Economic Policy Implications of External Debt and Capital Flight in Sub-Saharan Africa's Heavily Indebted Poor Countries

AbstractThe countries in Sub-Saharan Africa (SSA) have experienced a positive growth rate of over five per cent per year, on average, since their transition from the Heavily Indebted Poor Countries Initiative in 1996 and the Multilateral Debt Relief Initiative in 2006. Despite this growth, poverty and inequality are still very high. Employing the Driscoll – Kraay standard panel estimation method and dataset from 1990 to 2015, this paper sets out to examine the implications of external debt and capital flight on the general welfare of the people. The estimation results reveal that both external debt and capital flight have a welfare inhibiting effect, suggesting that increases in external borrowing or capital flight may lead to a reduction in the welfare of the people in the sub-region. The study, therefore, recommends to policymakers and government in the sub-region the need to tackle the revolving nature of external borrowing and capital flight and take steps to halt all channels through which deservingly acquired capital leaves the sub-region.

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An Analysis of External Debt and Capital Flight in the Severely Indebted Low Income Countries in Sub-Saharan Africa

SSRN Electronic Journal ◽

10.2139/ssrn.882343 ◽

1997 ◽

Author(s):

S. Ibi Ajayi

Keyword(s):

Low Income ◽

External Debt ◽

Sub Saharan Africa ◽

Low Income Countries ◽

Capital Flight ◽

Sub Saharan

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An Analysis of External Debt and Capital Flight in the Severely Indebted Low Income Countries in Sub-Saharan Africa

IMF Working Papers ◽

10.5089/9781451961119.001 ◽

1997 ◽

Vol 97 (68) ◽

pp. 1 ◽

Cited By ~ 21

Author(s):

Simeon Inidayo Ajayi ◽

Keyword(s):

Low Income ◽

External Debt ◽

Sub Saharan Africa ◽

Low Income Countries ◽

Capital Flight ◽

Sub Saharan

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Determinants of External Indebtedness in Heavily Indebted Poor Countries: What Macroeconomic and Socio-Economic Factors Matter?

The American Economist ◽

10.1177/0569434520938326 ◽

2020 ◽

pp. 056943452093832

Author(s):

Chukwuebuka Bernard Azolibe

Keyword(s):

Panel Data ◽

Population Growth ◽

Causal Relationship ◽

Government Expenditure ◽

External Debt ◽

Economic Factors ◽

Poor Countries ◽

Heavily Indebted Poor Countries ◽

External Indebtedness ◽

Socio Economic Factors

This study specifically examined whether macroeconomic and socio-economic factors such as corruption, foreign aid, government expenditure, external reserve, population growth, economic growth, and unemployment rate matter in increasing or reducing the level of external indebtedness in heavily indebted poor countries (HIPCs). Both static panel data and panel fully modified ordinary least squares (OLS) estimation techniques were employed. Using panel data set of all the 39 HIPCs covering period of 1996 to 2018, we found out that the factors that matter in increasing their external indebtedness are high rate of corruption that leads to mismanagement of public funds, high dependency on foreign aids, increase in government expenditure, population growth, and unemployment rate. However, external reserve and gross domestic product (GDP) has a reducing effect on their external indebtedness. In terms of causal relationship, only corruption, population growth, and GDP have a causal relationship with external debt, while other variables exhibited a zero causal relationship with external debt. JEL Classifications: F34, E6, E24

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Heavily Indebted Poor Countries (HIPC) Initiative and Multilateral Debt Relief Initiative (MDRI) - Status of Implementation 2008

Policy Papers ◽

10.5089/9781498334174.007 ◽

2008 ◽

Vol 2008 (71) ◽

Cited By ~ 1

Author(s):

Keyword(s):

Recent Progress ◽

Poor Country ◽

External Debt ◽

Debt Relief ◽

Poor Countries ◽

Consensus Recommendations ◽

The Status ◽

Heavily Indebted Poor Countries ◽

Hipc Initiative

This report provides an update on the status of implementation, impact and costs of the Enhanced Heavily Indebted Poor Country (HIPC) Initiative and the Multilateral Debt Relief Initiative (MDRI). With a view to the upcoming Financing for Development meetings in Doha, the report not only reports on recent progress since mid-2007, but also on developments since the Monterrey Consensus recommendations on external debt relief.

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