AN EMPIRICAL ANALYSIS OF DETERMINANTS OF FOREIGN DEBT: THE CASE OF PAKISTAN

Rukhsana Kalim and Muhammad Afzal

The IUP Journal of Applied Economics, 2004, vol. III, issue 6, 76-82

Abstract: Like most of the Indian states, specially those in the eastern region, foodgrains Foreign debt burden of Pakistan⬠"!s economy is a burning issue. Debt burden has reached to alarming proportion and has posed a great danger to the economic future of the country. A net outflow of resources is continuosly increasing. Pakistan is considered in the category of Severely Indebted Low Income Country (SILIC). The debt crisis was essentially triggered by the unsustainability of the level of current account deficits. It is imperative to explore the factors affecting foreign debt burden of the economy. The objective of this paper is to identify explicitely the factors affecting foreign debt of Pakistan. It is hypothesized that GDP, population, exports, imports and remittances are the key variables determining foreign debt of the economy. A simple regression model is developed to test the hypothesis. Time series data of 30 years covering the period of 1971-2000 has been utilized. Our results show that with the exception of remittances all variables viz, GDP, population, exports and imports play a significant role in determining foreign debt of Pakistan.

Date: 2004
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Persistent link: https://EconPapers.repec.org/RePEc:icf:icfjae:v:03:y:2004:i:6:p:76-82

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