Analyzing the national debt of several selected East African countries: an application of a longitudinal panel data

Abstract

Purpose- East African countries are the fastest-growing nations in the region. These countries have membership in several well-known regional agreements such as COMESA, IGAD, and EAC. Hence, because of their impressive growth in the course of the previous years, these countries are demanding an extensive analysis from many dimensions. Consequently, this paper has an objective to inspect the national debt of 9 selected East African countries from the period 2000 to 2021. Methodology- The paper utilized longitudinal panel data in order to evaluate the impact that the GDP, inflation rate, government spending, and trade have on the national debt of east African countries. Findings- The findings in our fixed effect model revealed that the variables GDP, inflation rate, government spending, importation, and exportation have a significant impact on the national debt of East African countries. we perceive that an increase of 1% in GDP increases 0.557% in the East African debt. Also, the inflation rate and government spending revealed that they expand by 0.002% and 0.413% respectively the national debt of East African debt. Finally, according to table 3, the trade components have revealed distinctive effects. To start with, exportation was revealed to increase the national debt by 0.122% while importation revealed an inverse impact in which it reduces the national debt by -0.368%. Conclusion- Finally, the study will provide evidence to the African countries especially my country Djibouti how to adjust and limit their national debt in conformity with their gross domestic product and economic capacity. Additionally, it will provide economists with a better comprehension of the economic situation in East Africa.