African countries need not fear default

Debt relief and a sustainable recovery must be two sides of the same coin.

Since the Covid-19 crisis began, the spectre of sovereign default has loomed over developing economies. Many sovereigns are so afraid of losing market access that they are unwilling to address debt-sustainability problems. Yet a clear-eyed look at the impact of the Covid-19 crisis, together with the fiscal and financing realities for low-income countries, reveals a ‘new normal’, in which a timely default is far from the worst-case scenario.