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Africa's public debt amid global headwinds: balancing resilience and vulnerabilities

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  • Michael Chui
  • Leonardo Gambacorta

Abstract

The conflict in the Middle East has raised energy and fertiliser prices, weakened growth and intensified fiscal pressures across Africa at a time when public debt and debt service burdens remain elevated. The shift towards domestic currency debt has reduced exchange rate risk for issuers and preserved market access, but higher interest rates and shorter maturities have increased debt service costs and rollover risks. A heavy reliance on banks and central banks for government financing can reinforce the sovereign-bank nexus, crowd out private credit and threaten financial stability. Developing deeper markets and a more diversified investor base are essential to address these challenges.

Suggested Citation

  • Michael Chui & Leonardo Gambacorta, 2026. "Africa's public debt amid global headwinds: balancing resilience and vulnerabilities," BIS Bulletins 132, Bank for International Settlements.
    • Handle: RePEc:bis:bisblt:132
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    References listed on IDEAS

    as
    1. Mark S Manger & David Mihalyi & Ugo Panizza & Niccolò Rescia & Christoph Trebesch & Ka Lok Wong, 2025. "Africa's Domestic Debt Boom: Evidence from the African Debt Database," Working Papers hal-05305125, HAL.
    2. John Hooley & Lam Nguyen & Mika Saito, 2024. "Fiscal dominance and inflation: evidence from Sub-Saharan Africa," Public Sector Economics, Institute of Public Finance, vol. 48(3), pages 363-391.
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