Public debt servicing and economic growth: an empirical analysis for Zambia, 1990-2019.
| dc.contributor.author | Chanda, Milambo | |
| dc.date.accessioned | 2024-02-15T13:30:55Z | |
| dc.date.available | 2024-02-15T13:30:55Z | |
| dc.date.issued | 2022 | |
| dc.description | Thesis of Master of Arts in Economics. | |
| dc.description.abstract | Zambia has over the years relied on both internal and external sources of financing to meet budget deficits. As a result the country has amassed huge amounts of domestic and external public debt. Zambia has outstanding Eurobonds that will be coming due in 2024 and it recently defaulted its debt servicing requirement to bondholders in 2022 attributing its failure to meet payments partly because of the COVID pandemic and the impact it has had on the Zambian economy. The implication of having outstanding debt requirements for which a country is unable to service are crowding out of investments, debt overhang and reduced credit rating among others. This study aimed at analyzing the effect of public debt servicing on economic growth by detangling the effects into public domestic debt servicing, public external debt servicing, and finally looking at the total effect of public debt servicing. The study used annual time series data from the period 1990-2019. Real GDP was used as the dependent variable while the independent variables were physical capital, labor, human capital, trade openness and debt servicing. Three models were specified to examine three objectives; model 1 investigated the effect of public domestic debt servicing on economic growth. Model 2 analyzed the public external debt servicing and economic growth relationship. While model 3 examined the effect of total public debt servicing on economic growth. An ARDL model was used to determine the short run and long run relationship between public debt servicing and economic growth. The findings of the study suggest that there exists a negative relationship between public domestic debt servicing and economic growth in both the short run and long run in Zambia. It also concludes that there exists a negative relationship between public external debt servicing and economic growth in the short run and long run. For the total effect, the study found a negative and significant relationship in the long run while in the short run the relationship was positive but insignificant. The Zambian government should adopt prudent policies with better repayment plans when borrowing from external sources. This study further recommends that policy makers need to ensure that borrowed funds are directed towards investments that contribute to economic growth. vi | |
| dc.identifier.uri | https://dspace.unza.zm/handle/123456789/8403 | |
| dc.language.iso | en | |
| dc.publisher | The University of Zambia. | |
| dc.title | Public debt servicing and economic growth: an empirical analysis for Zambia, 1990-2019. | |
| dc.type | Thesis |