Global Liquidity, the Private Sector and Debt Sustainability in Sub‐Saharan Africa

Abstract

This article analyses the effect of changes in international financial markets on the debt dynamics in sub-Saharan Africa in recent years. A key development is the rise of the private sector as both a lender and a borrower in African debt markets, a process that is associated with the growing integration of the region into global financial markets. The article argues that the Debt Sustainability Framework of the International Monetary Fund and World Bank has taken some steps to account for this growth of private sector, crossborder debt, but such steps still fall short of what is needed. A full appreciation of the importance of private debt implies, first, that debt sustainability in sub-Saharan Africa be understood in the context of countries' integration in global financial markets and the global liquidity cycles that characterize those markets and, second, that the interplay between private and public debt be monitored in order to provide a fuller picture of the impact of private sector debt on fiscal sustainability.The authors wish to thank the anonymous reviewers for their helpful feedback and Andreas Antoniades, Stephanie Blankenburg, Penelope Hawkins and Ewa Karwowski for comments on an earlier version. We also thank UNCTAD for financing earlier research on this subject. All errors are the authors' own.

International financial subordination in the age of asset manager capitalism

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‘Afro-pessimism’ and emerging markets finance

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Common Challenges for All? A Critical Engagement with the Emerging Vision for Post‐pandemic Development Studies

“…As inflation starts to bite, and North American/European countries raise interest rates, the tightening of global liquidity is leading to soaring refinancing costs threatening a tide of austerity and defaults. As explored in Bonizzi et al (2019) and Kvangraven et al (2021), these are constraints faced by countries in the global South that arise from their financially subordinate position. Monetary subordination results from a hierarchy in the international monetary and financial system that is fundamentally consequential for macroeconomic conduct and financial stability (e.g.…”

“…As explored in Bonizzi et al. (2019) and Kvangraven et al. (2021), these are constraints faced by countries in the global South that arise from their financially subordinate position.…”