Post-initiative heavily indebted poor countries (HIPC) public debt sustainability: Empirical evidence from Togo
Keywords:
sustainability, public debt, budget deficit, stationarity, cointegrationAbstract
The objective of this paper is to analyze the sustainability of Togo's public debt in the long term after the Heavily Indebted Poor countries (HIPC) initiative. The study period covers years from 1994 to 2019. Based on stationarity and cointegration tests, the results show that the Togolese government's debt is not very sustainable in the long term. Indeed, the persistence of the budget deficit due to insufficient internal resources to meet the increase in budgetary expenditure, particularly investment expenditure, has forced the Togolese government to resort to borrowing, leading to an increase in debt levels in recent years. In view of these results, budgetary rigor is more than necessary through the contraction of budgetary expenditure, but above all, the progressive taxation of the informal sector and increased mobilization of taxes on property.
References
Abdou, K. (2017). Étude de la soutenabilité de la dette publique du Niger. Mémoire de master. Dakar: COFEB.
View in Google Scholar
Aglietta, M. (2020). La réforme urgente du système monétaire international pour la sauvegarde des pays émergents et en développement. Paris: Université Paris-Nanterre.
View in Google Scholar
Anago, S. (2016). Estimation de la soutenabilité de la dette publique du Bénin: une projection à l’horizon 2020. Revue d’Analyse des Politiques Économiques et Financières, 2(1), 80–101.
View in Google Scholar
Banque Mondiale (BM). (2019, October). Commodity Markets Outlook. Rapport sur la politique monétaire de l’Union Monétaire Ouest Africaine (UMOA). Washington, DC: The World Bank.
View in Google Scholar
Barro, R. (1974). Are government bonds net wealth?. Journal of Political Economy, 82, 1095–1118.
View in Google Scholar
Berr, E., & Combarnous F. (2007). Une autre lecture de la soutenabilité de la dette. Revue Tiers Monde, 192, 789–813.
View in Google Scholar
Blanchard, O., Chouraqui, J.-C., Hagemann, R. P., & Sartor, N. (1990). La soutenabilité de la politique budgétaire: réponses nouvelles à une question ancienne. Revue Économique de l’OCDE, 15, 7–38.
View in Google Scholar
Bohn, H. (1995). The sustainability of budget deficits in a stochastic economy. Journal of Money, Credit and Banking, 27, 257–271.
View in Google Scholar
Bouabdallah, O., Checherita-Westphal, C., Warmedinger, T., de Stefan, R., Drudi, F., Set- zer, R., & Westphal, A. (2017). Debt sustainability analysis for euro area sovereigns: A methodological framework. (European Central Bank, Occasional Paper No. 185).
View in Google Scholar
Calvo, G. A. (1989). Is inflation effective for liquidating shot-term nominal debt?. Staff Papers, 6(4), 950–960.
View in Google Scholar
Chikoko, L., & Mupunga, N. (2012). A cointegration approach to analysis of domestic debt sustainability in Zimbabwe. African Integration Review, 5(2).
View in Google Scholar
Croce, E., & Juan-Ramón, V. H. (2003). Assessing fiscal sustainability: A cross-country comparison. (IMF Working Paper).
View in Google Scholar
Crowder, J. W. (1997). The U.S. intertemporal budget constraint: Restoring equilibrium through increased revenues or decreased spending? Macroeconomics, 9702002.
View in Google Scholar
Daseking, C. (2002). La dette: quand est-elle excessive?. Finances et Développement, 39(4), 12–14.
View in Google Scholar
De Castro, J-M., Gonzales-Paramo, & Hernadez De Cos, P. (2001). Evaluating the dynamics of fiscal policy in Spain: Patterns of interdependence and consistency of public expenditure and revenues. (Document de Travail No. 0103). Banco De España.
View in Google Scholar
Debrun, X., Ostry, J. D., Willems, T., & Wyplosz, C. (2019). Public debt sustainability. (CEPR Discussion Paper No. DP 14014).
View in Google Scholar
Direction de la Dette Publique et du Financement du Togo. (2020). Base de données sur la dette publique.
View in Google Scholar
Engle, R. E., & Granger, C. W. J. (1987). Cointegration and error-correction: Representation, estimation and testing. Econometrica, 55, 251–276.
View in Google Scholar
Fonds Monétaire International (FMI). (2016). Perspectives de l’économie mondiale: Demande modérée-Symptômes et remèdes. Washington, DC: International Monetary Found.
View in Google Scholar
Froot, K. A., Scharfstein, D. S., & Stein, J. C. (1989). LDC debt: Forgiveness, indexation, and investment incentives. The Journal of Finance, 44(5), 1335–1350.
View in Google Scholar
Guérineau, S., & Guillaumont, S. (2007). Le temps retrouvé de l’endettement interne en Afrique? Le cas de l’UEMOA. Revue Française d’Économique, 22(1), 73–105.
View in Google Scholar
Hakkio, C., & Rush, M. (1991). Is the budget deficit ‘too large’?. Economic Inquiry, 29(3), 104–118.
View in Google Scholar
Hamilton, J. D., & Flavin, M. A. (1986). On the limitations of government borrowing: A framework for empirical testing. American Economic Review, 76, 808–819.
View in Google Scholar
Heller, P. S. (2005). Pity the finance minister. Issues in managing a substantial scaling up of aid flows. Word Economics, 6(4), 69–110.
View in Google Scholar
Hénin, P.-Y., & Fève, P. (1998). Une évaluation économétrique de la soutenabilité de la dette extérieure des pays en développement. Revue Économique, 49(1), 75–86.
