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IMF programme duration and fiscal policy: a path to debt sustainability in Africa

Dr. Forson, Joseph Ato
Senior Lecturer/ Head of Department
  0202672680
  jaforson@uew.edu.gh

Authors
Kusi, B.A., Darkwa, J.A.J., Ayiakwo, P.K., Forson, J.A., Awuku, M., & Nankpan, M.N.
Publication Year
2025
Article Title
IMF programme duration and fiscal policy: a path to debt sustainability in Africa
Journal
SN Business & Economics
Volume
5
Issue Number
55
Page Numbers
81-95
DOI
Website Url
Abstract

In this study, we explore how the duration and presence of IMF programmes modify the relationship between fiscal activities (revenue and expenditure) and government debt reduction across African nations. Focusing on 20 African economies that subscribed to the IMF stabilisation programme between 2004 and 2020 and using the dynamic GMM estimation approach, we report that IMF programme arrangements and duration reduce government debts. Furthermore, we also report that while the effects of revenue and expenditure on government debts are decreasing, these effects are higher and lower during IMF policy programme periods and duration in Africa. These results show that IMF programmes speed up the reduction of revenue on debts while lowering the increasing effect of expenditure on government debts in Africa. Policymakers and governments can rely on IMF policy programmes to reinforce the desirable effect of fiscal activities in reducing government debts and improving debt sustainability in Africa.

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