Ensuring public debt sustainability in Africa: Prospects and policies


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    Key messages
    • Sustainable levels of public debt may need to be reconsidered in the context of Africa’s high economic growth rates and improved debt management among other factors.
    • Current African debt is the lowest in decades, with the fastest decline posted by the most indebted countries thanks to debt relief and accompanying policies that made relief possible.
    • There is scope for debt management strategies to emphasise growth -for countries with borrowing space, this includes prudent borrowing for growth-enhancing outlays.
    • African policymakers need to adopt sound fiscal policies and complementary monetary policies, while seizing opportunities for growth-enhancing investment.
    Outline of Briefing Note 66 During the past decade, debt sustainability has improved markedly and in the aftermath of the global financial crisis Africa’s debt-to-GDP today is lower than it has been in decades. Still, the global financial crisis has left some countries with looming fiscal challenges and deteriorating public debt sustainability. This article considers the public debt legacy of the crisis in Africa. It summarises the recent fiscal and external indicators for African countries. We then present and discuss the varied fiscal outcomes among African countries as well as their impact on fiscal space four years after the global financial crisis. We briefly consider the sustainability of African debt dynamics using the debt-stabilising primary balance framework as in Buiter (1985), Blanchard (1990) and more recently Escolano (2010) and Contessi (2012). The final section concludes with challenges ahead and policy options. Read Briefing Note 66
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