Public Debt Sustainability in Africa: Building Resilience and Challenges Ahead

Mthuli Ncube () and Zuzana Brixiová Schwidrowski

No 101, IZA Policy Papers from Institute of Labor Economics (IZA)

Abstract: The increased access of African countries to international capital markets has put public debt sustainability once again high on the continent's policy agenda. Utilizing the 'stabilizing primary balance' approach, we find 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 high debt burdens, the balances were above those needed to reduce public debt-to-GDP to sustainable thresholds. In most countries the main driver of sustainability has been the interest rate – growth differential (IRGD), underscoring the importance of supporting growth and 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. The recent developments such as the fall of the commodity prices and uneven global growth underscore the need for sound macroeconomic and risk management.

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: 26 pages
Date: 2015-05
New Economics Papers: this item is included in nep-afr
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

Published - published in: Development Policy Review, 2015, 33 (5), 555 - 580

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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 (2013)
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