The external debt of sub-Saharan Africa : origins, magnitude, and implications for action

Abstract

This paper discusses the sub-Saharan Africa external debt problem. While no clear solutions a discussion of the origin and development of the Africa debt problem points to some mistakes of the past that need to be avoided in the future. The major ones identified in the paper are excessive responses to favorable but probably temporary terms of trade shifts, inflexible public expenditure programs, investments directed primarily by availability of external financing, and delays in macroeconomic adjustment supported by nonconcessionary financing. Nonetheless, implementation of policies based on these lessons are not sufficient to overcome the current debt service difficulties. To illustrate, the scheduled debt service for 1985-87 on debt outstanding at the end of 1983 is about double that actually met in the past, where the contrast is characteristic of almost all countries, not only for the few extreme cases. The final section of the paper presents implications for action on the part of creditors and debtors to enable a return to a more stable functioning of external financing process.

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