Fitch Ratings has warned about the fiscal challenges posed by the mpox virus that has ravaged much of Nigeria and other sub-Saharan Africa (SSA).
The agency, Wednesday, said a potential acceleration in the spread of mpox in sub-Saharan Africa (SSA) could raise the risk that the virus and efforts to curb its impact hurt economic activity and weaken fiscal metrics in affected sovereigns, in addition to the suffering of those affected.
Any fiscal impact under such a scenario would probably be partially offset by additional financing from donors and official and multilateral partners, it said.
The World Health Organisation declared the upsurge of mpox in the Democratic Republic of Congo (DRC) and a growing number of African countries a public health emergency of international concern on August 14 .
Several Fitch-rated SSA sovereigns reported confirmed mpox cases in July-August, including Cote d’Ivoire (BB-/Stable), Kenya (B-/Stable), Rwanda (B+/Stable), South Africa (BB-/ Stable) and Uganda (B+/Negative).
In most of these, the number of confirmed mpox cases is very low, often in the single digits.
However, there could be underreporting in some countries and the emergency declaration highlights the potential for case numbers to rise sharply, bringing the prospect of financial pressure for affected sovereigns.
Fitch said virus outbreaks can have significant economic and fiscal effects, as was demonstrated by the Covid-19 pandemic and the 2014-2015 Ebola epidemic in West Africa.
The latter shock resulted in sharply lower economic growth and a widening of budget deficits in the main affected countries, Liberia, Guinea and Sierra Leone, although it is difficult to disaggregate the effects of Ebola from those of the concurrent fall in commodity prices.
It said past outbreaks are also an imperfect guide to future risks.
“For example, mpox has so far had a significantly lower fatality rate than Ebola, which means economic activity may be less directly affected. There are also vaccines that are available to be deployed against mpox, though at present access to these vaccines remains relatively limited in SSA. A previous public health emergency of international concern over a global mpox outbreak, lasting from July 2022 to May 2023, did not significantly impact key credit metrics for affected sovereigns.
“In the event of a substantial increase in mpox case counts, the main impact on economies from the virus and the measures to counter it would likely be on consumption and production.
Tourism could be hit – a potentially significant factor in Kenya, Rwanda and Uganda – where UN Tourism data indicate tourism accounted for 11%, 20% and 19%, respectively, of total goods and services export earnings in 2022.
There could also be challenges managing inflationary effects, especially if food production and/or logistics are significantly disrupted.
“Fiscal metrics would also be affected, with weaker economic activity depressing tax revenues, and higher government spending on healthcare and epidemic-prevention measures. International assistance could mitigate these effects, but its timing and size is uncertain. The World Bank has estimated that over 2014-2015 grants reached nearly 19% of GDP in Liberia, almost 10% of GDP in Sierra Leone and about 5% in Guinea. However, budget deficits in these countries were significantly wider on average over the period, even including grants, than they were in 2013. Rating effects would depend on the severity and the longevity of the economic and fiscal impact of the virus and the availability and size of donor support”, it said.
