Economic Governance Report III

Public debt has reached historic levels globally, pressuring public finances and development prospects. In Africa, these pressures have intensified amid rising interest rates, tighter global liquidity and heightened exposure to external shocks, increasing debt service burdens and constraining fiscal space for development. This report argues that debt sustainability cannot be reduced to fiscal ratios or short-term repayment capacity alone, but depends on the quality of institutions, legal frameworks, transparency and oversight across the entire debt life cycle, as well as on the global financial conditions within which African countries operate. Drawing on comparative case studies, it introduces a Growth Enhancing Governance approach and a Sustainable Debt Governance Cycle to assess how debt can be managed as a tool for structural transformation, resilience and inclusive growth. By identifying systemic governance gaps and proposing practical policy directions, it provides policymakers with a framework to strengthen debt governance and support sustainable development outcomes across the continent.