Public debt jumped more in resourcerich countries compared with non-resource-rich countries during the post-boom period.
Percent of GDP
Since the majority of natural resources are owned by the government, its size increased along with many challenges to the efficient management of public finance and state-owned enterprises. Public investments were not geared toward productive sectors to ensure sustainable use of resources, which could generate high returns on investment and boost potential growth. The government had to ensure that the economy was protected from the harmful effects of resource dependence—ranging across the potential adverse channels such as Dutch disease (Corden and Neary 1982), price and revenue volatility, corruption, conflict, and profligacy. The post-boom period was also characterized by rising public debt, from 38 percent of GDP in 2013 to 59 percent of GDP in 2018. The number of countries at high risk of debt distress jumped from eight to 18 between 2013 and 2018 (Calderon and Zeufack 2020). This increase was remarkable in oil-rich countries (excluding Nigeria), jumping from 31 percent of GDP in 2013 to 73 percent of GDP in 2018, in contrast to non-resource-rich countries, where the increase was 17 percentage points between 2013 and 2018 (figure A.4). Although FIGURE A.4: Public Debt in Sub-Saharan Africa, by Resource Abundance resource-rich countries (% of GDP) exhibited exceptional 80 performance during the 70 boom, the vulnerability and lack of fiscal buffers 60 became apparent after 50 prices collapsed, particularly 40 in oil-rich countries. Poor management of natural 30 resources was somewhat 20 caused by the lack of (fiscal and debt) transparency 10 as well as corruption. 0 According to the World Resource poor Minerals and metals rich Oil rich Oil rich excl. Nigeria Bank’s Statistical Capacity 2007 2013 2018 Index and the International Sources: Calderon and Zeufack 2020, based on IMF World Economic Outlook Database 2018. Monetary Fund’s Special Note: Regional GDP is based on weighted averages by region. GDP = gross domestic product. Data Dissemination Standards, the region has the lowest scores for transparency, although with a notable improvement over time and significantly higher than the level during the pre-boom and boom periods (Kubota and Zeufack 2020).
New Opportunities for Inclusive Growth After missing the opportunity of the 2000–14 commodity boom, the Sub-Saharan Africa region is facing another period of elevated prices on the back of two events. First, commodity prices are recovering to pre-pandemic levels or higher (in some cases) as countries have emerged from the 2020 pandemic-related recession. Second, soaring prices have resulted from the invasion of Ukraine and the sanctions imposed on Russia. Over the short run, price dynamics are driven
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