Debt Sustainability and the Ongoing Financial Crisis: the Case of Ida-only Africain Countries

F.L. Hernandez

The ongoing financial crisis has raised concerns about a potential future wave of sovereign defaults among developing countries, and therefore the need for additional rounds of debt relief in poorly indebted countries or among states that may become unsustainably indebted due to the crisis. This paper addresses this issue for a group of 35 IDA-only African countries, which are in a fragile debt situation. Using the DSA baseline scenario most recently constructed for each country, the paper analyses the effect of the ongoing financial crisis on the countries’ debt sustainability indicators as a function of the depth and length of the crisis.

The latter is measured by the fall in exports revenues and the duration of such fall, and by the terms with which each country can obtain financing to wade through the crisis period.