(Ecofin Agency) - Africa's external debt has reached $1.15 trillion, and the report highlights that interest payments account for more than 25% of public revenues in six African countries, including Egypt, Nigeria, and Angola.

Africa's average public debt-to-GDP ratio is expected to continue its downward trend, reaching 64.3% in 2025, compared to 67.5% in 2024 and 68.9% in 2023. This improvement is the results of ongoing efforts in fiscal discipline, according to the "World Economic Situation and Prospects 2025" report published by the United Nations on January 9.

The document highlights that Africa's total external debt stock stood at $1.15 trillion, with debt servicing costs peaking at $163 billion in 2024. Interest payments have taken a significant toll on public revenues, exceeding 70% in several African countries, and accounting for over 25% of revenues in Angola, Ghana, Kenya, Malawi, and Nigeria.

Meanwhile, domestic debt has been rising across the continent in recent years, although the average fiscal deficit remained stable at 5.5% of GDP in 2023 and 2024.

The report warns that debt crises remain a major risk to the continent’s sustainable development goals, despite ongoing debt restructuring processes in several countries. Zambia, which defaulted on its external debt in 2020, successfully reached a restructuring agreement with creditors in mid-2024, concluding a three-and-a-half-year process. Ghana also made progress in its debt negotiations, with creditors agreeing to $13 billion in total reductions.

Ethiopia has engaged in talks under the G20 Common Framework for debt restructuring, while Malawi is negotiating with creditors outside this initiative.

Somalia stands out as a positive example, having secured an irrevocable debt reduction of $4.5 billion through the Heavily Indebted Poor Countries (HIPC) Initiative. This brought the country’s public debt-to-GDP ratio down to just 6%.

Despite various debt relief efforts, achieving fiscal sustainability remains difficult across the continent. Social unrest linked to tax reforms in Kenya and the removal of fuel subsidies in Nigeria underscores these challenges.

Economic growth in Africa is projected to rise slightly from 3.4% in 2024 to 3.7% in 2025 and 4% in 2026. This growth is driven by recoveries in major economies like Egypt, Nigeria, and South Africa.

East Africa is expected to grow the fastest among subregions in 2025, at 6%, due to strong performances in countries like Ethiopia, Kenya, Rwanda, Uganda, and Tanzania. Growth in North Africa is forecast at 3.4%, West Africa at 4.1%, Central Africa at 3%, and Southern Africa at 2.2%.

The UN report attributes the continent’s improved economic outlook to easing supply chain disruptions, relaxed financial conditions, and a strong rebound in international tourism. However, challenges remain, including regional conflicts, rising debt service costs, youth unemployment, severe impacts of climate change, and persistent inflation.