Study on Managing Sovereign Debt in Times of Crisis: Study Summary: Findings & Lessons


COVID-19, believed to have emerged in China in December 2019, spread quickly across the globe and was declared a pandemic by the World Health Organization in January 2020. It triggered one of the most devastating global health and economic crises in modern history, attecting all socio-economic facets and permeating through the financial markets. The IMF (2020) estimates that the impact on developing countries was historic and unusual in severity. Among the various consequences, the pandemic in particular induced major debt stresses, while debt management proved complex and challenging, especially for countries that entered the crisis already vulnerable. Sub-Saharan Atrican countries were more exposed, with limited room tor manoeuvre given their narrow fiscal space, as compared to their situation during the 2008/09 global financial crisis, Operational challenges became frequent as the crisis unfolded, making it difficult to manage risks as working remotely became the default practice.

Globally, many countries took remedial measures to limit the socio-economic impact ot the pandemic as well as cushion local financial markets, Those measures, which mainly centred on fiscal, monetary and financial polies, provide useful lessons tor countries on how to prepare in advance for potential future crises. Against this background, MEFMI, with the support of FSD Africa, commissioned a study that documents debt and related policies and practices that countries adopted to manage public debt and support debt markets during the COVID-19 crisis. The study findings and results are outlined in four chapters focused on the following important and interrelated themes: (i) Macroeconomic policy interventions; (ii) External financing operations; (iii) Local currency bond markets; and (iv) Governance and operational risk management frameworks for public debt. These chapters are available as separate documents and can be accessed here. The current paper, which also forms part of the study, provides an extensive summary of the outcome of the whole exercise. Findings from the study come from a combination of desk reviews and feedback from questionnaires