STUDY ON MANAGING SOVEREIGN DEBT IN TIMES OF CRISIS

The report analyzes how MEFMI countries utilized external financing, including emergency facilities from the IMF and World Bank, to cope with the COVID-19 pandemic. It details the shift in creditor composition toward bilateral and private lenders, the deterioration of debt risk ratings, and the specific policy responses adopted by member states. The document concludes with ten key lessons for public debt management during crises, emphasizing the importance of official external finance, operational risk management, and transparency.

• MEFMI countries mobilized approximately US$8,849 million in loans and US$1,708 million in grants during 2020 and 2021 to address pandemic-related needs.
• The risk of debt distress in the MEFMI region increased significantly during the pandemic, with the percentage of countries at high risk or in debt distress rising from 33.3% in 2019 to 55.5% in 2022.
• There has been a gradual shift in the MEFMI region's external debt composition away from multilateral creditors (decreasing from 62% in 2012 to 54% in 2020) toward bilateral (increasing from 27% to 31%) and private debt (increasing from 11% to 14%).
• China has become the largest bilateral lender to the MEFMI region since 2011, with Angola being the largest recipient of these loans.
• The IMF's Rapid Credit Facility (RCF) was the most utilized emergency tool, with seven surveyed MEFMI countries accessing a total of US$2,427.21 million.
• The Debt Service Suspension Initiative (DSSI) provided liquidity support but did not provide actual debt relief, as it was designed to be net present value neutral.
• Sovereign spreads on Eurobonds issued by MEFMI countries peaked between May and June 2020; as of December 2021, nine out of 17 outstanding bonds had spreads above the 570 basis points benchmark.
• Zambia experienced severe debt accumulation, with cumulative public debt arrears amounting to US$1,475.89 million by the end of June 2021.
• The pandemic highlighted a critical need for strong 'front-office' capabilities in Debt Management Offices (DMOs) to quickly identify and negotiate new funding sources.
• Most surveyed MEFMI countries, except Namibia and Rwanda, did not publish specific debt management policy or strategy documents to record the measures taken during 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-2.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-2.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-2.pdf |access-date=23 October 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-2.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }