Risks and challenges of debt-financed development: roots and causes of the rising debt levels in Africa

Risks and challenges of debt-financed development: roots and causes of the rising debt levels in Africa

As public debts are increasing in many African countries, we see a new type of debt distress, where short-term commercial loans and bonds have replaced some of the long-term multi- and bilateral loans.

This policy note highlights two topical questions: what lies behind increasing levels of debt in Africa, and what are the challenges when financing development projects through loans?