Governments’ payment discipline: The macroeconomic impact of public payment delays and arrears

Abstract

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Government domestic debt arrears and private investment in Sub-Saharan Africa

“…It is important to note that the effect of government domestic debt arrears on investment by the private sector, by far, has not been investigated directly in the literature. Though few studies on arrears have looked generally at the economic impact in some regions of the world (Ramos, 1998; Caner and Mokhtari, 2000; Diamond and Schiller, 1993; Checherita-Westphal et al , 2016). Thus, the closest to this relationship that has been considered is the impact of government borrowing on private investment.…”

“…A report from International Monetary Fund (IMF) (2019) indicates that 24 out of 30 countries in SSA had government domestic arrears by the close of 2018, with an average stock of 3.3% of GDP and a maximum of 18% of GDP. According to Checherita-Westphal et al (2016), arrears are accumulated if payment to a bill is not made at the stipulated date. The rise in government expenditure arrears in recent years signifies delays in either government payment to its creditors or its suppliers, which has been identified as an essential fiscal issue (Diamond and Schiller, 1993).…”

Journalists and the intermediation of open data

“…The duration of the state (payment period) is a non-negative random variable called T, with a cumulative distribution F(t) (Cameron & Trivedi 2005). The probability that the duration of the episode is less than t is:…”

Fiscal consolidation by intergovernmental transfers cuts? The unpleasant effect on expenditure arrears

“…According to international standards of public accounting and financial rules, government expenditures are measured on a commitment (or accrual) basis -that is, taking into account the year when the expenditure is formally decided and financed by the municipal government -and on a cash basis -that is, considering the year when the expenditure is actually cashed out. As highlighted byChecherita-Westphal et al (2016), it is difficult to have clean measures of arrears on municipal public expenditure for investments in European countries, and proxy variables need to be used: "While it may not be possible to cleanly identify arrears in a legal sense, from an economic point of view, it may be more important to identify payment delays that go beyond what is expected by suppliers" (p. 150).…”