Fiscal Sustainability in African HIPC Countries: A Policy Dilemma?
Annalisa Fedelino,Alina Kudina +1 more
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TL;DR: In this paper, the authors look at the link between fiscal policy and debt sustainability in a number of African countries participating in the HIPC Initiative and find that, on the basis of current fiscal policies, debt levels will remain unsustainable even after these countries graduate from HIPC. This finding has important policy implications.
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Abstract: This paper looks at the link between fiscal policy and debt sustainability in a number of African countries participating in the Heavily Indebted Poor Countries (HIPC) Initiative. The paper finds that, on the basis of current fiscal policies, debt levels will remain unsustainable even after these countries graduate from the HIPC Initiative. This finding has important policy implications. By the very requirements of the HIPC Initiative, these countries are expected to increase significantly their poverty-reducing expenditure - possibly resulting in weaker fiscal primary balances and worsening debt sustainability outlook. As offsetting fiscal tightening may not be viable, ensuring debt sustainability may thus require increased availability of (nondebt-creating) grants. Otherwise, debt sustainability in HIPC countries may prove elusive in the long term.
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References
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Public Investment, Growth and Debt Sustainability: Putting Together the Pieces
TL;DR: This article developed a model to study the macroeconomic effects of public investment surges in low-income countries, making explicit the investment-growth linkages, public external and domestic debt accumulation, and the fiscal policy reactions necessary to ensure debt sustainability.
Assessing Fiscal Sustainability in Theory and Practice
Nigel Chalk,Richard Hemming +1 more
TL;DR: The main purpose of as discussed by the authors is to provide an overview of approaches to assessing fiscal sustainability, focusing on the present value budget constraint, which is the benchmark against which solvency is determined, tests of sustainability (including sustainability indicators), and sustainability and uncertainty.
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Analyzing the sustainability of fiscal deficitsin developing countries
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External Debt Sustainability: Theory and Empirical Evidence
TL;DR: A review of the different approaches on external debt sustainability is presented in this article, where a new and broader framework is emerging to address the main shortcomings of the standard analysis, namely, the effects that large external debts and deficits have on growth and the macroeconomic environment.
70
•Posted Content
Debt Relief and Fiscal Sustainability
TL;DR: In this article, the authors analyzed the relationship between fiscal policy, aggregate public sector debt sustainability, and debt relief and developed a methodology to compute the fiscal policy path compatible with aggregate debt sustainability in the post-HIPC era.
66