growth (i.e. [5] in Table 1). It has been often suggested that commodity trade exposure can be reduced if a country diversifies its economic structure by developing greater value addition capabilities and exporting more value-added products. Sub-Saharan Africa has indeed increased its exposure to global value chains over the past 20 years. Global value chains nearly collapsed during the COVID-19 crisis, and the trade disruptions have resulted in temporary suspensions and/or slowdowns of production processes within global value chains. Table 1 confirms this finding, for example, with the negative and significant growth effects of countries with greater export linkages to advanced countries and the positive (although not significant) impact of intraregional trade. Greater dependence on global value chains has deeper negative impacts on economic growth. Therefore, the adverse economic effects of the pandemic have been larger in countries that are inserted in global value chains rather than those with greater intra-regional trade.

The regression analysis also examines the impact on growth of debt management and having (fiscal and/or external) savings. The empirical results show that 1) accumulating external debts by official creditors are less risky than ones by private creditors, therefore, the composition of debt profiles matters, and 2) maintaining primary balance and current account surpluses helps the economy cushion the impact of the crisis. Changes in a country’s borrowing pattern will alter the risk profile and may vary the transmission mechanisms of the pandemic shock. Especially a shift in the composition of debt from public creditors to private creditors can render the economy more vulnerable due to greater currency, interest rate, maturity (i.e. shorter intervals) and refinancing risks.

Enhanced debt management requires greater debt transparency, particularly in low-income countries. Poor recording, monitoring and reporting systems have increased opacity in the debt profiles of low-income countries.<sup>24</sup> This has resulted in greater risks associated with massive hidden debt operations and greater (than expected) interest payments, which leads to heavier government burdens (World Bank 2020b). Empirical evidence shows that countries with greater public debt exposure to private creditors tend to experience a larger decline in economic growth as the coefficients of PPG external debt to private creditors are negative and, in some cases, significant in Table 1 (i.e. -0.019 in [5] of Table1), while the ones of PPG external debt to public creditors are robustly positive and significant in Table 1 (i.e. 0.0935 points in regression [5] of Table 1).

Reducing general government gross debt also helps mitigate macroeconomic vulnerability in the event of economic shocks. For instance, the coefficients of the government primary balance and to the COVID-19 shock, oil exporters excluding Nigeria accumulated some reserves from oil export proceeds, and consequently, the resulting fiscal space from these revenues may have helped finance policy actions and reduce the adverse impact from the pandemic even if their economic structure was not as diversified. Oil abundant countries registered more favorable fiscal and current account balances in 2019, therefore, those countries had some resources in their coffers prior to the COVID-19 crisis. For instance, oil exporting countries in Sub-Saharan Africa recorded a fiscal surplus that exceeded 1 percent of GDP in 2019 and exhibited a current account deficit of around 2 percent—the smallest among commodity exporting groups in the region.

> 24 The recently published debt transparency heatmap by the World Bank shows that although there has been some progress in terms of the coverage of debt instruments reported as well as its publication, there is still a lot of work to do in terms of making available information to the public on annual borrowing plans and contingent liabilities (World Bank 2020b).

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