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 Organization for Economic Cooperation and Development (OECD) member countries and Brazil, Russia, India, and China (BRIC) to the evolution of sub-Saharan Africa (SSA)’s 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 has helped to lower debt-to-exports, debt service-to-exports, and debt-to-GDP ratios, and in turn, impact growth. Results reveal that debt levels across SSA rose from ‘relatively’ low levels to unsustainable levels starting in the late 1980s to early 2000s. However, since mid-2000s, SSA countries have witnessed external debt sustainability.