or encourage an inflationary monetization of the deficit. Finally, depreciation risk could significantly increase governments’ debt service costs.
    • Tighter private sector funding conditions. Countries with comparatively developed financial markets with large participation by foreign investors, such as Kenya, Nigeria, and South Africa, may experience a correction in stock market valuations and corporate bond prices, with reverberations on other assets, such as real estate, which could be accentuated by tightening monetary policies.
    • Financial sector strain. Banks lending in foreign currency could experience an increase in nonperforming loans if large currency depreciations reduce their borrowers’ repayment capacity. In countries with more developed banking systems (Kenya, Nigeria, South Africa), banks could also suffer losses in domestic portfolio and real asset investments as well as increases in nonperforming loans on credit extended against such collateral.
    • Renewed inflation concerns. The exchange rate pass-through on domestic prices could increase inflation, especially in the case of large or disorderly adjustments and in countries highly dependent on imports.

Policy recommendations

To address existing and emerging risks and challenges, policy prescriptions made in previous issues of this publication generally remain valid. Macroeconomic and financial policies should focus on preserving stability: for some countries, the focus will be on rebuilding any depleted policy buffers; for others, it will mean renewing efforts to keep inflation under control. The following are the main policy recommendations.

  • Fiscal policy. Countries should generally increase their resilience to shocks, notably by boosting their revenue base and by avoiding excessive spending growth. Fast-growing countries in the region should take advantage of the growth momentum to strengthen their fiscal balances. Some countries with large external financing requirements may need to pursue consolidation even if growth weakens, while making determined efforts to safeguard social safety nets and growth-enhancing investment. Countries with large fiscal deficits or increasing debt levels (for example, Ghana and Zambia) should intensify their efforts to bring their public finances back to a sustainable footing, including by containing expenditure. Low-income countries should also boost revenue mobilization to address social and investment needs. In several countries, it is urgent to improve the efficiency of public expenditure and invest in greater energy supply and critical infrastructure. Oil-exporting countries, which are particularly vulnerable to price shocks, need to take advantage of still high oil prices to decisively reverse the deterioration of their fiscal balances.
  • Monetary policy. In most countries, monetary policy should remain focused on consolidating gains on the inflation front. The appropriate monetary policy stance will depend on a country’s specific macroeconomic conditions. Countries that have experienced a rapid expansion of private sector credit, especially to households, and countries where growth is robust and inflation persistently high and/or on the rise will benefit most from policy tightening. Where there is a concern that depreciating exchange rates could pose inflationary risks (Ghana, Malawi, and South Africa), policy might need to be tightened. The South African Reserve Bank already acted in January 2014 by increasing the repo rate by 50 basis points, and in February 2014, Ghana’s central bank raised policy rates by 200 basis points. In the wake of expanding financial sectors and other ongoing structural changes, traditional policy frameworks based on quantitative monetary targets have become inadequate in many countries. Monetary authorities in countries that have reached a higher degree of market development will need to strengthen the enabling environment for monetary policy. To maintain effective control on their policy objectives, the monetary authorities in these countries should reorient their policy frameworks toward more forward-looking and flexible goals and rely more on market-based instruments such as policy interest rates in their operational setting. This will require enhancing analytical, forecasting, and liquidity management skills to manage interest rates in a more forward-looking setting. Central banks will need to develop greater institutional capacity, operational independence, increase transparency, and enhance accountability of their operations.
  • Addressing the effects of tightening global financial conditions. Emerging and frontier market countries should prepare to weather a tightening of global financial conditions by preserving their budget flexibility and, where vulnerabilities are critical, by tightening policies. Dealing with capital reversals that may become disruptive would require implementing a comprehensive set of policies—including monetary, fiscal, and exchange rate—focusing on addressing the underlying sources of vulnerabilities. Restrictions on capital flows may be a temporary part of a broad policy package designed to prevent a full-blown crisis, but cannot substitute for needed policy adjustments. Countries should be ready to adjust their financing plans in a scenario of reduced access to external funding, while allowing their exchange rates to be the first line of defense against sudden changes in capital flows. Where possible, consideration may be given to anticipating borrowing in periods when favorable conditions prevail. The optimal strategy will depend on the balance between the risk that the exchange rate pass-through could reignite inflation and the risk that a tightening of monetary policy under adverse conditions could add to instability and further reduce growth.
  • Regional integration. Given the relatively low level of intraregional trade, countries in the region should renew their efforts to promote greater regional integration through lower tariff and nontariff barriers and by facilitating the movement of people, goods, and capital, drawing on the experience of the most advanced initiatives in the region, such as the East African Community (EAC), which recently signed a Monetary Union Protocol to establish a full monetary union within a decade (Box 1.1). The protocol appropriately emphasizes the need to prepare carefully in the years ahead to ensure a smooth transition toward, and functioning of, the single currency, but the detailed institutional setting and operational frameworks will need to be spelled out further and the relevant regional institutions will require sufficient powers to properly oversee the process, monitor, enforce the convergence criteria, and conduct a unified monetary policy. As the recent experience in the Eurozone has shown, a properly designed banking union contributes to the stability of a monetary union. This requires supervision capacity, sound frameworks for bank resolution and cross-border coordination, accompanied by robust financial sector safety nets.

