Domestic debt dynamics in Africa

A key development over the past decade has been an increasing reliance on domestic debt markets by African Governments to expand their net borrowing, in most cases reflecting a need to fill the gap created by a decline in official development assistance as a share of total external flows. Achieving high and sustainable levels of investment needed for Africa’s development will require a combination of foreign and domestic resources. This may increase ownership of the development agenda and enhance the effectiveness of strategies and the focus on sectors in which investment is most productive. At the same time, with domestic debt playing an increasingly important role, countries will face new risks as the numbers of creditors and debt instruments continue to expand, and domestic debt will become instrumental in assessing public debt sustainability owing to its size and swift growth.

Related Subject(s): Economic and Social Development