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Implications of the External Debt-servicing Constraint for Public Health Expenditure in Sub-Saharan Africa

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  • Augustin Kwasi Fosu

Abstract

The paper explores the implications of the external debt-servicing constraint for public health spending in sub-Saharan Africa (SSA), where the health challenges have been great and debt servicing particularly burdensome. Using 1975-94 5-year panel data for 35 African countries, the study finds that although actual debt servicing has little impact, a binding debt-servicing constraint that reflects the debt burden would shift expenditure away from health. Although increases in external aid and constraints on the government executive tend to divert spending in favour of health, the debt-burden effect is dominant. The paper also uncovers an upward trend in public health spending, a result that appears to contradict the popular belief that the structural adjustment programmes undertaken in many SSA countries as of the 1980s may have reduced government expenditure on health.

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  • Augustin Kwasi Fosu, 2008. "Implications of the External Debt-servicing Constraint for Public Health Expenditure in Sub-Saharan Africa," Oxford Development Studies, Taylor & Francis Journals, vol. 36(4), pages 363-377.
    • Handle: RePEc:taf:oxdevs:v:36:y:2008:i:4:p:363-377
    DOI: 10.1080/13600810802455112
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    1. Joshua Greene, 1989. "The External Debt Problem of Sub-Saharan Africa," IMF Staff Papers, Palgrave Macmillan, vol. 36(4), pages 836-874, December.
    2. Reza Baqir, 2002. "Social Sector Spending in a Panel of Countries," IMF Working Papers 2002/035, International Monetary Fund.
    3. Mr. Erwin H Tiongson & Mr. Hamid R Davoodi & Mr. Sanjeev Gupta, 2000. "Corruption and the Provision of Health Care and Education Services," IMF Working Papers 2000/116, International Monetary Fund.
    4. Ms. Hélène Poirson & Mr. Luca A Ricci & Ms. Catherine A Pattillo, 2004. "What Are the Channels Through Which External Debt Affects Growth?," IMF Working Papers 2004/015, International Monetary Fund.
    5. Mr. Benedict J. Clements & Mr. Sanjeev Gupta & Mr. Emanuele Baldacci & Mr. Carlos Mulas-Granados, 2002. "Expenditure Composition, Fiscal Adjustment, and Growth in Low-Income Countries," IMF Working Papers 2002/077, International Monetary Fund.
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    Cited by:

    1. Li-Lin Liang & Andrew J Mirelman, 2014. "Why Do Some Countries Spend More for Health? An Assessment of Sociopolitical Determinants and International Aid for Government Health Expenditures," Health, Nutrition and Population (HNP) Discussion Paper Series 88182, The World Bank.
    2. Hassan Tasleem, 2021. "Impact of Public Debt on Health and Education in SAARC Countries," Journal of Education and Social Studies, Science Impact Publishers, vol. 2(2), pages 52-58.
    3. Quattri, Maria A. & Fosu, Augustin Kwasi, 2012. "On The Impact Of External Debt And Aid On Public Expenditure Allocation In Sub-Saharan Africa After The Launch Of The Hipc Initiative," 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil 126879, International Association of Agricultural Economists.
    4. Sani Usman Gurowa & Shamaki Mohammed & Mohammed Ola Maroof, 2023. "Nexus Between Public Debt Servicing and Social and Community Sector Spending in Nigeria," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 7(8), pages 457-466, August.
    5. Ajay Tandon & Lisa Fleisher & Rong Li & Wei Aun Yap, 2015. "Reprioritizing Government Spending on Health: Pushing an Elephant up the Stairs?," Working Papers id:7050, eSocialSciences.
    6. Augustin Kwasi Fosu, 2010. "Africa's Economic Future: Learning from the Past," CESifo Forum, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 11(01), pages 62-71, April.
    7. Hurić-Bjelan Jasmina & Hadžiahmetović Azra, 2020. "External Debt in Bosnia and Herzegovina – An Empirical Analysis," South East European Journal of Economics and Business, Sciendo, vol. 15(2), pages 70-82, December.
    8. repec:lje:journl:v:19:y:2015:i:1:p:71-103 is not listed on IDEAS
    9. Augustin Fosu, 2010. "The External Debt-Servicing Constraint and Public-Expenditure Composition in Sub-Saharan Africa," African Development Review, African Development Bank, vol. 22(3), pages 378-393.
    10. Augustin Kwasi Fosu, 2010. "Africa's Economic Future: Learning from the Past," CESifo Forum, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 11(1), pages 62-71, April.
    11. Augustin Kwasi Fosu, 2011. "Terms of Trade and Growth of Resource Economies: A Tale of Two Countries," CSAE Working Paper Series 2011-09, Centre for the Study of African Economies, University of Oxford.
    12. Drine, Imed & Nabi, M. Sami, 2010. "Public external debt, informality and production efficiency in developing countries," Economic Modelling, Elsevier, vol. 27(2), pages 487-495, March.
    13. Quattri, Maria A. & Fosu, Augustin Kwasi, 2012. "On The Impact Of External Debt And Aid On Public Expenditure Allocation In Sub-Saharan Africa After The Launch Of The Hipc Initiative," 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil 126879, International Association of Agricultural Economists.
    14. Fagge, Muhammad & Ibrahim, Taofik, 2018. "Public Debt Management in Nigeria: The Impacts of Institutional changes after exiting from the Paris Club in 2006," MPRA Paper 100364, University Library of Munich, Germany, revised 10 Dec 2018.
    15. Chun-Ping Chang & Chien-Chiang Lee & GenFu Feng & Shao-Lin Ning, 2016. "Does higher government debt link to higher social expenditure? New method, new evidence," Applied Economics, Taylor & Francis Journals, vol. 48(16), pages 1429-1451, April.
    16. repec:unu:wpaper:wp2012-42 is not listed on IDEAS
    17. Iliyasu, Ibrahim & Gambo, Suleman Lawal, 2021. "Does Debt Servicing Crowd-Out Federal Government Expenditures in Nigeria?," African Journal of Economic Review, African Journal of Economic Review, vol. 10(1), December.
    18. Khemais Zaghdoudi, 2018. "Is the relationship between external debt and human development non-linear? A PSTR approach for developing countries," Economics Bulletin, AccessEcon, vol. 38(4), pages 2194-2216.
    19. Sadia Shabbir & Hafiz M. Yasin, 2015. "Implications of Public External Debt for Social Spending: A Case Study of Selected Asian Developing Countries," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 20(1), pages 71-103, Jan-June.
    20. Muntasir Murshed, 2019. "An Empirical Investigation of Foreign Financial Assistance Inflows and Its Fungibility Analyses: Evidence from Bangladesh," Economies, MDPI, vol. 7(3), pages 1-25, September.

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