Box 1.1.The East African Community Monetary Union Protocol

The Monetary Union Protocol signed by the Heads of State of the East African Community (EAC) countries (Burundi, Kenya, Rwanda, Tanzania, Uganda) on November 30, 2013, in Kampala, Uganda, represents a major milestone in the EAC regional integration process. It outlines a 10-year roadmap toward monetary union for an economic community with a combined GDP of more than US$100 billion and a population of 145 million.

Previous regional integration milestones following the EAC’s establishment in 2000 include the signature of (i) a customs union protocol (2005) that entails the introduction of a common external tariff (CET) and the gradual elimination of internal tariffs; and (ii) a common market protocol (2010) allowing free movement of goods, persons, labor, services, and capital. The implementation of these initiatives is still far from complete. Although trade within the customs union is largely free of duty and the CET is widely applied, progress is ongoing to dismantle nontariff barriers and to complete the legal and administrative reforms needed to implement the freedoms of movement guaranteed by the common market protocol. To foster the free movement of EAC citizens, various initiatives are in the final design or early implementation stage: these seek to permit travel with national identity cards, reduce work permit fees, and introduce single tourist visas. National Implementation Committees, comprising concerned ministries and stakeholders, have been established in every partner state to expedite the implementation process.

The deepening of the integration process by the single currency is expected to result in a larger regional market with reduced transaction costs, greater economies of scale, increased competition, and enhanced attractiveness to foreign direct investment, thereby contributing to sustained strong economic growth, employment creation, and improved economic efficiency.

The Protocol sets out the process for the establishment of the East African Monetary Union (EAMU), as well as the legal and regulatory framework for the EAMU’s operation, drawing on the experience of other monetary unions, including the European Monetary Union. The single currency is expected to be launched in 2024 with the countries meeting the convergence criteria.

Macroeconomic Convergence Criteria Under the EAC Monetary Protocol

Primary convergence criteria:

  • Ceiling on headline inflation of 8 percent
  • Ceiling on the fiscal deficit (including grants) of 3 percent of GDP
  • Ceiling on gross public debt of 50 percent of GDP in net present value terms
  • Floor on reserve coverage of 4.5 months of imports

Indicative criteria:

  • Ceiling on core inflation of 5 percent
  • Ceiling on the fiscal deficit excluding grants of 6 percent of GDP
  • Floor on tax-to-GDP ratio of 25 percent

Table 1.1.1 provides an overview of the initial starting positions in terms of the convergence criteria. Some variables—namely, inflation and the public debt—are currently at or below the agreed ceilings for most member countries. Other variables—the fiscal balance ceiling and reserve coverage—will require further significant policy actions in the years ahead for the criteria to be met.

Table 1.1.1.East African Community: Convergence Criteria and Other Selected Economic Indicators
(2013 data unless otherwise indicated)
Primary Convergence Criteria
Headline inflation18.
Fiscal balance including grants2−1.9−5.8−5.1−5.5−4.5−3
Gross public debt (net present value terms)229.833.823.232.023.350
Reserve coverage (months of imports)
Indicative Criteria
Core inflation16.
Fiscal balance excluding grants2−18.9−7.3−13.7−8.9−5.5−6
Tax-to-GDP ratio12.220.214.716.512.925
Macroeconomic Indicators
Nominal GDP (billions of U.S. dollars)2.745.57.430.421.4
Per capita GDP (U.S. dollars)305.31058.1698.3667.4582.4
Real GDP growth4.
Population (millions)9.044.410.645.636.8
Gross public debt231.348.529.443.333.9
Sources: Country authorities; and IMF staff estimates.

