Fitch predicts positive outlook for SSA in 2017

Ratings agency, Fitch Ratings, says continued fiscal and external pressures, compounded by rising government debt, weak economic growth and political instability in some countries is keeping the 2017 ratings outlook negative for sub-Saharan Africa (SSA).
However, some of the growth-offsetting factors, such as lower commodity prices, drought in some parts of the continent and foreign exchange shortages in Angola and Nigeria, are expected to fade in 2017.
Fitch forecasts a rise in aggregate SSA growth from 0.9 percent in 2016, weighed down by poor performance in Angola, Nigeria and South Africa, to 2.9 percent in 2017.
“While commodity prices have regained some ground, many commodity exporters in the region are still running substantial budget and current account deficits and are facing financing strains and pressures on foreign-exchange reserves at current levels. They face further fiscal consolidation in 2017 to narrow twin deficits and stabilise their economies,” the agency says.
it notes that government debt ratios will continue an upward trend across most of the region, adding that heavy spending on infrastructure, weak public financial management and the decline in commodity prices will remain important drivers of elevated budget deficits, and that political risks will also remain an important rating factor in the region.
“Instability in government will affect the ability to tackle economic policy challenges and, more seriously, social and political challenges facing government,” it says.
“This will put pressure on expenditure and affect the confidence of foreign investors in a number of sovereigns, such as Ethiopia, where unrest has led to the imposition of a state of emergency, or Kenya, where tensions have risen ahead of elections in 2017,” it says.