Proceedings of the 52nd International Academic Conference, Barcelona

THE IMPACT OF FOREIGN DEBT AND GOVERNMENT DEBT ON ECONOMIC GROWTH IN SOUTH AFRICA

LERATO MOTHIBI

Abstract:

Debt management has always been a major concern for many developing countries. South Africa’s foreign debt was reported to have reached its highest in 2017, where debt levels reached 48.8 percent of gross domestic product. At economically sustainable levels, borrowing in itself ought not to be an issue, however it is rather unfortunate that most sub-Saharan nations including South Africa have accumulated high, unsustainable amounts of debt, which may have constrained the progression of economic growth and development. Making use of the auto regressive distributive lag model (ARDL), this study examines the relationship between foreign debt and government debt on economic growth in South Africa from 1980 to 2018. The findings of the study reveal that sound debt management may lead to economic prosperity.

Keywords: South Africa Government debt Foreign debt Economic growth

DOI: 10.20472/IAC.2019.052.046

PDF: Download