The Covid-19 and the Russia–Ukraine war have increased pressure for public borrowing in selected African countries (this paper focuses on Côte d‘Ivoire, Ghana, Ethiopia, Morocco, Senegal, Togo and Tunisia) to address the adverse impacts of the overlapping shocks. Except for Ethiopia, public debt in selected African countries is projected to increase by 11 percentage points (pp) (Togo) to 22 pp (Ghana) of gross domestic product between 2019 and 2022.
In the recent decade up to 2019, several African countries have benefited from cheaper and longer-maturity external debt, guarantees on public debt issuances, external debt management and efforts to develop domestic debt markets in recent decade up to 2019. However, the commodity price hikes induced by the Russia-Ukraine war resulted in high inflation worldwide, triggering global monetary tighthening (i.e., policy rate hikes in advanced economies; and capital outflows from and currency depreciation in low- and middle-income countries), consequently increasing the cost and debt servicing of external debt.
This paper examines the public debt profile of each of the seven African countries to understand the opportunities and challenges around public debt management in these countries. It also offers policy suggestions on how the international community may help low- and middle-income countries address their short-term stabilisation needs but also in improving their medium- to long-term debt sustainability and resilience to future shocks.