Public Debt Sustainability in Africa: Building Resilience and Challenges Ahead

Mthuli Ncube () and Zuzana Brixiová Schwidrowski

No wp1053, William Davidson Institute Working Papers Series from William Davidson Institute at the University of Michigan

Abstract: The heightened interest of African countries to access international capital markets has put public debt sustainability once again high on the continent’s policy agenda. Applying the ‘stabilizing primary balance approach’ to sustainability shows that the primary balances exceeded those required to keep public debt at the 2007 level in about half of the countries studied. In several cases with higher debt burdens, the balances were also above those needed to reduce public debt-to-GDP to sustainable thresholds. However, in most countries the main driver of sustainability has been the interest rate – growth differential (IRGD), underscoring the importance of maintaining and even accelerating growth as well as utilizing the borrowing space for growth-enhancing outlays. Fiscal policies will need to play a greater role in maintaining debt sustainability in the future, especially since the IRGDs are likely to narrow over the longer term.

Keywords: public debt; sovereign bonds; interest-growth differential; primary balance; Africa (search for similar items in EconPapers)
JEL-codes: E6 H6 O23 (search for similar items in EconPapers)
Pages: pages
Date: 2013-07-01
New Economics Papers: this item is included in nep-afr and nep-dev
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Related works:
Journal Article: Public Debt Sustainability in Africa: Building Resilience and Challenges Ahead (2015)
Working Paper: Public Debt Sustainability in Africa: Building Resilience and Challenges Ahead (2015)
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