Towards sovereign debt restructuring in Africa: comments and recommendations

Abstract

According to the latest list of LIC DSAs for PRGT Eligible Countries, by the IMF, ten countries are currently in debt distress and nine of these are from Africa. In many heavily indebted nations, debt restructuring is necessary to bring debt burdens back to sustainable levels and limit the negative impact of greater debt servicing on what is already a fragile socioeconomic environment. Debt restructuring is a sovereign decision. Choices and approaches regarding public debt restructuring are mainly influenced by country-specific factors, including the national debt profile, prevailing macroeconomic conditions, the structure of the domestic economy, and the political and economic considerations of the country in question. The present paper highlights the options available to African countries and sets out a number of key recommendations to guide countries and strengthen the continental debt restructuring framework.