Do debt relief and fiscal rules improve public debt sustainability? The experience of sub-Sahara African countries

Attahir B. Abubakar, W. David McCausland and Ioannis Theodossiou

Journal of Policy Modeling, 2025, vol. 47, issue 1, 166-186

Abstract: The sub-Sahara African (SSA) region accounts for 33 of the 39 Highly Indebted Poor Countries (HIPCs) with many of these countries facing challenges in public debt management. This paper examines issues that are key to improving the debt situation in the region. Specifically, the study investigates two key questions namely whether the adoption of fiscal rules and debt relief improve public debt sustainability. What factors reduce the public debt of SSA countries? Interestingly, the findings reveal that while debt relief improves debt sustainability, the imposition of fiscal rules threatens the debt sustainability of the region. Further, higher economic growth and increasing government balance are instrumental to reducing public debt. These findings have far-reaching policy implications for public debt management in developing countries.

Keywords: Public debt; Debt sustainability; Debt management; Fiscal rules; Debt relief; Africa; Fiscal policy (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jpolmo:v:47:y:2025:i:1:p:166-186

DOI: 10.1016/j.jpolmod.2024.06.007

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