Public debt sustainability and debt dynamics: The case of Tanzania

Were, Maureen; Mollel, Lekinye

doi:10.35188/unu-wider/2020/869-6

Cited by 10 publications

(10 citation statements)

References 16 publications

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“…The sign and magnitude of the lagged public debt coefficient is in line with the findings of other studies for developing countries (Celasun, Debrun, and Ostry 2006;Cevik and Teksoz 2014). Similarly, we find that the output gap variable remains insignificant in all our specifications, like the study by Were and Mollel (2020), which indicates that fiscal policy is acyclical and thereby offers weak evidence in support of the assertion that fiscal policy is not being used as a stabilization tool. The empirical literature has connoted that positive and negative coefficients of the output gap suggest countercyclical and pro-cyclical fiscal policies, respectively.…”

Section: Findings Of the Fiscal Reaction Functionsupporting

confidence: 88%

To Borrow or Not to Borrow: Empirical Evidence from the Public Debt Sustainability of Pakistan

Islam¹,

Ahmed²

2023

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We aim to evaluate the public debt sustainability of Pakistan using the debt sustainability analysis (DSA) framework and fiscal reaction function (FRF). For the empirical analysis, we use relevant important macroeconomic variables, such as public debt, external debt, primary balance, output growth, current account balance, and oil prices, over the period 1976–2021. The results of the DSA suggest that, at the 10% growth rate with a real interest rate lower than 10%, the public debt level can be brought under the 60% standard sustainable limit from the current 80% by the year 2030. Furthermore, the estimates of the FRF reveal no evidence of debt sustainability. Besides this, the COVID-19 pandemic is positively associated with the primary balance mainly due to the decrease in the primary balance from –3.5% in 2019 to –0.9% in 2020. This is expected as a large amount of debt relief was provided to Pakistan during this period. Overall, our findings indicate that, if the rapid debt accumulation trend continues, the country will be unable to bear such a hefty load of ballooning debt. Therefore, a strategy of continuing coordination of fiscal and monetary policy is crucial for robust growth momentum to keep the debt sustainable.

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Section: Findings Of the Fiscal Reaction Functionsupporting

confidence: 88%

To Borrow or Not to Borrow: Empirical Evidence from the Public Debt Sustainability of Pakistan

Islam¹,

Ahmed²

2023

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“…On the other hand, liquidity risk reflects a country's capacity to meet and manage debt service obligations satisfactorily measured as debt service cost (% of revenue and/or % of export earnings). These two categories of risks may not be congruent in all cases a country could be distressed in one aspect but free in the other (Were & Mollel, 2020). Hence, it is paramount to consider these debt ratios along with macroeconomic dynamics that could ascertain the actual investment position in the medium to long term (World Bank, 2019).…”

Section: Conceptual Frameworkmentioning

confidence: 99%

“…From the models, debt sustainability can be interpreted as the result of the interaction between deficit financing and the macroeconomic environment (Were & Mollel, 2020). To prevent overindebtedness, policymakers usually respond to the dynamic conditions of macroeconomic factors (Aderemi et al, 2020).…”

Section: Conceptual Frameworkmentioning

confidence: 99%

Government Debt Sustainability and Investments in Nigeria: Trends and Risk Thresholds amidst Macroeconomic Swings

Onyele

Ikwuagwu

Opara

2023

PJGD

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The core idea behind government debt is to fund fiscal deficit, which is anticipated to drive economic investments. To a larger extent, this is not the case, as evidenced in the Nigerian context, where debt has risen so high with investment levels declining, thus questioning the government's ability to manage and sustain its debt to pursue vital investment needs. This study aimed to investigate the threshold effect of debt sustainability on investments amidst macroeconomic swings from 1981 to 2020. In this regard, the threshold autoregressive regression (TAR) was used because it gave information on the optimal threshold of debt sustainability that would attract investments. Also, the Granger causality test was carried out to show the direction of causality among the variables. This paper concentrated on debt service to revenue and total debt stock to GDP as debt sustainability measures while investment was decomposed into public, private, and foreign investments. The paper yields that, based on the multivariate TAR analyses, the main threshold variables, that is, debt service to revenue and total debt stock to GDP, had a non-linear relationship with public, private, and foreign direct investments amidst changes in macroeconomic variables such as exchange rate, inflation, and monetary policy rate. The threshold coefficient of debt service to revenue indicated that public and foreign direct investments declined during low thresholds while private investment increased. However, the opposite prevailed when debt service to revenue exceeded the threshold values. However, the Granger causality test showed that debt service to revenue Granger caused total debt stock to GDP and exchange rate Granger caused debt service to revenue ratio, implying that exchange rate swings could affect the government's ability to service debt which in turn explains the non-linear relationship between debt sustainability and investments. Hence, it was concluded that Nigeria's lack of debt sustainability was associated with revenue generation, which explains why the models did not follow a linear path.

