Fiscal regimes and fiscal sustainability in Sri Lanka

Chua, Chew Lian; Perera, Nelson; Suardi, Sandy

doi:10.1080/00036846.2020.1859456

Cited by 5 publications

(2 citation statements)

References 24 publications

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“…Public finance is the study of the revenue, expenditures, and fiscal situation of a country at various levels of the government (Chua et al, 2021). Efficient and prudent utilization of public funds is needed to ensure the sustainable growth and development of a country.…”

Section: Introductionmentioning

confidence: 99%

Debt Analysis of Sri Lanka: Factors and Finances

Choudhary¹

2022

epra

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Socio – economic condition in Sri Lanka has reached its bottom due to various social, political and Economic mismanagement. The tip of the ice berg has much more to do with extravagant public debt handling led by dynastic rulers of the tourist island. A fall in tax revenue collection, a spike in external debt to GDP, interest payments, and short-term debt are the underlying economic factors. Among the political factors, successive governments, to be in the government, resorted to short-lived and unsustainable remedies like borrowings from external creditors. The paper analyses series and sequences of debt crisis through the prism of economy, politics and ethnic issues plaguing Sri Lanka. KEY WORDS: Tax GDP ratio, debt sustainability analysis, inflation, political stability

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Section: Introductionmentioning

confidence: 99%

Debt Analysis of Sri Lanka: Factors and Finances

Choudhary¹

2022

epra

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“…Employing both linear and nonlinear approaches to test fiscal sustainability in Sri Lanka Chua et al (2021) reveal that in case of the linear function the primary balance response was positive against the rising public debt as percent of GDP. However, in case of the nonlinear regime switching model, the results show public debt as unsustainable which questioned the long-term fiscal sustainability of the country.…”

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confidence: 99%

Empirical examination of public debt sustainability in African economies: A panel data analysis

Shah,

Rafique,

Afridi

2023

Journal of Public Affairs

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This study intends to investigate public debt sustainability across 29 Sub‐Sahara African (SSA) economies, employing various econometric specifications, for the sampled years 1996–2020. The study employs Bohn's (Are stationarity and cointegration restrictions really necessary for the intertemporal budget constraint? Journal of monetary Economics, 54(7), pp.1837–1847.) framework of sustainability as the baseline model to assess public debt sustainability across the sampled Sub‐Sahara African economies. As additional tests of public debt sustainability in order to support the baseline findings, the study also employs panel unit root and timeseries unit tests. The baseline findings from the OLS, panel quantile and instrumental panel quantile regressions show that public debt is sustainable across the panel of SSA economies. The positive and statistically significant response of primary balance under the Bohn's framework of sustainability manifest that the intertemporal budget constraint is not violated in the sampled economies. The consistency in the estimates under the OLS, panel quantile and instrumental panel quantile regressions also show that the estimates are robust throughout the estimation process. Also, utilizing the panel unit root test for public debt sustainability, the findings show that public debt is stationary over the sampled years which implies that intertemporal budget constraint holds and that public debt is sustainable across the sampled SSA economies. However, the timeseries analysis indicate that although majority of the SSA economies have sustainable public debt ratios, four countries namely Uganda, Sudan, Togo and Cote d'Ivoire have unsustainable public debt ratios. The study has important policy implications in terms of prudent public debt management and fiscal management for the sampled SSA economies.

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