Machiko Nissanke (SOAS)

Drawing in part on her chapter in the forthcoming Palgrave Handbook of Development Economics, Machiko presents a critical reflection on how to secure sovereign debt sustainability for economic development of LICs. Her seminar talk is set in the context of the rising debt distress in several SSA countries over the recent years as well as the evolution of the academic and policy debates on the ‘aid-debt-growth’ nexus. After critically evaluating the constructs of the IFIs’ Debt Sustainability Framework in use of LICs, she discusses alternative approaches to sovereign debt sustainability. These entail: a) a system of prudent resource and debt management, including sound selection of debt-financed projects with large developmental dividends and spill-overs in light of a country’s absorptive capacity, and close performance monitoring at micro and macro levels; b) choice and packaging of appropriate financial instruments; and c) a clearly agreed procedure, backed up with global facilities laid out at the onset in debt contracts, on how to deal with downside risks and debt distress conditions in order to facilitate an orderly debt restructuring and workout process. Against these conditions, she evaluates the prospects of the emerging debt problems in Africa, in particular in relation to the growing portion of sovereign debt owed to private creditors and non-traditional concessional loan providers, and the way forward with their sovereign debt restructuring mechanisms.

Machiko Nissanke is Emeritus Professor of Economics at the SOAS Department of Economics.

This talk was organised by the Centre for Global Finance (CGF) and was part of the CGF Seminar Series. The Centre for Global Finance (CGF) is established under the AXA Chair in Global Finance. The centre undertakes rigorous research that explores mega-trends in global finance and how they impact on development in the international financial system and the world economy. The research via the centre aims to significantly extend the existing body of knowledge on finance, stability and growth. This can help identify the drivers of growth in emerging economies, and the issues that lead to financial crashes.

Find out more about the CGF: https://www.centreforglobalfinance.org/

Speakers: Machiko Nissanke (SOAS), Victor Murinde (AXA Professor in Global Finance, SOAS University of London)

Released by: SOAS Economics Podcasts