Debt Sustainability in Sub-Saharan Africa : Unraveling Country-Specific Risks
Sub-Saharan African countries as a group showed a considerable reduction in public and external indebtedness in the early 2000s as a result of debt relief programs, higher economic growth, and improved fiscal management for some countries. More rec...
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| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2016
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2015/12/25705887/debt-sustainability-sub-saharan-africa-unraveling-country-specific-risks http://hdl.handle.net/10986/23622 |
| Summary: | Sub-Saharan African countries as a group
showed a considerable reduction in public and external
indebtedness in the early 2000s as a result of debt relief
programs, higher economic growth, and improved fiscal
management for some countries. More recently, however,
vulnerabilities in some countries are on the rise, including
a few with very rapid debt accumulation. This paper looks at
the heterogeneous experiences across Sub-Saharan African
countries and the detailed dynamics that have driven changes
in public debt since the global financial crisis. Borrowing
to support fiscal deficits since 2009, including through
domestic markets and Eurobond issuance, has driven a net
increase in public debt for all countries except oil
exporters benefitting from buoyant commodity prices and
fragile states receiving post-2008 Highly Indebted Poor
Country relief. Current account deficits and foreign direct
investment inflows drove the external debt dynamics, with
balance of payments problems associated with very rapid
external debt accumulation in some cases. Pockets of
increasing vulnerabilities of debt financing profiles and
sensitivity of debt burden indicators to macro-fiscal shocks
require close monitoring. Specific risks that policy makers
in Sub-Saharan Africa need to pay attention to going forward
include the recent fall in commodity prices, especially oil,
the slowdown in China and the sluggish recovery in Europe,
dependence on non-debt-creating flows, and accounting for
contingent liabilities. |
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