Rethinking Debt Sustainability in Africa
To develop a proper understanding of the risks facing indebted African countries, international financial institutions must overhaul their own methods for assessing debt sustainability. Rather than setting arbitrary limits on a country’s debt-to-GDP ratio, the focus must shift to how debt is being used.
CAMBRIDGE – Across Africa, macroeconomic management has improved substantially in recent years. Studies by the International Monetary Fund, the African Development Bank (AfDB), and the World Bank, as well as surveys from Worldwide Governance Indicators and Transparency International, all attest to this trend. Yet concerns about debt sustainability on the continent have been mounting, especially since the onset of the COVID-19 pandemic.