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Washington D.C || The International Monetary Fund (IMF) has warned that 20 countries in sub-Saharan Africa (SSA) are either facing or at high risk of debt distress, underscoring mounting fiscal vulnerabilities across a region still grappling with the fallout of multiple global and domestic shocks.
Speaking at a press conference on the IMF’s October Regional Economic Outlook for sub-Saharan Africa, Abebe Aemro Selassie, Director of the IMF’s African Department, said the high debt levels reflect both the scale of recent economic shocks and underlying structural weaknesses in many SSA economies.
“Right now we estimate about 20 countries to be in a situation of high risk of debt distress,” Selassie said. “This comprises about 14 countries at high risk of debt distress and another six in actual debt distress.”
This assessment comes as policymakers and international financial institutions continue discussions at the 2025 Annual Meetings of the IMF and World Bank.
The meetings are taking place amid rising concerns about the sustainability of public finances in a region where borrowing costs remain elevated, revenue bases are narrow, and access to external financing is tightening.
Selassie emphasised that the path to resolving these vulnerabilities must begin with growth-enhancing reforms, including domestic revenue mobilisation and more efficient public spending.
“This is exactly why reforms are needed, first and foremost of course is trying to put in place the reforms that will encourage higher economic growth,” he said.
The IMF official acknowledged the efforts of many African governments to invest in infrastructure, health, and education over the past decade. However, he noted that the expected returns from such investments have not been adequately captured through tax systems or productivity gains.
“One area where we have not done as well is capturing the rate of return on all of these investments through the tax system,” Selassie said. “We see potential, we see scope for revenue mobilisation. But this mobilisation has to go hand in hand with showing that the money that is being collected is being used for the right reasons, for the right purposes.”
Selassie also addressed growing public discontent with tax regimes in parts of the region, noting that citizens often associate high tax burdens with poor public services. He stressed the importance of building trust through transparency, efficient spending, and curbing corruption.
Beyond fiscal reform, the IMF flagged illicit financial flows as a persistent drag on revenue collection and financial stability. According to Selassie, these flows—ranging from trade misinvoicing to tax evasion and outright corruption—must be tackled through tailored reforms.
“The way to tackle this is to identify what the source of the particular flows are and tackle them through reforms,” he said, calling for a differentiated and targeted approach to stem capital flight and leakages.
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While some countries, such as Nigeria, have begun to see positive signals from recent policy shifts, including tighter monetary policy and exchange rate reforms, Selassie warned that the economic recovery remains fragile. Inflation may be decelerating, he said, but the cost of living crisis is still deeply felt across the continent.
“There’s been a level shift in inflation and this is not unique to our countries,” he said. “But it is particularly biting in our countries exactly because this cost of living crisis has hit our people way more than others, with limited capacity to perhaps withstand this shock.”
The IMF’s latest regional outlook urges African governments to accelerate structural reforms and improve fiscal governance to navigate a challenging global environment and preserve hard-won development gains.
