Briefing Paper

Domestic Debt Management in Africa

“In the face of budget deficits, against a backdrop of drying up of concessional lending and reduction in development assistance due to the impact of the global financial crisis among others, borrowing from domestic markets becomes a viable option. Unfortunately far less attention has been given to domestic debt in most development policy discussions. This policy brief describes factors that lead countries to borrow domestically, the legal and institutional frameworks governing domestic debt management. The brief also identifies possible challenges and gaps in domestic debt management practices in Africa. The brief concludes that while the switch towards more domestic debt can play a positive role in development, policymakers should include a country’s domestic public debt in the debt sustainability analysis. There is also need to strengthen the legal and institutional frameworks of domestic debt management and increase governments’ capacity to implement these frameworks.”