Determinants of external debt in South Africa: a VAR-based approach
by Genius Murwirapachena; Forget Mingiri Kapingura
International Journal of Economic Policy in Emerging Economies (IJEPEE), Vol. 8, No. 2, 2015

Abstract: The external debt issue has recently been a subject of topical concern in South Africa. In the 2014 budget review, the Treasury proposed to increase external debt as a percentage of GDP from the 2013 figure of 39.9% to about 43.9% by 2016. This proposal was contrary to the IMF recommendation that South Africa should cut its external debt to figures below 40% of its GDP. In this paper, the vector auto-regression model was used to analyse the determinants of the South African external debt utilising annual data from 1980-2013. Empirical results reveal that external debt in South Africa is mainly due to sluggish levels of economic growth and high levels of government spending on infrastructure.

Online publication date: Thu, 28-May-2015

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