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IMF programme duration and fiscal policy: a path to debt sustainability in Africa

Author

Listed:
  • Baah Aye Kusi

    (University of Ghana Business School)

  • Joseph Atta Junior Darkwa

    (University of Education)

  • Peter Kobati Ayiakwo

    (University of Education)

  • Joseph Ato Forson

    (University of Education)

  • Michael Awuku

    (University of Education)

  • Moses Nanyun Nankpan

    (Dongbei University of Finance and Economics)

Abstract

In this study, we explore how the duration and presence of IMF programmes modify the relationship between fiscal activities (revenue and expenditure) and government debt reduction across African nations. Focusing on 20 African economies that subscribed to the IMF stabilisation programme between 2004 and 2020 and using the dynamic GMM estimation approach, we report that IMF programme arrangements and duration reduce government debts. Furthermore, we also report that while the effects of revenue and expenditure on government debts are decreasing, these effects are higher and lower during IMF policy programme periods and duration in Africa. These results show that IMF programmes speed up the reduction of revenue on debts while lowering the increasing effect of expenditure on government debts in Africa. Policymakers and governments can rely on IMF policy programmes to reinforce the desirable effect of fiscal activities in reducing government debts and improving debt sustainability in Africa.

Suggested Citation

  • Baah Aye Kusi & Joseph Atta Junior Darkwa & Peter Kobati Ayiakwo & Joseph Ato Forson & Michael Awuku & Moses Nanyun Nankpan, 2025. "IMF programme duration and fiscal policy: a path to debt sustainability in Africa," SN Business & Economics, Springer, vol. 5(5), pages 1-23, May.
    • Handle: RePEc:spr:snbeco:v:5:y:2025:i:5:d:10.1007_s43546-025-00818-7
    DOI: 10.1007/s43546-025-00818-7
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    More about this item

    Keywords

    IMF programmes; Public finance; Debt sustainability; Fiscal policy; Africa;
    All these keywords.

    JEL classification:

    • C58 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Financial Econometrics
    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H50 - Public Economics - - National Government Expenditures and Related Policies - - - General
    • H60 - Public Economics - - National Budget, Deficit, and Debt - - - General

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