Determinants of external debt in South Africa: a VAR-based approach

Genius Murwirapachena and Forget Kapingura

International Journal of Economic Policy in Emerging Economies, 2015, vol. 8, issue 2, 138-152

Abstract: The external debt issue has recently been a subject of topical concern in South Africa. In the 2014 budget review, the Treasury proposed to increase external debt as a percentage of GDP from the 2013 figure of 39.9% to about 43.9% by 2016. This proposal was contrary to the IMF recommendation that South Africa should cut its external debt to figures below 40% of its GDP. In this paper, the vector auto-regression model was used to analyse the determinants of the South African external debt utilising annual data from 1980-2013. Empirical results reveal that external debt in South Africa is mainly due to sluggish levels of economic growth and high levels of government spending on infrastructure.

Keywords: South Africa; external debt; foreign debt; government debt; economic growth; government expenditure; infrastructure spending. (search for similar items in EconPapers)
Date: 2015
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Persistent link: https://EconPapers.repec.org/RePEc:ids:ijepee:v:8:y:2015:i:2:p:138-152

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