Slovakia will not change export-led model overnight

2015 ◽  
Keyword(s):  
Public Debt ◽  
Purchasing Power ◽  
External Financing ◽  
Bond Yields ◽  
Content Type ◽  
Breathing Space ◽  
Debt Levels

Significance Impacts The IPO should help cut public debt levels and will create fiscal breathing-space for more spending ahead of the 2016 elections. Falling bond yields will ease debt servicing; Slovakia will comfortably meet its external financing requirement. The deflationary trend will peter out later in 2015 but persistently low inflation will help boost household purchasing power.

Vietnam's debt woes will concern investors

2015 ◽  
Keyword(s):  
Public Debt ◽  
Development Projects ◽  
Foreign Investors ◽  
Content Type ◽  
Borrowing Costs ◽  
Fund Development ◽  
Debt Levels

Subject Vietnam's debt difficulties. Significance Vietnam's Finance Ministry announced on May 15 that it would continue to use offshore borrowings to fund development projects, although many economists caution that public debt levels are unsustainable, potentially harming Vietnam's image with investors. There are concerns that government liabilities may be higher than reported, and that recent monetary initiatives, including currency devaluations, may aggravate the situation. Impacts Borrowing costs will rise, and Vietnam could face a credit downgrade if debt limits are reached. Foreign investors will respond cautiously to reforms of infrastructure partnership regulations. Vietnam's ability to capitalise on ASEAN infrastructure integration may be hindered.

Oman and Bahrain are the most vulnerable Gulf states

2020 ◽  
Keyword(s):  
Public Sector ◽  
Public Debt ◽  
Medium Term ◽  
Fiscal Deficits ◽  
Content Type ◽  
Gulf States ◽  
Remittance Flows ◽  
Debt Levels

Significance Oman and Bahrain, already struggling with rising public debt levels and high fiscal deficits, are in the most exposed medium-term position. Impacts Governments will seek to avoid cutting expenditure on public-sector salaries. Private businesses will lay off many of their expatriate workers. Gulf economic contractions will significantly reduce global remittance flows.

What debt threshold hampers economic growth in Africa?

2019 ◽  
Vol 19 (1) ◽  
pp. 25-42 ◽  
Author(s):  
Lord Mensah ◽  
Divine Allotey ◽  
Emmanuel Sarpong-Kumankoma ◽  
William Coffie
Keyword(s):  
Economic Growth ◽  
Public Debt ◽  
Developed Countries ◽  
Annual Data ◽  
African Region ◽  
African Countries ◽  
Content Type ◽  
Distributed Models ◽  
The Impact ◽  
Debt Levels

Purpose This paper aims to test whether a debt threshold of public debt has any effect on economic growth in Africa. Design/methodology/approach The authors applied the panel autoregressive distributed models on 38 African countries with annual data from 1970 to 2015. It was established that the threshold and the trajectory of debt has an impact on economic growth. Findings Specifically, the authors found that public debt hampers economic growth when the depth is in the region of 20 to 80 per cent of GDP. Based on debt trajectory, this study established that increasing public debt beyond 50 to 80 per cent of GDP adversely affects economic growth in Africa. The study also finds that the persistent rise in debt also has adverse effect on economic growth in the African countries in the sample. It must be known to policymakers that the threshold of debt in developing countries, and for that matter African countries, are less than that of developed countries. Practical implications This study suggests threshold effects between 20 and 50 per cent; this should be a guide for policymakers in the accumulation of debt stock. Interestingly, the findings suggest some debt trajectory effect, which policymakers might consider by increasing efforts to reduce debt levels when they fall between 50 to 80 per cent of GDP. This implies that reducing such debt levels can help African countries increase their economic growth. Originality/value The study is unique because it seeks to add new evidence on the relationship between public debt and growth in the African region, by considering the impact of the persistent growth of public debt on economic growth.