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“…Bu durum ise ödenecek anapara ve faiz ödemelerinin artmasına, ülkenin kıt olan kaynaklarının boşa harcanmasına, yerli ve yabancı yatırımların caydırılmasına neden olarak büyümeyi olumsuz yönde etkileyebilmektedir (Akan ve Kanca, 2015, s. 3). 1970'li yıllarda yaşanan petrol krizleri, gelişmekte olan ülkelerin dış borç yükümlülüklerini yerine getirememe olgusunu yaygınlaştırmış ve Meksika'nın Ağustos 1982'de petrol ihracatçısı olmasına rağmen borçlarını ödeyemeyeceğini açıklamasıyla dış borçlar uluslararası bir krize dönüşmüştür (Were, 2001). Az gelişmiş ve gelişmekte olan ülkelerin üretim yapılarının sorunlu olması ve bununla birlikte hem petrol fiyatlarının yükselmesi hem de gelişmiş ülkelerden kaynaklanan yüksek fiyatlar, bu ülkelerin daha fazla cari açık vermesine neden olmuştur.…”

Section: Introductionunclassified

Türkiye’de Kamu ve Özel Sektör Dış Borçları ile Ekonomik Büyüme Arasındaki İlişki

İlter,

Günsoy

2024

Anadolu Üniversitesi Sosyal Bilimler Dergisi

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Bu çalışmada, kamu ve özel sektör dış borçlarının ekonomik büyüme üzerindeki etkisi incelenmektedir. Bu kapsamda, Türkiye’de kamu ve özel sektör dış borçlarıyla ekonomik büyüme arasındaki ilişki 1989-2021 dönemini kapsayan yıllık veri seti kullanılarak test edilmektedir. Öncelikle kullanılan serilerin durağanlık seviyelerini belirlemek için geleneksel ve yapısal kırılmaya izin veren birim kök testleri kullanılmıştır. Değişkenler arasındaki ilişkileri belirlemek için ARDL sınır testinden ve Hatemi-J asimetrik nedensellik testinden faydalanılmıştır. Çalışmada elde edilen bulgular, sabit sermaye oluşumunun, işgücüne katılım oranının ve ihracatın ekonomik büyümeyi pozitif; kamu ve özel sektör dış borç stokunun ise ekonomik büyümeyi negatif yönde etkilediğini göstermektedir. Ayrıca, büyümenin pozitif şokları ile kamu sektörü dış borç stokunun pozitif şokları arasında, büyümeden kamu sektörü dış borç stokuna doğru tek yönlü nedensellik ilişkisi bulunmaktadır. Bu bulgular, politika yapıcılara Türkiye’de kamu ve özel sektör dış borç stokunda meydana gelen artışların büyümeyi olumsuz yönde etkilediğini göz önünde bulundurmaları gerektiğini göstermektedir.

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Public debt sustainability and debt dynamics: The case of Tanzania

Abstract: This study has been prepared within the project Sustainable development solutions for Tanzania -strengthening research to achieve SDGs funded by the Ministry for Foreign Affairs of Finland.

Cited by 10 publications

References 16 publications

To Borrow or Not to Borrow: Empirical Evidence from the Public Debt Sustainability of Pakistan

To Borrow or Not to Borrow: Empirical Evidence from the Public Debt Sustainability of Pakistan

Government Debt Sustainability and Investments in Nigeria: Trends and Risk Thresholds amidst Macroeconomic Swings

Türkiye’de Kamu ve Özel Sektör Dış Borçları ile Ekonomik Büyüme Arasındaki İlişki

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