Determining factors of public debt in Benin

Abstract

The main objective of this research is to identify the determining factors of Benin's public debt level. The decades before the 1980s were marked by the success of national growth models based on a strategy of openness to international trade, combining export stimulation with the use of external financing. This study examined issues related to indebtedness, with a particular focus on explanatory factors for the level of public debt. The empirical analysis of the determinants of public debt in Benin, using an error correction model, indicates that : Variables such as debt service as a percentage of exports, imports as a percentage of GDP, and demographic pressure are relevant in explaining the level of indebtedness and have a positive impact on Benin's public debt in the long term. Variables such as trade openness and GDP growth rate are also relevant in explaining the level of indebtedness, but they have a negative impact on public debt in the long term. In the short term, debt service as a percentage of exports, capital flight, and demographic growth increases Benin's debt ratio, while trade openness improves it.

The examination of the results led to the development of recommendations for action frameworks and strategies, including improving the competitiveness of the Beninese economy, creating an adequate framework to stimulate economic growth, easing debt service, controlling demographic growth, and managing expenses towards imported goods.

Keywords: Determinants, public debt, public investment, economic growth, debt service.

Classification JEL : C32, E44, H63 H68 H81

Paper type: Empirical Research