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Determinants and Sustainability of External Debt: A Panel Data Analysis for Selected Islamic Countries

Abdul Waheed and Shujaat Abbas ()

MPRA Paper from University Library of Munich, Germany

Abstract: This study analyses the determinants and sustainability of external debt of selected Islamic countries. The study uses panel data of ten oil & gas exporting countries and nine oil & gas importing countries from 2004 to 2016. For oil & gas exporting Islamic countries, economic growth, central government revenue, FDI, and population have a negative effect on external debt, while central government expenditure, trade openness, inflation, and current account balance have a positive effect on external debt. For oil & gas importing Islamic countries, economic growth, central government revenue, current account balance, domestic investment, and labour force have a negative effect on external debt; whereas, FDI and foreign exchange reserve have a positive effect on external debt. The result of sustainability analysis shows that for many oil & gas importing Islamic countries, the actual debt is more than their expected debt based on their macroeconomic performance. For oil & gas exporting Islamic countries, the situation is not as alarming and their external debt position is still better, except few countries.

Keywords: External debt; Debt sustainability; Panel data; Oil & gas exporters; Oil & gas importers (search for similar items in EconPapers)
JEL-codes: F1 F3 O4 (search for similar items in EconPapers)
Date: 2021
New Economics Papers: this item is included in nep-ene and nep-isf
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