View in Google Scholar
Hénin, P.-Y., & Garcia, S. (1996). L’évaluation économétrique de la soutenabilité des déficits publics. Paris: Mimeo, CEPREMAP et MAD-Paris I.
View in Google Scholar
Idlemouden, K., & Raffinot, M. (2005). Le fardeau virtuel de la dette extérieure. Eurisco Cahier, 3.
View in Google Scholar
INSEE. (2004–2005). La dette publique en France: la tendance des vingt dernières années est-elle soutenable?. Documentation française.
View in Google Scholar
International Monetary Fund (IMF). (2005). Operational framework for debt-sustainabi- lity assessments in low-income countries—further considerations. Washington, DC: The World Bank.
View in Google Scholar
International Monetary Fund (IMF). (2012). Revisiting the debt sustainability framework for low-income countries. Washington, DC: The World Bank.
View in Google Scholar
International Monetary Fund (IMF). (2018). Debt sustainability framework for low-income countries. Washington, DC: The World Bank. Retrieved from http://www.imf.org/exter-nal/np/exr/facts/jdsf.htm
View in Google Scholar
Johansen, S. (1988). Statistical analysis of cointegration vectors. Journal of Economic Dynamics and Control, 12, 231–254.
View in Google Scholar
Johansen, S. (1991). Estimation, and hypothesis testing of cointegration vectors in Gaussian vector autoregressive models. Econometrica, 59, 1551–1580.
View in Google Scholar
Jondeau, E. (1992). La soutenabilité de la politique budgétaire. Économie et Prévision, 104, 1–17. Keynes, J. M. (1936). Théorie générale de l’emploi, de l’intérêt et de la monnaie. Paris: Payot Kremers, J. M. (1988). The long-run limits of the U.S. federal debt. Economics Letters, 28, 259–262.
View in Google Scholar
Krugman, P. (1988). Financing vs. forgiving a debt overhang. (NBER Working Paper No. 2486). Loser, C. M. (2004). External debt sustainability: Guidelines for low and middle-income countries. (G-24 Discussion Paper No. 26). New York and Geneva: United Nations.
View in Google Scholar
Mansour, M. (2012). Evaluation théorique et empirique de la soutenabilité de la dette publique: cas de la France. Mémoire de master. Economie-Gestion, Université Panthéon-Assas, Banques des mémoires.
View in Google Scholar
Moisseron, J.-Y., & Raffinot, M. (1999). Dette et pauvreté: solvabilité et allègement de la dette des pays à faible revenu. Paris: Editions Dial-Economica.
View in Google Scholar
Muzellec, R., & Conan, M. (2013). Finances publiques (16e éd.).Paris: Dalloz.
View in Google Scholar
OCDE. (2020). Recettes fiscales (indicateur). Retrieved January 3, 2021 from https://doi.org/10.1787/2907dcbf-fr
View in Google Scholar
Pesaran, M. H. (1987). Global and partial non-nested hypotheses and asymptotic local power. Econometric Theory, 3(1), 69–97.
View in Google Scholar
Presbitero, A. F., & Arnone, M. (2006). External debt sustainability and domestic debt in Heavily Indebted Poor Countries. (MPRA Working Paper No. 1396). Munich: University Library of Munich.
View in Google Scholar
Quintos, C. (1995). Sustainability of the deficit process with structural shifts. Journal of Business Economics & Statistics, 13(4), 409–417.
View in Google Scholar
Raffinot, M. (1998). Soutenabilité de la dette extérieure: de la théorie aux modèles d’évaluation pour les pays à faible revenu. (Document de travail du DIAL No. 1). Paris.
View in Google Scholar
Raffinot, M., & Ferry, M. (2019). La dette des pays en développement (3ème éd.). Paris: La Découverte.
View in Google Scholar
Ricardo, D. (1817). On the principles of political economy and taxation. London: John Murray. Sachs, J. (1988). The debt overhang of developing countries. In G. A. Calvo, R. Findlay, P. J. K. Kouri & J. B. de Macedo (Eds.), Debt, Stabilization and development: Essays in memory of Carlos Diaz Alejandro (pp. 80–102). Oxford: Basil Blackwell.
View in Google Scholar
Sira, S. F. (2011). Soutenabilité de la dette extérieure des pays de l’UEMOA: une analyse empirique. Revue Économique et Monétaire de la BCEAO, 10, 35–67.
View in Google Scholar
Trehan, B., & Walsh, C. (1988). Common trends, the government’s budget constraint, and revenue smoothing. Journal of Economic Dynamics and Control, 12, 425–444.
View in Google Scholar
Trehan, B., & Walsh, C. (1991). Testing intertemporal budget constraints: Theory and applications to U.S. federal budget and current account deficits. Journal of Money, Credit, and Banking, 23, 206–223.
View in Google Scholar
UEMOA. (2018, December). Rapport semestriel d’exécution de la surveillance multilatérale de la Commission de l’Union Economique et Monétaire Ouest Africain.
View in Google Scholar
Wilcox, D. W. (1989). The sustainability of government deficits: Implications of the present value borrowing constraint. Journal of Money Credit and Banking, 21, 291–306.
View in Google Scholar
Yapo, L. (2002). Les déterminants de l’endettement extérieur des pays pauvres très endettés: cas de la Côte d’Ivoire. (WIDER conférence sur l’allègement de la dette). Helsinki.
View in Google Scholar
Downloads
Published
Issue
Section
License
Copyright (c) 2021 Poznań University of Economics and Business
This work is licensed under a Creative Commons Attribution 4.0 International License.
