Capital flight and sovereign bond spreads in Africa: implications for public debt sustainability

Adamu Braimah Abille () and Maria Siranova
Additional contact information
Adamu Braimah Abille: Slovak Academy of Sciences
Maria Siranova: Slovak Academy of Sciences

Economic Change and Restructuring, 2025, vol. 58, issue 4, No 11, 39 pages

Abstract: Abstract In the wake of the COVID-19 pandemic and the Russia–Ukraine war, many African countries are facing mounting debt distress, which increases the risk of needing a bailout from the International Monetary Fund (IMF). A severe capital flight may further impede the capacity to raise fiscal revenues, eroding the tax base, undermining government funding for public goods and services, and exacerbating wealth and power inequalities. To analyze the link between capital flight and sovereign bond spreads, we examine the factors influencing sovereign bond spreads from 1990 to 2018 across 21 African countries. We confirm a positive relationship between capital flight and sovereign bond spreads and follow the IMF debt sustainability framework to demonstrate that capital flight exhibits a varying effect on the debt sustainability of African countries, with the Seychelles, Sierra Leone, and the Congo Republic experiencing significant impacts, as opposed to Ghana and South Africa, where the interest rate channel exerts only a limited influence.

Keywords: Capital flight; Africa; Pooled-mean group; Sovereign bond spreads (search for similar items in EconPapers)
JEL-codes: F34 G12 G15 O11 (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
http://link.springer.com/10.1007/s10644-025-09891-2 Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:kap:ecopln:v:58:y:2025:i:4:d:10.1007_s10644-025-09891-2

Ordering information: This journal article can be ordered from
http://www.springer. ... nt/journal/10644/PS2

DOI: 10.1007/s10644-025-09891-2

Access Statistics for this article

Economic Change and Restructuring is currently edited by George Hondroyiannis

More articles in Economic Change and Restructuring from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().