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Sovereign debt sustainability in MENA countries: Determinants and policy implications

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  • Kais Ben Mbarek

Abstract

This paper examines sovereign debt sustainability in the Middle East and North Africa (MENA) region by comprehensively analyzing macroeconomic, institutional, and geopolitical determinants. Using a panel dataset of 15 MENA countries spanning 2000-2023, we employ dynamic panel estimation techniques to identify key factors affecting debt sustainability. Our findings reveal significant heterogeneity across the region, with oil-exporting countries demonstrating distinct debt dynamics compared to oil-importing nations. Institutional quality and governance indicators emerge as critical predictors of debt sustainability beyond traditional macroeconomic variables. Furthermore, our threshold analysis identifies specific debt-to-GDP levels at which growth effects become negative, varying substantially across country groups. The results underscore the importance of tailored policy approaches to regional debt management, challenging one-size-fits-all recommendations from international financial institutions. This research contributes to the literature by developing a novel composite debt sustainability index and providing empirical evidence on the region-specific determinants of sustainable sovereign debt management.

Suggested Citation

  • Kais Ben Mbarek, 2025. "Sovereign debt sustainability in MENA countries: Determinants and policy implications," Modern Finance, Modern Finance Institute, vol. 3(2), pages 75-95.
    • Handle: RePEc:bdy:modfin:v:3:y:2025:i:2:p:75-95:id:274
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