African Debt since HIPC : How Clean is the Slate?
The paper finds a moderate evolution in public debt ratios since debt relief among heavily indebted poor countries (HIPC) and multilateral debt relief initiative (MDRI) recipient countries in Sub-Saharan Africa, with certain exceptions. For eight c...
| Main Authors: | , , |
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| Format: | Working Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2015
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2015/06/24677892/african-debt-hipc-clean-slate http://hdl.handle.net/10986/22399 |
| Summary: | The paper finds a moderate evolution in
public debt ratios since debt relief among heavily indebted
poor countries (HIPC) and multilateral debt relief
initiative (MDRI) recipient countries in Sub-Saharan Africa,
with certain exceptions. For eight countries the authors
find rapid rates of debt accumulation, which can return them
to pre-HIPC debt levels in only a few years. Short-term
domestic debt has, despite early fears, in general not
filled the borrowing space created by debt relief. However,
external debt accumulation on commercial terms in some cases
presages repayment spikes, which may combine with short-term
domestic obligations to amplify refinancing risk and cause
abrupt reductions in public spending, with damaging
consequences for development. Finally, despite reduced debt,
African economies continue to be commodity dependent and
prone to shocks. As global interest rates and commodity
prices revert to historically more customary levels, these
countries should remain prudent: avoid tax-base erosion,
prevent large recurrent spending hikes, and invest wisely in
growth, by executing projects effectively to enhance
infrastructure. These fiscal fundamentals will be as
important for debt sustainability as how much is borrowed
and on which terms. |
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