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Data on debt service to exports ratios show promise for Sub-Saharan Africa

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Global Snapshot

Between 2000 and 2008, the ratio of public and publicly guaranteed debt service to exports for developing regions declined from 12.5 percent to 3.4 percent. With the IMF and World Bank’s debt sustainability framework threshold set at debt service of 15 and 25 percent of exports, the data showed a trend towards achieving sustainable economic growth. 

However, in 2009, the decreasing trend was interrupted by the global economic crisis, when export earnings of developing countries declined by 17.6 percent and total public debt service remained at about the same level as in 2008. In 2010, export earnings of developing countries rebounded by 23.4% from 2009 as total public debt service remained steady.  This resumed the downward trend of the average ratio of public debt service to exports from before 2009.

The indicator is an important benchmark since a country’s external debt burden affects its creditworthiness and vulnerability to economic shocks. Debt service to exports ratio is also a target for measuring the progress on Developing a Global Partnership for Development Millennium Development Goal.

Achieving Lower Debt Service to Exports Ratios – Ensuring Sustainable Economic Growth

Maintaining a low debt service to exports ratio largely benefits economic growth of a country, since in order to service external debt (typically denominated in hard currencies), countries must earn foreign exchange. The largest source of foreign exchange is usually a country’s exports (although in some countries migrant remittances and tourism also provide substantial extra foreign exchange resources, especially in some small island developing states). This means that the larger a country’s external debt service burden, the more it must earn via exports, including tourism, in order to cover debt service repayments.

Better debt management, the expansion of trade and, for the poorest countries, substantial debt relief have reduced the burden of debt service.

What are the Effects of Debt Relief?

Forty countries are eligible for debt relief under the Heavily Indebted Poor Countries (HIPC) initiative. What this means is that they will be able to reduce their total external debt while simultaneously improving the debt service to exports ratio. The restructuring of debt and outright debt forgiveness, combined with economic reforms, favorable external environment, and increased aid, contributed to an improvement of debt indicators for a number of regions, most significantly Sub-Saharan Africa.  

Regional Success

In 2010 Sub-Saharan Africa’s ratio of total external debt to exports decreased by 12 percentage points and the ratio of debt to GNI fell by 1.6 percentage points from the year before. This improvement came primarily as a consequence of large scale debt forgiveness under the HIPC (Highly Indebted Poor Countries) and MDRI (Multilateral Debt Relief Initiative) programs. Four more countries in Sub-Saharan Africa (Democratic Republic of Congo, Republic of Congo, Liberia, and Togo) reached the HIPC completion point in 2010, bringing the total to 26 out of 33 eligible African countries that have completed the HIPC process and benefitted from HIPC and MDRI debt relief.

Countries in the region also restructured $13.2 billion owed to Paris Club creditors in 2010 of which $9 billion was forgiven.

For data on the debt service to exports ratio see the World Bank Open Data site at For more information on Debt Relief Initiatives, visit The Enhanced Heavily Indebted Poor Countries Initiative website.

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