The report underscores three important implications of the rising public debt on the continent. First, the report notes the shifting of productive resources from critical sectors (spending on education, health, and social protection) of African countries to contain the public debt overhang through higher debt servicing costs. The high level of debt relative to the size of the economy was seen to be associated with reduced public investment in healthcare, education, and social protection at statistically significant levels. This has triggered liquidity challenges (difficulties in meeting their short-term financial obligations to creditors) for many countries (e.g., Ghana, Kenya, Zambia, Chad, Nigeria and Ethiopia) and solvency risks (sustained difficulties in principal debt repayments) for other countries (including Ghana, Zambia and Chad), which have necessitated both voluntary and IMF-mandated debt restructuring on the continent. The report also affirms the high proportion of expensive domestic debt contributing to the imposing public debt overhang; and that any effort to comprehensively restructure debt on the continent must respond to the rising, more expensive, short-dated domestic debt.

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