Natural disasters, readiness and indebtedness of landlocked African countries

Natural disasters can worsen the fiscal deficit due to lower tax revenues and higher spending on recovery efforts. This often increases debt, especially in landlocked African countries facing development and resource mobilization challenges. This study analyzes the impact of natural disasters on debt and conditional on landlocked African countries’ preparedness levels. Three types of natural phenomena were considered for the estimations, based on data availability and their relative importance since the 2000s: biological (epidemics, infestations), climatological (droughts, wildfires), and hydrological (floods, wave action) disasters. The results obtained using the Jordà local projection method with instrumental variable estimators for the period 2000–2022 showed that disaster shocks increase the debt of landlocked African countries after the shock, except for climatological disasters, for which the effect is insignificant over the considered period. In addition, preparedness significantly reduces the impact of disasters on the debt of the countries concerned. Thus, it is essential to adopt resilience mechanisms upstream to disasters to preserve the debt sustainability of landlocked African countries. Rather than limiting ourselves to reactive solutions, such as temporary debt suspension after a disaster, it would be beneficial to adopt a preventive approach that involves investments in preparedness, supported by the international community and reforms that promote the mobilization of financing.