The Covid-19 pandemic occurred at a time when sovereign debt had already increased substantially in Sub-Saharan Africa (SSA). Between 2010-2017, government debt as a share of GDP averaged 34.5% in SSA but increased significantly to 51.5% in 2019 (IMF 2021a, p. 25). Similarly, in SSA, official external debt as a share of GDP averaged about 15% between 2010-2017 but rose substantially to 23.6% in 2019 (IMF 2021a, p. 27). One main reason behind these accumulated debt levels was a shift in the debt structure from concessional towards more non-concessional financing with relatively higher interest rates. Increased debt ser-vice payments diminished fiscal space in most SSA countries. Moreover, non-concessional financing includes private credit, such as Eurobond issuance. Another reason is the growing momentum to close the continent’s infrastructure deficit, which the African Development Bank (AfDB) has estimated will cost about US$130 to US$170 billion annually (AfDB 2019).
October 13, 2021