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Assessing public debt sustainability under COVID‐19 uncertainty: Evidence from Côte d'Ivoire.
- Source :
- African Development Review / Revue Africaine de Développement; Jun2022 Supplement S1, Vol. 34, pS141-S160, 20p
- Publication Year :
- 2022
-
Abstract
- This article investigates public debt sustainability, in the context of a novel exogenous shock, by proposing a realistic forecasting procedure. The procedure implies the combination of a Bayesian VAR model and a nonlinear fiscal reaction model to derive a large number of simulated public debt paths and construct a probabilistic debt sustainability indicator. Annual data covering the period from 1970 to 2019 are used in the African context, with Côte d'Ivoire as a case study. Forecasts suggest low probabilities of non‐increasing trend and well‐contained upside risks (16%–27%) in Côte d'Ivoire for the forecasting period 2021–2024, regardless of the scenario underlying the evolution of COVID‐19 and suggesting that the country remains vulnerable to debt distress risks. Government should promote a sound and reliable debt management system to mitigate such risks. Results also highlight the importance of domestic resources mobilization in reducing the country's fiscal vulnerability and building a sustainable post‐COVID recovery. [ABSTRACT FROM AUTHOR]
Details
- Language :
- English
- ISSN :
- 10176772
- Volume :
- 34
- Database :
- Complementary Index
- Journal :
- African Development Review / Revue Africaine de Développement
- Publication Type :
- Academic Journal
- Accession number :
- 158963962
- Full Text :
- https://doi.org/10.1111/1467-8268.12649