Is crowding out of private sector credit inhibiting Africa’s growth?

December 2, 2022
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The analysis presented in this study confirms that crowding out has become more severe, but that timely policy support averted a credit crunch. Evidence of an increased sovereign-bank nexus highlights risks to macro-financial stability, especially as sovereign creditworthiness is deteriorating.

Reducing excessive sovereign borrowing and strengthening countries’ public debt management and transparency will help to contain crowding-out effects. Domestic and international development finance institutions can support these efforts by catalysing private sector resources and providing technical assistance.