Debt Security of CEE Countries: Actual Approaches and Methods of Evaluation

The study is aimed at analyzing methods of country’s debt security evaluation, developing methodic approach towards estimating the level of debt security based on the calculation of the integral index, and assessing the level of debt security of CEE countries on the basis of the proposed approach. A method of calculating the integral debt security index of the country is developed, taking into account generally accepted thresholds of indebtedness and solvency indicators and the trend of countries’ increasing dependence on external borrowing. The proposed approach is practically tested in assessing the level of debt security of CEE countries. It is determined that the group of CEE countries is differentiated by the state of indebtedness and solvency. The highest level of debt security is demonstrated by Bulgaria, the Czech Republic and Estonia, the worst situation with the debt security is formed in Slovakia and Slovenia. Based on the analysis of the dynamics of integral debt security indices for 2007–2019, the grouping of CEE countries by the level and zones of debt security, the trends of deterioration of the region’s debt security in 2010–2015 and its improvement in 2016–2019 has been found out. The proposed approach is universal one; it can be used to calculate debt security indices and to provide comparative studies of the debt sector of any country or region. It can also help to identify weaknesses in country’s debt security that is critically important for reasoning the public policy measures to ensure a proper level of debt security.

Impact of External Debt on Economic Growth in Nigeria

This study examined external borrowing and economic growth in Nigeria covering the period 1981 – 2019. The main objective of the study is to ascertain the impact of external borrowing on economic growth in Nigeria. Times series data on GDP, external debt, exchange rate, external debt servicing payments and inflation were extracted from the Central Bank of Nigeria (CBN) statistical bulletin 2018 was used for the study. The method of data analysis and evaluation were the unit-root test which was used to ascertain the stationary status of the variables, the linear regression with the application of Ordinary Least Squares (OLS) technique and the Granger causality analysis. The major findings of the study are that all the variables are stationary at first difference I(1), external debt has a negative and insignificant relationship with economic growth in Nigeria ( = -0004912, p-value = 0.6944 > 0.05) and there is no causality relationship existing between external debt and economic growth in Nigeria. The study therefore recommends that the federal government should acquire external debt largely for economic reasons rather than social or political reasons. This would increase the Gross Domestic Product (GDP) of the nation.

Nigeria Eurobonds will ease short-term budget pressure

Significance This comes a month after the National Assembly approved an external borrowing plan of USD6.2bn in August. Also, the IMF has approved the allocation of USD3.35bn in Special Drawing Rights (SDRs) to boost Nigeria’s foreign reserves. Combined, these have provided a modest boost to Nigeria’s faltering foreign-exchange reserves. Impacts The proceeds from the Eurobonds sale will form a significant part of funding the 2022 budget. The Eurobonds and SDR allocation, by boosting reserves, could help narrow the gap between formal and informal exchange rates. There will likely be another Eurobond sale in 2022 as well as more multilateral and bilateral loans. Nigeria’s weak tax collection infrastructure will not generate substantially improved revenues from expected growth.

Impact of government budget deficits on public health sector output in Nigeria

The study examined the impact of government budget deficits on the public health sector output in Nigeria over a period of 1980 to 2018. The specifically study sought to: investigate the impact of government budget deficits affect the public health sector output in Nigeria, ascertain the impact of external borrowing on the public health sector output in Nigeria and evaluate the impact of domestic borrowing budget deficits financing on the public health sector output in Nigeria. The methods of data analysis range from argument dickey fuller unit root test, Johansen co-integration test and finally error correction method. The following results were the basic findings of the study: (1) government budget deficits have positive insignificant impact on public health sector output in Nigeria (t – statistics (0.5663) < t0.05 (1.684); (2) external borrowing of financing budget deficits has negative insignificant impact on Health sector output in Nigeria (t – statistics (-1.2746) < t0.05 (1.684) and (3) domestic borrowing of financing budget deficits has positive significant impact on Health sector output in Nigeria (t – statistics (2.1711) > t0.05 (1.684). This study concludes that the budget deficits of government have positive insignificant impact on Health sector output in Nigeria because more budget allocations are put in health recurrent government expenditure than health capital expenditure whereas health capital expenditure is the engine of growth in health sector output. The study recommended that the Federal Government should commence and continue to execute the National Health Act. Allocation’s map-out for the Basic Health Care Provision Fund (BHCPF) should be drawn directly from the National Health Act, which is not less than 1% of the Consolidated Revenue (CRF) Fund of the Federation and is to flow from the FG's share of revenue.

