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Borrow with Sorrow The Changing Risk Profile of Sub-Saharan Africa's Debt (English)

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.

Details

  • Author

    Calderon,Cesar, Zeufack,Albert G.

  • Document Date

    2020/01/30

  • Document Type

    Policy Research Working Paper

  • Report Number

    WPS9137

  • Volume No

    1

  • Total Volume(s)

    1

  • Country

    Africa,

  • Region

    Africa,

  • Disclosure Date

    2020/01/30

  • Disclosure Status

    Disclosed

  • Doc Name

    Borrow with Sorrow ? The Changing Risk Profile of Sub-Saharan Africa's Debt

  • Keywords

    public debt; access to international financial market; risk profile; domestic currency debt; annual average growth rate; external public debt; public sector net worth; formal debt management strategy; Public and Publicly Guaranteed; local currency bond market; private investment in infrastructure; public sector balance sheet; Public Investment Management System; country debt; currency composition of debt; public external debt; risk of debt; public debt stock; Learning and Innovation Credit; efficiency of investment; foreign currency debt; Public Debt Management; debt management practice; source of financing; asset and liability; external debt service; high debt levels; gross capital formation; private consumption growth; resource rich countries; rate of growth; domestic debt market; international capital market; emerging market bond; management of risk; stream of revenue; gross public debt; risk and vulnerability; international bond market; public debt data; debt sustainability analysis; prudent fiscal policy; exchange rate risk; improvement in governance; exchange rate depreciation; source of funding; emerging market economy; domestic saving rate; higher interest rate; central government debt; total public debt; substantial debt relief; external debt stock; total external debt; public debt sustainability; low interest rate; private commercial bank; short time span; debt service costs; commodity price boom; sovereign credit rating; credit rating agency; credit rating agencies; investment grade rating; countries in arrears; evolution of debt; quality of infrastructure; interest rate fluctuation; debt management capacity; state-owned enterprise; international financial institution; cash balance; domestic institutional investor; export commodity prices; public infrastructure investment; quality of investment; debt service payment; fiscal sustainability analysis; impact of policy; types of asset; identification of risks; emerging market country; government bond yield; government financial assets; tax base variability; wealth of nation; global economic prospect; degree of heterogeneity; rate of investment; high public debt; behavior of investment; adverse commodity price; use of resources; price of oil; education and health; domestic resource mobilization; rates of return; debt management issue; private creditor

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Citation

Calderon,Cesar Zeufack,Albert G.

Borrow with Sorrow The Changing Risk Profile of Sub-Saharan Africa's Debt (English). Policy Research working paper,no. WPS 9137 Washington, D.C. : World Bank Group. http://documents.worldbank.org/curated/en/370721580415352349/Borrow-with-Sorrow-The-Changing-Risk-Profile-of-Sub-Saharan-Africas-Debt