Abstract
Reassessing the rationale underlying the emergence of structural adjustment programmes (SAPs) in the 1980s, this article looks more specifically at the effects of the heavily indebted poor countries (HIPC) initiative on the debt burden in Sub-Saharan Africa (SSA). Using data from the World Bank and the International Monetary Fund (IMF), it illustrates how in spite of important degrees of economic growth during the last decade and the promotion of the HIPC initiative since 1996, SSA’s total external debt remains a central dilemma. The annual debt service of many post-completion point HIPCs is even expected to increase until 2013. The development aid received by many countries is still often offset by their debt service payments so that in practice, the net transfer of wealth remains out of most SSA countries. Therefore, the empirical analysis shows a very limited effect of the HIPC initiative on the reduction of external debts. Thus, up to 2012, the persistence of this huge economic burden might contribute to explain why few countries have really progressed towards achieving the millennium development goals (MDGs). Key words: Heavily indebted poor countries (HIPC) initiative, millennium development goals (MDGs), external debt, poverty reduction, sub-Saharan Africa.
Highlights
Why is Sub-Saharan Africa (SSA) still paying huge external debts? Even though the sub-continent has seen renewed economic growth, especially since 1995, how can it be explained that this has not led to a substantial reduction of its debt burden? For decades International Financial Institutions (IFIs) have supported or even constrained SSA governments in promoting institutional and financial reforms to sustain economic growth
It looks at the risk of debt distress, the evolution of the total external debt and the annual debt service of those sub-Saharan African countries concerned with the HIGHLY INDEBTED POOR COUNTRIES (HIPC) initiative; it evaluates the effects of the HIPC initiative on the projections of the debt services due by SSA countries; to finish with, as a matter of complement, it provides some comparisons between the amount of external debts of SSA countries and their total expenditures or global progresses towards achieving the millennium development goals (MDGs); the conclusion summarizes and discusses the findings
Total external debts remain so disproportionate compared with the official development assistance (ODA) they receive, that the latter is entirely redirected to IFIs and donors
Summary
Reassessing the rationale underlying the emergence of structural adjustment programmes (SAPs) in the 1980s, this article looks at the effects of the heavily indebted poor countries (HIPC) initiative on the debt burden in Sub-Saharan Africa (SSA). Using data from the World Bank and the International Monetary Fund (IMF), it illustrates how in spite of important degrees of economic growth during the last decade and the promotion of the HIPC initiative since 1996, SSA’s total external debt remains a central dilemma. The development aid received by many countries is still often offset by their debt service payments so that in practice, the net transfer of wealth remains out of most SSA countries. The empirical analysis shows a very limited effect of the HIPC initiative on the reduction of external debts.
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