Debt sustainability and direction of trade: What does Africa’s shifting engagement with BRIC and OECD tells us?

This chapter provides a comparative assessment of the contribution of OECD and BRIC countries to the evolution of Sub-Saharan Africa's (SSA) foreign debt sustainability. Using data for the period 1970-2014, the analysis shows how external demand for SSA goods and services by OECD and BRIC helps to lower debt-to-exports, debt-service-to-exports, and debt-to-GDP ratios, and in turn, impact growth. Results shows that debt levels across SSA rose from ‘relatively’ low levels to unsustainable levels starting in late 1980s and continuing to early 2000s. However, in recent years (especially since mid-2000s), SSA countries have largely witnessed external debt sustainability. The debt sustainability exercise we make using various sustainability thresholds also largely confirms this.