Sovereign Defaults by Creditor Groups in Africa

Proceedings of The 5th International Academic Conference on Management and Economics

Year: 2022

DOI:

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Sovereign Defaults by Creditor Groups in Africa

Aram Belhadj , Slim Souissi

ABSTRACT: 

A sovereign government typically has several creditors and can choose when to pay off its debt and which creditor to pay in priority. This paper explores the determinants of sovereign default in 52 African countries over the period ranging from1970–2018. We have built a new data set of sovereign defaults and found that default events vary according to the creditor group, and more specifically that government defaults under different economic and financial conditions. This default depends on whether the loans are coming from banks, bondholders, International Financial Institutions (IFIs), or other sovereign governments. We also provide evidence that bilateral creditors tend to be junior to multilateral creditors and bondholders.

keywords: Sovereign default, Africa, Creditor group, Creditor seniority.