Debt Sustainability in Developing Economies: Evidence from Sub-Sahara Africa

Authors

  • Jephthah Osei York University

DOI:

https://doi.org/10.33422/ijarme.v5i2.884

Keywords:

Debt, Sustainability, Threshold, Emerging Economies, Sub-Sahara Africa

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.

Additional Files

Published

2022-06-27

How to Cite

Osei, J. (2022). Debt Sustainability in Developing Economies: Evidence from Sub-Sahara Africa. International Journal of Applied Research in Management and Economics, 5(2), 34–43. https://doi.org/10.33422/ijarme.v5i2.884

Issue

Vol. 5 No. 2 (2022)

Section

Articles