Average economic growth for rated Sub-Saharan economies is likely to return to pre-financial crisis levels this year, according to Standard & Poors report.
The report, titled "For Sub-Saharan Africa, Fiscal Strains Persist Despite Stronger Economic Growth", says the 2011 fiscal performance of most rated Sub-Saharan sovereigns will improve over 2010, but that fiscal balances are likely to continue to underperform the levels recorded prior to the global downturn.
This ongoing weakness in fiscal indicators reflects a number of factors, including some governments' scaled up investment programs and higher social spending initiated when economic growth rates were falling, the report says. It also reflects fiscal revenues that have not recovered to the same extent as GDP growth.
Given the fiscal deterioration that started in 2009 and the subsequently slow recovery in many governments' budget balances, the average government debt burden remains well above its pre-crisis level, and forecasts suggest that it will remain largely unchanged through 2013, the report says.
Only in a few oil-exporting countries can we expect to see a significant drop in debt levels over the next three years, the report says. Adding to fiscal risks, high fuel and food costs are likely to heighten spending pressures on some governments, particularly in those countries that import oil.
Nevertheless, of the 15 Sub-Saharan sovereigns rated by Standard & Poor's, 13 are on stable outlook and only two are on negative outlook, the report notes.
