5 ECONOMETRIC ANALYSIS OF THE DEBT
The second part of our study consists of two chapters. The
fist chapter focuses on the results of empirical studies on debt. The second
part is devoted to the econometric study of Togo's external debt. This chapter
contains two sections. The first one deals with the econometric study of Togo's
debt which will be carried out from the macroeconomic data of Togo. The second
section is reserved for interpretations and suggestions.
5.1 EMPIRICAL AND
ECONOMETRIC ANALYSES
5.1.1 RESULTS OF EMPIRICAL ANALYSES AND
SPECIFICATION OF MODEL
5.1.1.1 EMPIRICAL
ANALYSES RESULTS
The works of Barry and Portes (1996) were interested in
identifying the determinants of the stock of the debt of about thirty countries
at a certain moment of their economy. They conclude that excessive debt and
default payment tend to reduce the rate of real growth and credibility of the
State. Ojo (1989) in «Debt capacity model of sub-Saharan Africa» by
an econometric approach, shows that the ratio of outstanding debt/ GDP of
thirty African countries during the period 1976-1984 is determined by: the
variation of exports (X), the ratio of imports/ GDP, the population (Pop) and
the growth rate of GDP (y). He concluded that the ratio of debt outstanding/
GDP is negatively related to the change in exports, the growth rate of GDP and
the ratio of positive imports/ GDP and population growth (Pop).
Ajayi (1991) analyzes the impact of external and internal
factors of Nigeria's debt. Indeed, he chose as determinants of the debt /
exports ratio, the following variables: terms of trade, the growth rate of
industrialized countries' income, the actual interest rate, the ratio of budget
deficit/ GDP and trend. He affirms that we should expect that a worsening of
budget deficits will increase the debt / export ratio. The estimation results
of his model confirm this fact.
N'Diaye (1993); shows that the debt of Senegal is explained
positively by the stock of existing debt and negatively by the level of deficit
of the current balance. Also, the appreciation of the average exchange rate of
CFA/US (dollar?) reduces the debt service. Considering the virtual absence of
reserve in Senegal, equation attempts to explain currency movement composed of
transaction account, draw on IMF and the contribution of primary banks to
finance the balance of payments. He found out that despite the weakness of the
correlation coefficient, this explanation of currency movements by the current
account and the net direct investment can be retained.
In view of this result and the evolution of the debt in
relation to the current account, it is difficult to justify the level of
indebtedness of Senegal by looking for a balance of macroeconomic variables.
This means that Senegal does not borrow to balance its current account or to
increase its investments, because the model shows that the impact of the debt
stock on the latter is very low. He also believes that the explanation of
currency movements (transaction account) by the balance of the current account
and net direct investments is not satisfactory from the point of view of
statistical results.
Rougier (1994) found mixed results in African countries.
According to his econometric analyses, the debt to GDP has a depressive effect
on growth in Côte d'Ivoire, Mali, and Chad for the period 1970-1991.
However, the effect is positive for Niger, Madagascar and Kenya.
Cohen (1996) shows empirically that the debt has weighed on
growth in developing countries. However, the impact of the debt on growth
reduction is negligible for Burkina-Faso, Kenya, Mauritius, Rwanda, South
Africa, Zaire, Zimbabwe and Mali.
Coulibaly and al. (2001) in a study on Mali's debt showed that
statistical indicators such as interest rate, financing of imports, especially
consumer goods and cumulative process of debt have a positive effect on the
level of indebtedness of Mali.
RAFFINOT and VENET (2001) found through a panel of 21
countries in sub-Saharan Africa for the period 1978-1997 that there is no
significant casualty between trade openness and debt. They concluded that these
results should not be generalized because of the specificity of economies in
this part of Africa (exports mainly consisted of basic products and their quasi
impossibility to borrow from international private donors).
YAPO (2002) in a study found that for Côte d'Ivoire over
the period 1975-1999, the import/GDP ratio is not significant. In addition, he
shows that the debt of Côte d'Ivoire is positively influenced by the
deterioration of terms of trade and finds that the primary deficit is not
significant.
AGBERE (2006) found that in Togo the debt ratio is positively
affected by the population growth rate and the ratio of debt service to
exports, negatively by the growth rate to actual GDP. According to his study,
the fiscal balance ratio to GDP has not had a significant impact.
Studies conducted on a panel of countries such as the studies
of Eichengreen and Portes (1986), Elbadawi and. al (1996), Patillo and al.
(2004) and Clemens and al (2003), have all found that excessive debt has a
negative effect on growth rate.
Building on the literature review and empirical tests or
validations made by various studies on the determinants of external public
debt, we can make the following assumptions H1 and H2 to meet the concern of
this long essay which is an attempt to identify factors explaining public debt
in Togo.
H1: The reported debt service to exports, the
ratio of imports to GDP, exchange rate and the population positively explain
the level of debt.
H2: The devaluation of the CFA, the break
down of cooperation and GDP per capita negatively explain debt level.
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