Debt Sustainability in Developing Economies: Evidence from Sub-Sahara Africa
Journal Title: International Journal of Applied Research in Management and Economics - Year 2022, Vol 5, Issue 2
Abstract
In this study, we assess the debt sustainability of emerging economies in Sub-Saharan Africa. We specify a dynamic panel threshold to estimate the debt threshold for primary surplus and economic growth. The results reveal a non-linear threshold effect. First, with a threshold value of 17.95%, the primary surplus has a strong positive relationship with the debt-to-GDP ratio. Second, economic growth is maintained when the debt-to-GDP ratio is about 52%. The study recommends that governments in SSA should make conscious efforts to restore fiscal discipline that will keep the debt burden at a rate reasonable enough to sustain and avoid debt overhang problems.
Authors and Affiliations
Jephthah Osei,
Keywords
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