December 2013 (year over year).

Percent of GDP.

Sources: Country authorities; and IMF staff estimates.

December 2013 (year over year).

Percent of GDP.

Institutional Setting and Policy Harmonization

The East African Monetary Institute (EAMI) is expected to be established in 2015 as a precursor to an independent central bank, to direct preparatory work for the monetary union. The East African Central Bank (EACB) will be responsible for the joint monetary and exchange rate policies implemented from 2024 onward, within a system of national central banks acting as the EACB’s operational arms. The EACB’s primary objective will be to achieve and maintain price stability, with financial stability and economic growth and development as secondary objectives. The single exchange rate regime will be free floating.

EAC member countries have agreed to harmonize and coordinate their fiscal policies—a key element to reduce potential vulnerabilities to the monetary union. They are also expected to establish mechanisms to deal with exogenous shocks, including an early warning system and a stabilization facility to provide assistance to member states. An East African Surveillance, Compliance, and Enforcement Commission to monitor and enforce convergence will be created by 2018; monetary and exchange rate policies will be coordinated and harmonized from that point on. At the same time, an East African Statistics Bureau and an East African Financial Services Commission will also be established.

This box was prepared by Clara Mira.

Public investment remained buoyant throughout the region and increased most notably in Mozambique, Namibia, Swaziland, Togo, and Uganda, although in some countries a lower-than-expected execution of public investment plans contributed to containing the fiscal deficit (Botswana, Côte d’lvoire, Liberia).


Several low-income countries also experienced significant currency depreciation in 2013, although the underlying causes were varied: low reserves (Malawi), a drop in exports caused by floods (Mozambique), monetary financing of the deficit (Liberia), worsening terms of trade (Ethiopia), or the removal of ineffective exchange rate restrictions amid large fiscal slippages (The Gambia).


The most recent, and more comprehensive, balance of payments data available to IMF staff present a milder impact than suggested by the Emerging Portfolio Fund Research data reported in Figures 1.6 and 1.7, which track flows of funds registered for sale in major developed markets from individual and institutional investors.


Including EAC members. see Box 1.1.


Chapter 2 of the April 2013 Regional Economic Outlook: Sub-Saharan Africa—Strengthening Fiscal Policy Space.


At the time, ten countries in the region were seen as facing (potential) fiscal sustainability issues in the event of needing additional financing of expanded budget deficits. Five of these countries were classified at high risk of debt distress (Burundi, Comoros, Democratic Republic of Congo, The Gambia, and São Tomé and Príncipe); three were classified at moderate risk of debt distress but experienced increases in debt-to-GDP ratios of at least 10 percentage points since end-2007 (Ghana, Malawi, and Mali); and Swaziland and South Africa were anticipated to see sharp increases in debt-to-GDP ratios (beyond 60 percent) by 2017.


Chapter 2 of the April 2010 Regional Economic Outlook: Sub-Saharan Africa—How Countercyclical and Pro-Poor Has Fiscal Policy Been During the Downturn?


Debt-to-GDP ratios remain generally low at the regional level and are not a major source of concern from the point of view of fiscal sustainability for the majority of countries (Chapter 2 of the April 2013 Regional Economic Outlook: Sub-Saharan Africa—Strengthening Policy Space).


Nigeria and South Sudan are excluded because of data limitations. For Nigeria there is no disaggregated data for general government primary expenditure as shown in this chapter (government agencies—and their payrolls—are relatively large and their spending is not reflected in federal government expenditures). Cabo Verde is also excluded because some items of primary expenditures were reclassified in 2011, making the time comparison misleading.


The data for Uganda does not include two hydropower projects amounting to some 3.5 percent of GDP.


The observed reduction in primary expenditure in Guinea-Bissau is most likely related to the political turmoil affecting that country during the period analyzed. A similar situation could explain expenditure reductions in the Central African Republic.


Elections during 2010–13 were held in many sub-Saharan African countries, and a case could be made for the existence of a political business cycle. The literature on political business cycles is extensive (for a review, see Drazen, 2001). In the case of sub-Saharan African, Block (2002) finds evidence of a political business cycle in fiscal (and monetary) policy in a panel of 44 countries during 1980–95.


This came on top of a rise in recurrent spending by about 4 percent of GDP in 2011–12, which stemmed from an increase in the wage bill, energy subsidies, and other expenditures.

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