Overall government debt in sub-Saharan Africa stabilises but at high level – IMF

The International Monetary Fund's latest assessment of sub-Saharan Africa's debt dynamics presents a paradoxical picture for European investors: while aggregate debt levels have stabilised across the region, the underlying conditions remain precarious and highly differentiated across countries. The stabilisation narrative requires careful unpacking. After years of accelerating debt accumulation—particularly during the pandemic period when governments deployed expansionary fiscal measures—the region's overall debt-to-GDP ratios have plateaued. However, this apparent equilibrium masks significant structural challenges that continue to shape investment risk profiles across the continent. The critical distinction the IMF emphasises centres on domestic versus external debt composition. Sub-Saharan African countries increasingly rely on domestic borrowing, which the Fund identifies as strategically preferable when properly managed. This shift reflects both necessity and opportunity. Limited access to international capital markets at favourable rates has forced governments to develop local debt markets. Paradoxically, this constraint has created infrastructure that can support longer-term financial stability, provided policymakers deploy these tools deliberately rather than reactively. For European investors, this distinction carries substantial implications. Domestic debt markets operate under different risk parameters than external sovereign bonds or direct foreign investment. Currency risk diminishes when borrowing occurs in local currencies, though inflation risk intensifies. Additionally, domestic debt development