بدهی های عمومی خارجی در جامعه کارائیب

A notable build-up in the foreign debt stock of the Caribbean Community (CARICOM) has been observed in recent years. By employing recent developments in panel unit root and co-integration analysis, this paper finds the major contributing factors to be: the output gap, real effective exchange rate, exports, real interest rate and current deviation of government expenditure from its trend value. Scenario analyses suggest that the time periods required to achieve the benchmark foreign debt to GDP ratio of 30%, for some countries, are too long, given the assumed parameters, but greater fiscal effort or more output growth can shorten these periods considerably.

The external public debt of the Caribbean Community (CARICOM)1 has risen significantly, particularly during the 2000s. In fact, by 2003, fourteen of these countries were among the top thirty highly indebted emerging market economies (Sahay, 2005). Servicing of this debt is constrained by most Caribbean nations being net foreign exchange-users, the increased likelihood of capital flight and the possibility of reduced investment as well as limited government resources that must be channelled toward meeting these obligations rather than utilised for growth and development. Clearly, appropriate policy reactions must be identified which requires one to first determine the factors contributing to this rapid rise in external debt. Thus, this paper empirically evaluates the major variables influencing the growth of such debt in twelve CARICOM countries. A model of debt accumulation is developed and estimated using non-stationary panel data analysis over the annual period between 1987 and 2005. Based on this model, the paper also assesses how the international financial institutions benchmark for external debt to GDP, of 30%, can be reached through changes in the output and government expenditure gaps. The remainder of this paper is structured as follows. Section 2 provides an overview of how the external debt of the countries investigated has evolved, as well as the factors accounting for these changes. The third section gives a review of the relevant theoretical and empirical literature. Section 4 describes the debt accumulation model, the methodology and the data used. Section 5 presents the empirical analysis and results of the study. Conclusions and their policy implications are noted in the sixth section.

Using a panel DOLS procedure, this study has discovered five main determinants of external public debt in twelve CARICOM countries. Of the contributing factors, the output gap, the real cost of foreign borrowing, the real effective exchange rate and exports are inversely related to the level of external indebtedness while the current deviation of government expenditure from its trend value is positively associated. These findings lead naturally to several policy recommendations, which ultimately can contribute to a reduction in external indebtedness. One such suggestion is that efforts should be made to improve the performance of the productive sectors. Higher output will narrow the gap between domestic savings and desired investment and therefore lessen the need for external borrowing and, by extension, lower the rate of growth of external debt. More importantly, raising production levels should allow for greater export growth; the additional foreign exchange earned will facilitate debt servicing. The increase in export revenue will also serve to contain the amount of external debt in the instance of real currency depreciation. As an appreciation appears to lead to an increase in external liabilities, measures, such as maintaining a suitable interest rate differential and keeping nominal wage increases in line with productivity, must be taken to prevent severe declines in the real effective exchange rate. An expansionary fiscal policy stance is a general trend throughout CARICOM and has led to a rapid increase in external debt in recent times. Though spending for developmental purposes is vital, the need for fiscal reform is evident. To reduce fiscal deficits, steps must be taken to either raise the efficiency of tax collection or of the allocation of government resources. Alternative ways of obtaining foreign financing, such as encouraging foreign direct investment, must also be examined. These and other measures must be explored to prevent external debt stocks from reaching unsustainable levels. However, it is likely that this is already the case for some countries; verification of this is an area for future research. This paper also uses scenario analyses to determine when the CARICOM countries under review would achieve the internationally accepted benchmark of 30% of external debt to GDP. These results indicate that some of the time periods required to achieve this target are too long, given the assumed parameters, but it is expected that with greater fiscal effort and/or more growth in output these periods can be shortened considerably.