External Debt and External Finance for Sub-Saharan Africa: The Continuing Problem

Abstract

Sidney Dell was among the first to see the full implications, particularly for longer-run development prospects, of the developing countries’ balance of payments and debt crises of the early 1980s. He was also among the first to draw upon legal precedents to promote an efficient and equitable writedown of their unserviceable external debt (Dell, 1985). The international creditor community eventually came to recognize the case for reductions in the stock of developing countries’ external debt. When creditors finally acted, however, they did so primarily on the basis of short-term strategic and self-interested economic calculations. Their action has been effective in many respects. From the standpoint of the global financial system and many of the largest debtors, ‘the debt crisis is over’. In the case of low-income Sub-Saharan Africa, however, the creditor response still falls far short of what is required for an efficient and equitable long-term solution to the region’s debt problem. This chapter addresses the need for further external support and, in particular, expanded debt relief for low-income Sub-Saharan African countries, without which their development prospects, about which Sidney cared so deeply, will remain severely constrained.

Portions of this chapter previously appeared in my ‘Debt Relief for Africa; A Call for Urgent Action on Human Development’, UNICEF Staff Working Papers, no. 11 (New York, 1993). I am grateful to Matthew Martin, Eva Jespersen and Hans Singer for comments on that working paper; none of them is to be implicated in the contents of this chapter.