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Sustainability of Mena Public Debt and the Macroeconomic Implications of the Recent Global Financial Crisis

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  • Simon Neaime

Abstract

In the wake of the recent US financial crisis and after the accumulation of sizeable public debts, especially in the emerging MENA countries of Egypt, Jordan, Morocco, Tunisia, and Turkey, the financial distress of the public sector has become a major source of concern for policymakers in the region. Using time series econometric tests, and the Present Value Constraint model, this study examines the sustainability of MENA public debt. The empirical results point to strong sustainability of fiscal policies in Tunisia, weak sustainability in Egypt, mixed results for Morocco, and unsustainable debt and fiscal policies in Jordan and Turkey. It is argued that the acceleration of fiscal reforms in the latter group of MENA countries is urgently needed; otherwise, those countries may experience further increases in an already large public debt, and more pressure on exchange and interest rates, with further macroeconomic imbalances. It is also argued that the recent global financial crisis is expected to put further strains on Jordan’s debt sustainability given its limited fiscal space and high debt to GDP ratio.

Suggested Citation

  • Simon Neaime, 2010. "Sustainability of Mena Public Debt and the Macroeconomic Implications of the Recent Global Financial Crisis," Middle East Development Journal, Taylor & Francis Journals, vol. 2(2), pages 177-201, January.
    • Handle: RePEc:taf:rmdjxx:v:2:y:2010:i:2:p:177-201
    DOI: 10.1142/S1793812010000228
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    Cited by:

    1. Neaime, Simon & Gaysset, Isabelle, 2024. "Financial inclusion, integration, and stability asymmetries in the Mediterranean region," The Journal of Economic Asymmetries, Elsevier, vol. 30(C).
    2. Neaime, Simon, 2015. "Sustainability of budget deficits and public debts in selected European Union countries," The Journal of Economic Asymmetries, Elsevier, vol. 12(1), pages 1-21.
    3. Zeineb Gouasmi & Riadh El Ferktaji, 2022. "Detecting and date-stamping unsustainability: The case of Tunisian Budget Deficit," Economics Bulletin, AccessEcon, vol. 42(4), pages 2065-2078.
    4. Neaime, Simon & Gaysset, Isabelle, 2017. "Sustainability of macroeconomic policies in selected MENA countries: Post financial and debt crises," Research in International Business and Finance, Elsevier, vol. 40(C), pages 129-140.
    5. Olumide Olusegun Olaoye & Phillip A. Olomola, 2023. "Sub‐Saharan Africa's rising public debt stock: Is there a cause for concern?," South African Journal of Economics, Economic Society of South Africa, vol. 91(1), pages 85-115, March.
    6. Asmaa Ezzat & Manal Emira, 2025. "Do institutions matter in the fiscal reaction function? The case of Egypt," Humanities and Social Sciences Communications, Palgrave Macmillan, vol. 12(1), pages 1-15, December.
    7. Bijoy Chandra Das & Fakhrul Hasan & Soma Rani Sutradhar & Sujana Shafique, 2023. "Ukraine–Russia Conflict and Stock Markets Reactions in Europe," Global Journal of Flexible Systems Management, Springer;Global Institute of Flexible Systems Management, vol. 24(3), pages 395-407, September.
    8. Abderrahim Chibi & Sidi Mohamed Chekouri & Mohamed Benbouziane, 2019. "Debt sustainability, structural breaks and nonlinear fiscal adjustment: empirical evidence from Algeria," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 66(4), pages 369-397, December.
    9. Nadine Yamout, 2025. "Fiscal Limits in the MENA Region: A Structural Analysis of Debt Sustainability," Working Papers 1787, Economic Research Forum, revised 20 Aug 2025.
    10. Neaime, Simon, 2015. "Twin deficits and the sustainability of public debt and exchange rate policies in Lebanon," Research in International Business and Finance, Elsevier, vol. 33(C), pages 127-143.
    11. Ankudinov, Andrei & Ibragimov, Rustam & Lebedev, Oleg, 2017. "Sanctions and the Russian stock market," Research in International Business and Finance, Elsevier, vol. 40(C), pages 150-162.
    12. Syed Sadaqat Ali Shah & Muhammad Asim Afridi & Libin Luo & Dilvin Taşkın, 2025. "Fiscal Resilience or Vulnerability? Assessing Public Debt Sustainability in the Developing Countries During 1996–2020," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 16(2), pages 8983-9017, June.
    13. Zeineb Gouasmi & Houda Haffoudhi, 2020. "Analysis of Sustainability of Fiscal Policy and Democratic Transition: Case of Tunisia," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 11(2), pages 512-529, June.
    14. Olaoye, Olumide Olusegun & Olomola, P.A., 2022. "Empirical analysis of asymmetry phenomenon in the public debt structure of Sub-Saharan Africa's five biggest economies: A Markov-Switching model," The Journal of Economic Asymmetries, Elsevier, vol. 25(C).
    15. Debi Prasad Bal & Sanhita Sucharita & Narayan Sethi & Seba Mohanty, 2025. "Is Public Debt Sustainable in Indian States? An Empirical Insight," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 16(2), pages 8358-8373, June.
    16. Samia Omrane Belguith & Foued Badr Gabsi, 2019. "Public Debt Sustainability in Tunisia: Empirical Evidence Estimating Time-Varying Parameters," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 10(2), pages 550-560, June.
    17. Sidi Mohammed Chekouri & Abderrahim Chibi & Mohamed Benbouziane, 2024. "Public debt dynamics and fiscal sustainability in selected North African countries: new evidence from recurrent explosive behavior tests and quantile unit root analysis," Economic Change and Restructuring, Springer, vol. 57(2), pages 1-27, April.

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