STUDY ON MANAGING SOVEREIGN DEBT IN TIMES OF CRISIS

This report, Chapter Four of a broader study by the Macroeconomic and Financial Management Institute of Eastern and Southern Africa (MEFMI) supported by FSD Africa, evaluates the governance and operational risk management frameworks for public debt in 12 MEFMI member countries during the COVID-19 pandemic. It examines legal frameworks, managerial structures, debt strategies, reporting, and auditing, highlighting a general lack of comprehensive business continuity plans and procedure manuals, which increased operational risks during the shift to remote work.

• The COVID-19 pandemic increased debt levels in sub-Saharan Africa, with the average general government gross debt-to-GDP ratio rising from 51.5 per cent in 2019 to 57.8 per cent at the end of 2020, the highest level in nearly 20 years.
• Most MEFMI member countries did not breach their legal debt limits during the pandemic, partly because they are bound by SADC (50 per cent) and EAC (60 per cent) debt-to-GDP convergence criteria, which lack the flexibility of the European Union's General Escape Clause.
• To maintain operations during the pandemic, 11 of the 12 surveyed countries (excluding Eswatini) used email services to deliver loan agreements for signatures, while five used electronic signatures and four utilized lender representatives in the borrowing countries.
• Many countries established new dedicated teams to manage crisis financing, including Botswana's COVID Fund Committee, Kenya's Taskforce on COVID-19 Financing, Lesotho's Financing Fiscal Operations Team, and Namibia's COVID Crisis Committee.
• The shift to remote work and the implementation of work shifts created operational risks by compromising the segregation of duties between front, middle, and back offices in Debt Management Offices (DMOs).
• Debt management strategies were revised in several countries to address increased deficits; 50 per cent revised fiscal balance projections, 41.7 per cent increased domestic borrowing, and 16.7 per cent increased external borrowing.
• Nine MEFMI member countries accessed approximately SDR 2.1 billion from the IMF through the Rapid Credit Facility (RCF) and Rapid Financial Instrument (RFI) to finance deficits.
• Debt reporting regularity and content remained largely unchanged during the pandemic, although 73 per cent of countries reported to the World Bank's Debtor Reporting System (DRS) with a time lag of up to six months.
• Financial audits of public debt were conducted annually by all surveyed countries during the crisis, with no reported changes in frequency or delays in releasing reports, despite the shift to electronic document submission.
• There is a significant deficiency in operational risk management tools; only two countries have procedure manuals for debt management processes, and only Namibia and Mozambique had Business Continuity Plans (BCPs) prior to the pandemic.

APA

FSD Africa (n.d.). STUDY ON MANAGING SOVEREIGN DEBT IN TIMES OF CRISIS. https://fsdafrica.org/wp-content/uploads/2025/05/MEFMI-Report-Chapter-4.pdf

Chicago

FSD Africa. STUDY ON MANAGING SOVEREIGN DEBT IN TIMES OF CRISIS. n.d. https://fsdafrica.org/wp-content/uploads/2025/05/MEFMI-Report-Chapter-4.pdf.

Wikipedia

{{cite report |author=FSD Africa |title=STUDY ON MANAGING SOVEREIGN DEBT IN TIMES OF CRISIS |url=https://fsdafrica.org/wp-content/uploads/2025/05/MEFMI-Report-Chapter-4.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{fsdafricandstudy, author = {{FSD Africa}}, title = {{STUDY ON MANAGING SOVEREIGN DEBT IN TIMES OF CRISIS}}, institution = {FSD Africa}, url = {https://fsdafrica.org/wp-content/uploads/2025/05/MEFMI-Report-Chapter-4.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }