Are other African sovereigns likely to follow? None are flashing red right now, analysts say. But Kenya, Egypt and Nigeria are the African sovereigns which “stand out” due to the high proportion of government revenue used to make interest payments, says Frank Gill, sovereign specialist at Standard & Poor´s Global Ratings.
Kenya
One key factor in Ghana’s distress is the small size of its financial sector in relation to GDP at about 40%, indicating the lack of a strong pool of domestic savings, Gill says. As a yardstick, South Africa’s developed financial sector is worth more than 140% of GDP. Egypt also has a large financial sector which means “more flexibility in refinancing” government debt and so reduces the dangers, Gill says.
Kenya, he argues, is “a closer match for Ghana” than Egypt with a financial sector worth 62% of GDP. Large eurobond bullet maturities will increase the
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