Exploring Debt Dynamics in Sub-Saharan Africa: An Application of the Geometry of Debt Sustainability and the Balance of Payments Constrained Growth Model

This thesis examines the complex relationship between debt dynamics and economic growth in Sub-Saharan Africa (SSA). It analyses historical debt patterns, recent pandemic-related developments and the role of the Global North in shaping the debt landscape in SSA. The Debt Service Suspension Initiative, various debt ratios and the future burden of debt repayment are examined, with a focus on sustainable debt approaches. A thorough literature review examines the relationship between debt and economic growth, including the concept of debt overhang. The study presents and applies the geometry of debt sustainability and the Balance of Payments Constrained Growth Model. These models show that debt sustainability is affected by growth rates, debt levels, external imbalances and income disparities. The three-gap model enriches our understanding of debt dynamics, and the interaction of the models highlights the complexity of SSA's fiscal and economic landscape. These models provide important insights for policymakers seeking to achieve economic stability. The recognition of the limitations of predictive models, especially in the face of geopolitical events such as the Russia-Ukraine conflict, underscores the need for ongoing research to assess their evolving implications. In summary, this research provides a comprehensive overview of debt dynamics in SSA, highlighting challenges and opportunities. Adapting to unforeseen geopolitical events is critical and future studies are essential for SSA's financial resilience.