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Analysis of the Effectiveness of Budget Deficit Financing Methods in Cote D'ivoire Using a Credit Scoring Model

Author

Listed:
  • Guy Kpakpo
  • Elizaveta Ruzina

Abstract

After reaching the completion point of the Heavily Indebted Poor Countries (HIPC) initiative and the subsequent debt relief, Cote d’Ivoire decided to take the necessary measures to avoid a new public debt crisis. Ten years later, the country is at a crossroads with a rapidly growing debt. Given this situation, it is important to question the effectiveness of the methods of financing the budget deficit in Cote d’Ivoire. This article aims to develop a credit scoring model in order to analyse the efficiency of budget deficit financing modes using a sample of 3222 loan lines from the database of the Department of Public Debt and Grants of Ivory Coast. The results show that loans from bilateral and commercial banks can be considered as “risky” financing. This mode of financing has a less important impact on the probability of default. On the other hand, the results obtained with the estimation of the Logit model show that the probability of default is strongly reduced when the government is financed by bondholders and other debt instruments and multilateral institutions.

Suggested Citation

  • Guy Kpakpo & Elizaveta Ruzina, 2023. "Analysis of the Effectiveness of Budget Deficit Financing Methods in Cote D'ivoire Using a Credit Scoring Model," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 1, pages 51-74.
    • Handle: RePEc:bas:econst:y:2023:i:1:p:51-74
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt
    • C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities

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