Sub‐Saharan Africa's rising public debt stock: Is there a cause for concern?

Olaoye, Olumide Olusegun; Olomola, Philip Akanni

doi:10.1111/saje.12334

Cited by 3 publications

(1 citation statement)

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“…In recent times, fiscal positions in SSA have experienced considerable deterioration. Though the SSA nations benefited greatly from the Highly Indebted Poor Country debt relief initiative 2006, which lessened the debt burden on many countries [2], the debt dynamics witnessed a drastic transformation ever since the 2008 and 2009 economic downturn [3]. Therefore, the debt dynamics in sub-Saharan Africa are largely a reflection of the influence of fresh loans occasioned by rising budget deficits.…”

Section: Introductionmentioning

confidence: 99%

Fiscal deficit in sub-saharan Africa: A new intuition from the institution and political drivers

Abanikanda,

Dada,

Ogunjumo

2023

PLoS ONE

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Motivated by the growing fiscal deficits in sub-Saharan Africa, this study examines fiscal deficit’s economic, political, and institutional drivers using a panel of twenty-three sub-Saharan African countries. Panel spatial consistent correlation, dynamic fixed effects autoregressive distributed lag, and feasible generalised ordinary least squares were used as the estimation techniques. Our findings reveal that while per capita income, trade openness, population, and religious tension increase the size of fiscal deficit, bureaucracy quality, government stability, Law and order, and military in politics reduce the extent of fiscal deficit. However, corruption control, democratic accountability, and internal conflict have weaker statistical evidence. Furthermore, the study established evidence of long-run co-integration relationships among institutional factors, economic factors, and fiscal deficits in SSA. Per capita income has a significant positive influence in the short run but a negative effect in the long run. Population and religious tension positively impact fiscal deficit in both periods. However, democratic accountability, government stability, and the military in politics significantly negatively impact fiscal deficit in the long run. This study concludes that beyond economic factors, institutional and political factors are significant drivers of fiscal deficit in sub-Saharan Africa. Therefore, strengthening the institutional quality and creating a stable political environment would lessen the accumulation of fiscal deficit.

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Section: Introductionmentioning

confidence: 99%

Fiscal deficit in sub-saharan Africa: A new intuition from the institution and political drivers

Abanikanda,

Dada,

Ogunjumo

2023

PLoS ONE

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Differential impact of natural resource revenues on global public debt: A quantile regression approach

Ruiz,

Aguirre,

Ponce

et al. 2025

Resources Policy

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The public debt sustainability and its determinants in Sub-Sahara African countries

Ye,

Guo

2024

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PurposeThis paper aims to answer the following important questions: Is public debt in Sub-Saharan African (SSA) countries sustainable? What are the determinants of public debt sustainability in these countries, and do these determinants exhibit heterogeneity due to regional, natural resource, and income differences among SSA countries?Design/methodology/approachThis study analyzes the public debt sustainability in SSA countries using the theoretical model known as the Present Value Budget Constraint (PVBC) model developed by Hamilton and Flavin (1986), and adopts the econometric testing method proposed by Trehan and Walsh (1991). Moreover, to empirically investigate the determinants of public debt sustainability in SSA countries, the System-Generalized Method of Moments (System-GMM) method is applied. Furthermore, this study conducts heterogeneity analysis by categorizing the sample based on different regions, natural resource endowments, and income levels. The data of this study are sourced from the IMF and World Bank databases for 45 SSA countries from 2005 to 2021.FindingsFindings reveal that public debt in SSA countries is not sustainable in the long run, with factors such as the previous government debt, long-term debt ratio, debt repayment capacity, economic growth rate, inflation rate, export to GDP, and government fiscal deficit rate influencing sustainability. Additionally, the factors exhibit heterogeneity attributed to regional, natural resource, and income variations among SSA countries.Practical implicationsThe findings of our study will serve as a catalyst for policymakers in the SSA countries to embrace and sustain robust fiscal consolidation and debt stabilization measures. Moreover, countries with distinct characteristics should implement tailored approaches. Additionally, policymakers in SSA countries should implement economic measures to address public debt issues. These measures include improving the macroeconomic structure, promoting economic transformation and diversification of industries, fostering sustainable economic growth, ensuring price stability, and strengthening resilience against external shocks and debt risks. Specifically, countries endowed with indigenous species, resources, and tourism potential should adopt a well-coordinated strategy that utilizes agriculture, tourism, ecotourism, and the hospitality industry as instruments for sustainable local community and rural development.Originality/valueFirstly, it assesses the sustainability of public debt and its determinants for countries in SSA, which distinguishes it from previous studies that only focus on either debt sustainability or determinants of debt separately. Secondly, by including multiple SSA countries in the analysis, this study stands out from prior research that predominantly concentrates on specific nations. Thirdly, the utilization of the System-GMM method for analyzing determinants adds a novel dimension to this study, departing from earlier literature primarily focused on debt thresholds. Lastly, the heterogeneity analysis conducted in this study provides an empirical foundation for tailoring policies to different countries, addressing a facet often overlooked in earlier literature.

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Sub‐Saharan Africa's rising public debt stock: Is there a cause for concern?

Cited by 3 publications

References 92 publications

Fiscal deficit in sub-saharan Africa: A new intuition from the institution and political drivers

Fiscal deficit in sub-saharan Africa: A new intuition from the institution and political drivers

Differential impact of natural resource revenues on global public debt: A quantile regression approach

The public debt sustainability and its determinants in Sub-Sahara African countries

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