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Public Debt Sustainability in Africa: Building Resilience and Challenges Ahead

  • Mthuli Ncube
  • Zuzana Brixiová


The heightened interest of African countries to access international capital markets has put public debt sustainability once again high on the continent’s policy agenda. Applying the ‘stabilizing primary balance approach’ to sustainability shows 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 higher debt burdens, the balances were also above those needed to reduce public debt-to-GDP to sustainable thresholds. However, in most countries the main driver of sustainability has been the interest rate – growth differential (IRGD), underscoring the importance of maintaining and even accelerating growth as well as 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.

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Paper provided by William Davidson Institute at the University of Michigan in its series William Davidson Institute Working Papers Series with number wp1053.

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Length: pages
Date of creation: 01 Jul 2013
Date of revision:
Handle: RePEc:wdi:papers:2013-1053
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  1. Kasekende Louis & Brixova Zuzana & Ndikumana Leonce, 2010. "Africa: Africa's Counter-Cyclical Policy Responses to the Crisis," Journal of Globalization and Development, De Gruyter, vol. 1(1), pages 1-22, January.
  2. Balázs Égert, 2013. "Public debt, economic growth and nonlinear effects: Myth or reality?," William Davidson Institute Working Papers Series wp1042, William Davidson Institute at the University of Michigan.
  3. Reinhart, Carmen M. & Rogoff, Kenneth, 2010. "Growth in a Time of Debt," CEPR Discussion Papers 7661, C.E.P.R. Discussion Papers.
  4. Haizhou Huang & Danyang Xie, 2008. "Fiscal Sustainability and Fiscal Soundness," Annals of Economics and Finance, Society for AEF, vol. 9(2), pages 239-251, November.
  5. Olivier Jean Blanchard, 1990. "Suggestions for a New Set of Fiscal Indicators," OECD Economics Department Working Papers 79, OECD Publishing.
  6. Luc Eyraud & Anke Weber, 2013. "The Challenge of Debt Reduction during Fiscal Consolidation," IMF Working Papers 13/67, International Monetary Fund.
  7. Silvio Contessi, 2012. "An application of conventional sovereign debt sustainability analysis to the current debt crises," Review, Federal Reserve Bank of St. Louis, issue May, pages 197-220.
  8. Yibin Mu, 2012. "Striking an Appropriate Balance Among Public Investment, Growth, and Debt Sustainability in Cape Verde," IMF Working Papers 12/280, International Monetary Fund.
  9. Charles Wyplosz, 2007. "Debt Sustainability Assessment: The IMF Approach and Alternatives," IHEID Working Papers 03-2007, Economics Section, The Graduate Institute of International Studies.
  10. Thomas Herndon & Michael Ash & Robert Pollin, 2013. "Does High Public Debt Consistently Stifle Economic Growth? A Critique of Reinhart and Rogo ff," Working Papers wp322, Political Economy Research Institute, University of Massachusetts at Amherst.
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