The Coronavirus Crisis versus Social and Market Economy of Germany

The coronavirus crisis caused by the COVID-19 pandemic has had a significant negative impact on all aspects of the German social market economy. For the first time in history, the crisis was caused by factors of a non-economic nature. They manifested themselves in all economies of the world, including Europe. Since March 2020, the federal and state executive authorities of Germany, along with the introduction of restrictive measures for the population and business, have adopted several large-scale economic and political programmes aimed at preventing bankruptcies of economic entities, preserving jobs and social stability in the country. Along with short-term instruments designed to stop the decline in GDP and give impetus to its growth, the German state pursued an active and coordinated with Brussels structural policy aimed at ensuring an energy and digital transition to a climate-neutral economy, including the overcoming the deficits and problems revealed by the pandemic in the country's economy. To this end, Berlin abandoned the budget surplus policy and switched to large-scale external borrowing to finance programmes to bring economy out of the crisis. The author analyzes the results of the impact of the coronavirus crisis on the economic space of Germany, including aspects of its stress resistance and competitiveness, explores the effectiveness of state policy to counter crisis and assesses the prospects for the development of Russia's leading foreign economic partner in the west of the Eurasian continent.

Macroeconomic Determinants of External Debt Accumulation in Ethiopia: An ARDL Bound Testing Approach

This study attempts to explore the major macroeconomic determinants of external debt stock growth in Ethiopia prompted by a continuous increase in government external borrowing over the period 1981-2018. For this purpose, the study employed the ARDL bound testing approach and all the necessary time series diagnostic tests were conducted. The long run model estimation result revealed that per capita GDP growth has a positive and significant effect on the country’s external debt stock. The result also revealed that the budget deficit and political instability put a significant upward pressure on the external debt stock growth of the country both in the short run and long run. Consistent with some existing empirical evidence, the study revealed negative and significant influence of openness and infrastructure development on the external debt stock growth. Consequently, the government should embark on prudent borrowing to achieve structural transformation.

Welfare implications of external debt and capital flight in Sub-Saharan Africa (Evidence using panel data modelling)

The countries in Sub-Saharan Africa (SSA) have experienced a positive growth rate of over five per cent per year, on average, since their transition from the Heavily Indebted Poor Countries Initiative in 1996 and the Multilateral Debt Relief Initiative in 2006. Despite this growth, poverty and inequality are still very high. Employing the Driscoll – Kraay standard panel estimation method and dataset from 1990 to 2015, this paper sets out to examine the implications of external debt and capital flight on the general welfare of the people. The estimation results reveal that both external debt and capital flight have a welfare inhibiting effect, suggesting that increases in external borrowing or capital flight may lead to a reduction in the welfare of the people in the sub-region. The study, therefore, recommends to policymakers and government in the sub-region the need to tackle the revolving nature of external borrowing and capital flight and take steps to halt all channels through which deservingly acquired capital leaves the sub-region.

New Algerian polls will not address protest demands

Significance Demonstrations resumed on February 22, the second anniversary of the ‘Hirak’ movement that ousted President Abdelaziz Bouteflika from office. His successor, President Abdelmadjid Tebboune, has failed to appease the protest movement. On February 21, he announced the release of political prisoners, a partial cabinet reshuffle and the dissolution of parliament in anticipation of elections, but the measures appear to have been ineffective in staving off dissent. Impacts After the elections, Tebboune might have backing for economic reforms that would open the economy to foreign investors. As reserves have fallen to USD43bn, down from USD59bn in February 2020, Algiers may have to resort to external borrowing. Members of the old regime who survived the fall of Bouteflika might decide to fight back if Tebboune challenges their interests too much.

External debt sustainability in West African countries

Purpose This paper aims to apply the debt sustainability framework using various ratios to review the current state of sovereign debt of Economic Community of West African States (ECOWAS) member countries. Design/methodology/approach Debt sustainability framework using various ratios (which include the present value approach, Country Policy and Institutional Assessment debt policy assessment ranking and solvency ratio of external debt) for the period 2010 and 2017 were used for the analysis to determine external debt sustainability and solvency of ECOWAS members. Findings The findings indicate that most ECOWAS countries are already turning at the unsustainable debt path and may renege in their debt obligations, thus creating a vicious cycle of external borrowing that could lead to capital flight. Originality/value This paper offers the empirical evidence to identify which of the ECOWAS countries are already at the threshold of external debt stress, and in the likelihood to renege on their debt obligations.