Fiscal Sustainability in African HIPC Countries: A Policy Dilemma?
IMF Working Papers, September 1, 2003
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- Fiscal Sustainability in African HIPC Countries: A Policy Dilemma?
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Bibliographic details
- Authors: Annalisa Fedelino, Alina Kudina
- Published: September 1, 2003
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451859539.001
Overview
- Examines the link between fiscal policy and debt sustainability in a number of African countries participating in the Heavily Indebted Poor Countries (HIPC) Initiative.
- Core conclusion: on the basis of current fiscal policies, debt levels will remain unsustainable even after these countries graduate from the HIPC Initiative.
Key findings
- Debt levels will remain unsustainable under current fiscal policies even after HIPC graduation.
- HIPC Initiative requirements imply a significant increase in poverty-reducing expenditure for participating countries.
- Increased poverty-reducing expenditure could result in weaker fiscal primary balances and a worsening debt sustainability outlook.
- Offsetting fiscal tightening may not be viable in these countries.
Policy implications and recommendations
- Ensuring debt sustainability may require increased availability of nondebt-creating grants.
- Without increased nondebt-creating grants, debt sustainability in HIPC countries may prove elusive in the long term.
Subjects and keywords
- Subjects: Debt sustainability, Exchange rate adjustments, External debt, Fiscal policy, Fiscal stance, Foreign exchange
- Keywords: concessional financing, creating flow, debt level, debt problem, debt ratio, Debt sustainability, debt-sustainability target, exchange rate, Exchange rate adjustments, Fiscal stance, GDP ratio, HIPC completion point, HIPC Initiative, Sub-Saharan Africa, sustainability threshold, WP
Content in this bundle
- Fiscal sustainability in African HIPC Countries: A Policy Dilemma? - WP/03/187