External Debt and Economic Growth in Sub-Saharan African Countries: An Econometric Study

"Results obtained in this study confirm that an excessively high stock of external debt depresses investment and lowers the rate of economic growth. Thus, heavily indebted countries in sub-Saharan Africa need to articulate creative strategies for bringing about debt reduction so that the high debt stock and associated crushing debt service burden would not have such a negative impact on economic growth. Traditional debt relief mechanisms currently being used by SSA countries include debt restructuring, debt rescheduling, reduced debt servicing, debt buy-backs, interest rate options, and various debt conversion schemes like the debt-equity swap. Overall, the effectiveness of these techniques in significantly reducing the debt stock has been rather limited."