Abstract
Even though some African countries implemented adjustment programs effectively during 1980–81, generally adjustment efforts of African countries remained fairly limited. During this period, the economic conditions in Africa did not show signs of improvement. After picking up somewhat in 1980, economic activity slowed down in 1981 to about 3 percent and stagnated in 1982. Inflation continued to rise during 1980–81 to an annual average of about 22 percent, but tapered off to 17 percent in 1982. The terms of trade declined sharply, by about 10 percent during the three-year period of 1980–82, reflecting in part the recession in the industrialized countries. The aggregate external current account deficit climbed from about US$10 billion in 1979 to an annual average of US$13.1 billion in 1980–82. These deficits continued to be financed primarily by foreign borrowing, with the result that total outstanding external debt rose from US$45 billion in 1979 to US$62 billion in 1982. As a ratio to GDP this represented an increase from 38 percent to 50 percent in three years. Rising international interest rates contributed to an even steeper rise in the debt service ratio, which increased from about 17 percent in 1979 to about 24 percent in 1982.
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