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Public Debt Sustainability in Africa: Building Resilience and Challenges Ahead

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  • Mthuli Ncube
  • Zuzana Brixiová

Abstract

type="main" xml:id="dpr12126-abs-0001"> The increased access of African countries to international capital markets has put public debt sustainability at the forefront of the continent's policy agenda. Utilising the ‘stabilising primary-balance’ approach, this article finds that the actual primary balances exceeded those required to keep public debt at the 2007 level in about half the countries studied, and in several cases, those needed to reduce public debt-to-GDP to sustainable thresholds. The interest rate-growth differential (IRGD) drove sustainability, underscoring the importance of growth and borrowing for growth-enhancing outlays. As the IRGDs are likely to narrow over the longer term, fiscal policies will need to play a greater role.

Suggested Citation

  • Mthuli Ncube & Zuzana Brixiová, 2015. "Public Debt Sustainability in Africa: Building Resilience and Challenges Ahead," Development Policy Review, Overseas Development Institute, vol. 33(5), pages 555-580, September.
    • Handle: RePEc:bla:devpol:v:33:y:2015:i:5:p:555-580
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    File URL: http://hdl.handle.net/10.1111/dpr.2015.33.issue-5
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    Cited by:

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    2. Ribeiro, Ana Paula & Carvalho, Vitor & Sanches, Hélder, 2021. "Debt dynamics and fiscal policy stance in Cape Verde: Is there evidence of pro-cyclical behavior?," MPRA Paper 111305, University Library of Munich, Germany.
    3. Okwoche Princewill U. & Iheonu Chimere O., 2021. "Determinants of fiscal effort in sub-Saharan African countries: Does conflict matter?," Economics and Business Review, Sciendo, vol. 7(2), pages 50-73, June.
    4. Mthuli Ncube & Zuzana Brixiova, 2013. "Working Paper 188 - Remittances and their Macroeconomic Impact: Evidence from Africa," Working Paper Series 996, African Development Bank.
    5. Benjamin Musiita & Fredrick Nsambu Kijjambu & Asaph Kabuura Katarangi & Geoffrey Kahangane & Sheilla Akampwera, 2023. "Uganda’s Debt Sustainability: Testing The Efficacy of Debt Overhang Theory," Journal of Economics and Behavioral Studies, AMH International, vol. 15(4), pages 37-54.
    6. António Afonso, & Emanuel Reis Leão, & Dilson Tiny, & Diptes C. P. Bhimjee, 2017. "Fiscal Sustainability Analysis: The Case of PALOP Economies," Working Papers Department of Economics 2017/14, ISEG - Lisbon School of Economics and Management, Department of Economics, Universidade de Lisboa.
    7. William Irungu Ng'Ang'A & Julien Chevallier & Simon Wagura Ndiritu, 2019. "Primary balance dynamics and public debt sustainability in Kenya," Working Papers halshs-02120613, HAL.
    8. Florence Dafe & Dennis Essers & Ulrich Volz, 2018. "Localising sovereign debt: The rise of local currency bond markets in sub‐Saharan Africa," The World Economy, Wiley Blackwell, vol. 41(12), pages 3317-3344, December.
    9. Misheck Mutize & Sean J. Gossel, 2019. "Sovereign Credit Rating Announcement Effects on Foreign Currency Denominated Bond and Equity Markets in Africa," Journal of African Business, Taylor & Francis Journals, vol. 20(1), pages 135-152, January.
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    11. Remme, Michelle & Siapka, Mariana & Sterck, Olivier & Ncube, Mthuli & Watts, Charlotte & Vassall, Anna, 2016. "Financing the HIV response in sub-Saharan Africa from domestic sources: Moving beyond a normative approach," Social Science & Medicine, Elsevier, vol. 169(C), pages 66-76.
    12. Walid BENAYED & Foued Badr GABSI & Samia OMRANE BELGUITH, 2015. "Threshold Effect of Public Debt on Domestic Investment: Evidence from Selected African Countries," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania / Editura Economica, vol. 0(4(605), W), pages 189-198, Winter.

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    More about this item

    JEL classification:

    • H6 - Public Economics - - National Budget, Deficit, and Debt
    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
    • O23 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Fiscal and Monetary Policy in Development

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