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Factors influencing the ability to honour debt repayment obligations by Governments in Africa

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  • Anselm K. Abotsi

Abstract

The debt overhang in the 1990s among African countries significantly constrained fiscal space and had a devastating effect on economic development. With the current rising levels of public debt, this study seeks to explore the factors that influence the ability of governments to honour their debt repayment obligations. The study used secondary data from the World Development Indicators and World Economic Outlook. The frequency of the data is annual from 1980 to 2019. The fixed and random effects panel data estimation technique was deployed. Deploying fixed and random panel data estimation techniques while controlling for other variables, the study shows that government gross debt and total investment have a positive influence on the ability to honour debt repayment obligations while government expenditure and current account balance have a negative influence. Prudent government expenditure, financing of productive public investment, and implementation of export‐oriented policies are recommended.

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  • Anselm K. Abotsi, 2023. "Factors influencing the ability to honour debt repayment obligations by Governments in Africa," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 28(1), pages 876-885, January.
    • Handle: RePEc:wly:ijfiec:v:28:y:2023:i:1:p:876-885
    DOI: 10.1002/ijfe.2454
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