Government Spending, Integrity and Public Debt in Sub saharan Africa

Abstract

ABSTRACT The rising public debt level in sub-Saharan Africa and the sustainability of that debt remains an important research agenda. Given the raising concerns of fiscal sustainability and increases in debt burdens in sub-Saharan Africa, this study aims to determine the effect of government spending and government integrity on debt to-GDP ratio in SSA. The study used panel data of SSA countries over the period 2005 – 2019 and employs GMM estimation model in analysing the findings of the study. The study found that government spending has a significant positive effect on debt-to-GDP ratio. The study also found that government integrity also has a significant and positive effect on debt-to-GDP ratio. The study provided evidence that government integrity reduces the effect of government spending on debt-to GDP ratio in sub-Saharan Africa. The study therefore, recommends that the borrowed funds by governments should productively be spent on development or capital expenditures in order to regenerate more revenue and achieve growth. Hence policy makers and government agencies in the region should ensure that their government spend within their means. Government are encouraged to restructure their spending from corruption-prone investments to the ones that can be properly managed and monitored. Therefore, governments should pledge to be accountable by frequently making available to the public information on fiscal deficits, government’s borrowing and debt management