This website uses cookies.

By clicking the "Accept" button or continuing to browse our site, you agree to first-party and session-only cookies being stored on your device to enhance site navigation and analyze site performance and traffic. For more information on our use of cookies, please see our Privacy Policy.

  1. Home
  2. ASSA Annual Meeting
  3. 2021
  4. Preliminary Program
  5. Policy Session: Debt Sustainability and Financial Stability in MENA Countries
« Back to Results

Policy Session: Debt Sustainability and Financial Stability in MENA Countries

Paper Session

Sunday, Jan. 3, 2021 12:15 PM - 2:15 PM (EST)

Hosted By: Middle East Economic Association & American Economic Association
  • Chair: Riza Demirer, Southern Illinois University-Edwardsville

The Social Sustainability of Public Debt in the Framework of MENA Countries: Egypt, Lebanon, Morocco, Tunisia And Turkey

Wissem Ajili Ben Youssef
,
Eslsca Paris Business School- France
Hassan Henri Ayoub
,
Lebanese University

Abstract

The objective of the article is to analyze the social sustainability of the external public debt of some MENA countries (Egypt, Lebanon, Turkey, Tunisia, and Morocco) between 1990 and 2019. The study carries out a dual statistical and econometric analysis to determine the impact of external public debt on the social welfare of the population. The first analysis aims to examine the evolution of the social sustainability indicators and the second analysis uses the ARDL panel data estimation technique.
Statistical analysis shows that the servicing of the external public debt weighs heavily on public spending, public health, national education and investment. While the econometric study establishes that the ratio of external public debt as a percentage of GDP has a negative effect on the standard of living of the population.
The study concludes that external public debt in MENA countries has been used to finance non- productive expenditures that have no effect on the living conditions of the population. It highlights the need to consider the views of both debtors and creditors in order to achieve a comprehensive and sustainable approach to public debt. It should integrate the social and environmental consequences of debt on the well-being and living conditions of the population.
In terms of economic policy, our study leads to some implications for public debt management. It shows the need for national authorities to: (1) ensure comprehensive management of public debt from the point of view of the capacity of the population of the indebted countries and of creditors; (2) borrow only to finance the most productive investment expenditures which, can have an impact on the standard of living of the population and on economic growth; (3) not accept the recommendations of international organizations (IMF or WB) which can lead to the implementation of austerity and anti-social policies.

Terrorism, Military Expenditure and Public Debt: A Comparative Analysis Between SSA, MENA and Latin America & Caribbean Countries

Ines Trojette
,
Higher School of Real Estate Professions (ESPI)
Millogo Millogo
,
University of Norbert-Zongo

Abstract

This article analyses the impact of terrorism on public debt via the military expenditure channel. Our research compares this relation for SSA (Sub-Saharan Africa), MENA (Middle East and North Africa), and LAC (Latin America and Caribbean countries).
The stock of debt, in developing economies, has grown annually by 8% between 2008 and 2018. In the same period, insecurity related to the threat of terror attacks, has become an acute concern in particular for African and MENA countries. Governments responses address all the needs of public spending including social, economic and military. Consequently, the share of military expenditures has been raising with intensification of terrorist attacks . The role of military expenditure in explaining the external debt of developing countries was established on earlier studies by Brzoska (1983), Looney (1987), Danso (1990) and Dunne (1996). We use a sample of 96 countries over the period 2000-2018. The econometric model explains the variations in government total debt. The dependent variable is the government debt measured as a share of the GDP. As explanatory variables, we use the lagged value of government debt and military expenditure as share of GDP. The set of control variables, account for the growth of GDP per capita, natural rents, inflation, the external debt service over the gross national income (GNI), the stock of external debt (share of GNI), and governance. We adopt the generalized method of moments (GMM) procedure for estimations. Results show that terrorism, measured by the number of annual victims, increases military expenditure in percentage of GDP. Results indicate heterogeneous effects of military expenditures on debt. A 1% increase of military expenditure rises government debt by 2.89% for SSA and 2.60% for MENA countries. However, the effect military expenditure on debt is not significant for LAC countries.

Concentration of Wealth and the Scope for a Solidarity Tax in the Arab Region

Khalid Abu-Ismail
,
United Nations Economic and Social Commission
Vladimir Hlasny
,
Ewha Womans University

Abstract

The proposed paper uses parametric regularities of wealth distributions to estimate the entire distribution of wealth in the Arab region, and to project how the wealth held by the richest groups could be effectively tapped to attain financial stability and eradicate poverty, particularly that created under the ongoing COVID-19 crisis.

Debt Sustainability and Financial stability in Lebanon

Wassim Shahin
,
Lebanese American University

Abstract

Debt sustainability and financial stability in Lebanon is focused on
Discussant(s)
Rahel M. Schomaker
,
Carinthia University of Applied Sciences-Villach and German Research Institute for Public Administration Speyer
JEL Classifications
  • G2 - Financial Institutions and Services
  • E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook