The exceptional measures taken by States to contain the effects of the covid-19 crisis should bring the world debt to a record level of 277 trillion dollars by the end of 2020 (Institute International of Finance). This considerable increase in the level of debt has raised questions about a debt crisis, particularly in African countries.
When states cannot honor their financial commitments to creditors (paying debt services, interest and principal), governments can then implement fiscal consolidation measures (adjustments): raising taxes or reducing public spending.
When it is difficult to implement adjustment measures, as is currently the case with the unprecedented context of the covid-19, it is said that the debt is not sustainable.
The debtor State can then negotiate with its creditors the restructuring of its debt, i.e. a modification of the conditions provided for the repayment of debt services (lower interest rates, longer maturity, postponement of payments, etc.).
CJEA