Markets may misjudge risk of Greek exit from euro-area

2015 ◽  
Keyword(s):  
Euro Area ◽  
Ownership Structure ◽  
Public Debt ◽  
Focal Point ◽  
Quantitative Easing ◽  
Southern Europe ◽  
Bond Yields ◽  
German Government ◽  
Content Type ◽  
Private Investors

Significance While the scope for widespread contagion across Southern Europe is much more limited this time around because of the new ownership structure of Greece's public debt -- more than 80% of the stock is held by the official sector, in stark contrast to end-2011 when private investors held the bulk of Greek bonds -- a loss of confidence in the ECB's ability to implement a credible and effective programme of quantitative easing (QE) could increase investors' sensitivity to Greece's political woes. Impacts Despite Greece's re-emergence as a focal point for market anxiety, the bond yields of Portugal, Spain and Italy remain at near-record lows. This is partly due to market expectations of full-blown QE by the ECB. Yet Draghi must come up with a QE programme that is both credible and has the backing of a German government wary of further credit risk.

External financing may buoy Tunisia's economy

2015 ◽  
Keyword(s):  
Economic Activity ◽  
Oil Prices ◽  
Coalition Government ◽  
External Financing ◽  
Content Type ◽  
National Budget ◽  
Industrial Action ◽  
Breathing Space ◽  
The Government ◽  
The Many

Subject Prospects for the Tunisian economy since the formation of the coalition government. Significance Headwinds to the Tunisian economy are emerging from many directions: industrial action, a security-related shock to tourism and poor rainfall are all providing significant resistance to government efforts to stimulate economic activity. A great deal of focus will turn to how the government handles the many economic and security disruptions it faces. Impacts The decline in global oil prices gives the government some modest breathing space for the national budget. It should also lay the groundwork for longer-term subsidy reduction. However, it will not provide much of a boost to the economy since it is not directly passed through to businesses and consumers.

Moreno will aim for first-round win in Ecuador

2016 ◽  
Keyword(s):  
Public Debt ◽  
Public Spending ◽  
Vice President ◽  
Presidential Candidate ◽  
External Financing ◽  
Content Type ◽  
Economic Slowdown ◽  
The Government ◽  
The Right ◽  
Ruling Party

Subject Presidential hopefuls. Significance On October 1, Ecuador's ruling party, Alianza Pais, nominated former Vice President Lenin Moreno as its presidential candidate in the elections of February 19. The news has boosted the government, raising hopes of a victory in the first round of the elections. However, the possibility a candidate from the right winning in a second round cannot be discounted. Impacts Managing the economic slowdown will be one of the main challenges for the government in the lead-up to the election. Securing external financing and maintaining relatively high levels of public spending will remain a priority. Opposition candidates will try to make gains from the economic slowdown, the rise in public debt and corruption allegations.

Armenia and Georgia need external funds for crisis

2020 ◽  
Keyword(s):  
Public Debt ◽  
Health Spending ◽  
Labour Migration ◽  
Content Type ◽  
Tourism Sector ◽  
Business Support ◽  
External Funds ◽  
Oil Revenues ◽  
Debt Levels

Significance Commodity exports have been hit in both countries, the Georgian tourism sector has become a source of weakness, and Armenia is exposed to Russia because of trade and labour migration. Impacts The COVID-19 crisis will create demand for higher health spending in future budgets. The fiscal response will lead to higher public debt levels in Georgia and Armenia. Azerbaijan faces the additional shock of low oil revenues but is planning similar welfare and business support packages.

Does a Clarke-Groves type tax prevent free riding when implementing Eurobonds?

