Borrow with Sorrow? The Changing Risk Profile of Sub-Saharan Africa's Debt
In the post-global financial crisis period, the financing of countercyclical policies led not only to a reduction in the fiscal surpluses across Sub-Saharan African countries, but also an increase in their levels of indebtedness. Although public de...
| Main Authors: | , |
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| Format: | Working Paper |
| Language: | English |
| Published: |
World Bank, Washington, DC
2020
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/370721580415352349/Borrow-with-Sorrow-The-Changing-Risk-Profile-of-Sub-Saharan-Africas-Debt http://hdl.handle.net/10986/33293 |
| Summary: | In the post-global financial crisis
period, the financing of countercyclical policies led not
only to a reduction in the fiscal surpluses across
Sub-Saharan African countries, but also an increase in their
levels of indebtedness. Although public debt for the region
in 2018 was still below that of the pre-debt forgiveness
period, the risk profile of public debt has sharply
increased. The share of concessional public debt has been
declining while that owed to private creditors and non–Paris
Club bilateral creditors has been rising. The resulting
reconfiguration of public debt has led to increased debt
service in the region. Hence, the higher risk profile of
debt and rising payments might lower the threshold for debt
distress in the region. Addressing public debt
vulnerabilities requires the buildup of external and fiscal
buffers by conducting prudent fiscal policies and
implementing growth-enhancing reforms, and the strengthening
of debt management practices. However, the policy toolkit
can be enlarged by gradually moving from debt management to
balance-sheet management of the public sector, and policies
to boost the efficiency of public investment. |
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