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Working Paper

African Debt since HIPC : How Clean is the Slate?

LIVING STANDARDS DEBT ACCUMULATION CAPITAL MARKETS DEBT SUSTAINABILITY ANALYSES BORROWER REPAYMENT CAPACITY INTERNATIONAL CAPITAL PAYMENT OBLIGATIONS STOCK FISCAL DEFICITS MACROECONOMIC MANAGEMENT INTEREST DOMESTIC BORROWING PUBLIC INVESTMENTS GUARANTEES DEBT STOCK INTEREST RATE EMERGING ECONOMIES EXCHANGE GOVERNMENT REVENUES DISCOUNT RATE ISSUANCES LIQUIDITY DEBT MANAGEMENT DEBT STATISTICS DEBTOR REPAYMENTS EMERGING MARKET DEBT INTERNATIONAL CAPITAL MARKETS DOMESTIC DEBT MARKET REVENUES PORTFOLIO FISCAL POLICY BONDS DOMESTIC DEBT MARKETS DOMESTIC INTEREST RATES LOAN CAPACITY BUILDING DEBT POLICY DISCOUNT TAX DEBT DATA DOMESTIC PUBLIC DEBT MULTILATERAL DEBT RELIEF INTERNATIONAL BANK CREDITORS CREDITOR LENDER INSTRUMENTS DEBT PAYMENT BUDGET MATURITY SHORT-TERM INSTRUMENTS BOND ISSUANCES DOMESTIC DEBT STATISTICS INTERNATIONAL FINANCE STOCK OF DEBT COMMERCIAL CREDITORS INDEBTEDNESS CURRENCY DEBT RESCHEDULING EXTERNAL DEBT ACCUMULATION INTERNATIONAL BOND MARKETS BULLET REPAYMENTS DEBTS BOND ISSUANCE EXCHANGE RATES OPTIONS INTERNATIONAL BOND INTEREST RATES MONETARY FUND SOVEREIGN BOND EMERGING MARKET EXTERNAL INDEBTEDNESS FINANCIAL INSTITUTIONS MARKETS DEBT LOW DEBT EXTERNAL DEFICITS RETURN DEFICITS RATIOS OF DEBT DEBT FLOWS LENDERS INTERNATIONAL DEBT INCOME LEVELS MULTILATERAL DEBT DOMESTIC DEBT LOANS RESERVES DEBT SERVICE FINANCE FOREIGN CURRENCY PUBLIC INVESTMENT INTERNATIONAL FINANCIAL INSTITUTIONS DEBT MANAGERS TRANSACTIONS DEBT LEVELS CREDIT LINE INVESTMENT BANKS INVESTORS DEBT RATIO BOND MARKETS COUPON DATE GOOD GOVERNMENT BUDGET DEBT MANAGEMENT STRATEGY DEBT MANAGEMENT STRATEGIES FUTURE COMMERCIAL TERMS COMMERCIAL DEBT PURCHASING POWER REPAYMENT GOVERNMENT REVENUE DISBURSEMENTS ISSUANCE INSTITUTIONAL CAPACITY SHARES FACE VALUE COUPON RATE MARKET DEFAULT DEBT RATIOS MARKET DEBT PUBLIC DEBT SOLVENCY AVERAGE DEBT DEBT MARKETS DEBT MARKET ACTIVE DEBT DEBT INSTRUMENTS INVESTMENT BOND EUROBOND COMMERCIAL BANKS SOVEREIGN BONDS SHARE SHORT MATURITIES DEBT RELIEF INITIATIVE POVERTY DEBT OBLIGATIONS EXTERNAL PUBLIC DEBT COUPON REVENUE EXTERNAL DEBT INVESTMENTS LENDING DEBT REPAYMENT DEBT MANAGEMENT OFFICE DEBT SERVICE TO EXPORTS VARIABLE INTEREST RATES MATURITIES DEBT SUSTAINABILITY PUBLIC DEBT STOCK REMITTANCES PUBLIC SPENDING COMMODITY PRICES ARREARS INTERNATIONAL MARKETS CAPITAL ACCOUNT DEVELOPMENT BANK INCOME LEVEL EXTERNAL BORROWING DEBT RELIEF DEBT MATURITY
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World Bank, Washington, DC
Africa | Africa
2015-08-13T19:13:43Z | 2015-08-13T19:13:43Z | 2015-03

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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