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Carlos Contreras ◽  
Julio Angulo
Keyword(s):  
Public Debt ◽  
Sovereign Debt ◽  
Free Riding ◽  
Social Utility ◽  
Liquidity Premium ◽  
Transfer Scheme ◽  
Content Type ◽  
Depth Analysis ◽  
Fiscal Rule ◽  
Debt Levels

Purpose The purpose of this paper is to propose a Clarke-Groves Tax (CGT) type as a remedy to the criticism that the implementation of Eurobonds has raised regarding the risk of undermining fiscal discipline. In this model, a government minimizes its sovereign debt-to-GDP ratio in a given period and decides whether to join a common sovereign debt club. In doing so, it exposes itself to a positive or negative tax burden while benefiting from the liquidity premium involved in creating a secure asset. The authors found that the introduction of this tax may prevent free riding behaviours if Eurobonds were to be implemented. To illustrate this, the authors provide some numerical simulations for the Eurozone. Design/methodology/approach In the model presented, a government which optimizes a social utility function decides whether to join the common debt club. Findings The adoption of the proposed tax could prevent free-riding behaviours and, therefore, encourages participation by those countries with lower debt levels that would have not otherwise taken part in this common debt mechanism. Under certain circumstances, we can expect the utility of all members of this club to improve. The bias in the distribution of gains might be mitigated by regulating the tax rule determining the magnitude of payment/reward. The proportion of the liquidity premium, arising from the implementation of a sovereign safe asset, has a decisive impact on the degree of the governments’ utility enhancement. Research limitations/implications The adoption of a CGT would require Eurobonds club members to reach an agreement on “the” theoretical model for determining the sovereign debt yield. One of the limitations of this model is considering the debt-to-GDP ratio as the sole determinant of public debt yields. Moreover, the authors assumed the relationship between the debt-to-GDP ratio and funding costs to be identical for all countries. Any progress in the implementation of the proposed transfer scheme would require a more realistic and in-depth analysis. Practical implications A new fiscal rule based on compensating countries with lower public debt levels could be a way to mitigate free-riding problems if a Eurobond mechanism is to be established. Originality/value This fiscal rule has not been proposed or analysed before in a context such as that considered by this paper.

EU can become a trendsetter and bolster world GDP

2019 ◽  
Keyword(s):  
Public Debt ◽  
Economic Conditions ◽  
Budget Deficits ◽  
Content Type ◽  
The Face ◽  
Economic Slowdown ◽  
Global And Local ◽  
Global Influence ◽  
The Eu ◽  
Debt Levels

Subject The global reach of Germany's fiscal scope. Significance The focus on euro-area debt fragility perhaps obscures the fact that the bloc and broader EU have strengthened their fiscal position. They can afford to take action in the face of the global and local economic slowdown. Public debt levels and budget deficits have shrunk since 2014, especially in Germany and the Netherlands, which enjoy substantial budget surpluses and moderate debt levels. Impacts Action would prevent the EU from looking feeble and unable to respond to, let alone influence, shifts in global economic conditions. A change in perceptions of the EU and its capabilities might boost local and global sentiment, multiplying the influence of any stimulus. Illustrating Germany's global influence, it bought 89.4 billion of dollars of goods from China in 2018 and 57.7 billion dollars of US goods.

Markets are overreacting to US price and rates risks

2021 ◽  
Keyword(s):  
Federal Reserve ◽  
Futures Markets ◽  
The United States ◽  
Oil Price ◽  
Bond Markets ◽  
Crude Oil Price ◽  
Bond Yields ◽  
Content Type ◽  
Bond Yield ◽  
Ongoing Support

Significance The continuation of the modest manufacturing downturn follows the recent report of slower third-quarter GDP growth. Despite slower growth, bond markets are challenging an attempt by the Federal Reserve (Fed) to delink tapering from tightening by bringing forward their forecasts for rate increases: futures markets are pricing in two 25-basis-point rate hikes by end-2022. Impacts Equities are at a record high in the United States; providing ongoing support for this, real US bond yields remain in negative territory. The Brent crude oil price is near its highest since 2014; further upside will be limited but it is likely to stay high well into 2022. Germany’s ten-year bond yield, negative since April 2019, has risen by 40 basis points since end-August and will soon turn positive.

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