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Sustainability of the public debt of WAEMU member states in an approach based on repayment capacity: The case of Senegal

Authors: DrBabo Amadou BA;

Sustainability of the public debt of WAEMU member states in an approach based on repayment capacity: The case of Senegal

Abstract

{"references": ["AFD (2013) \u2015Sustainable debt and sustainable development\u2016 Revue Techniques Financi\u00e8resetD\u00e9veloppement /1 n\u00b0 110 | pages 37 to 44.", "Agenor (P.R.) and Montiel (P.J.) (1996) \u2015Development in macroeconomics\u2016, Princeton, New Jersey Princeton University Press", "Aghion, P. and Bolton, P. (1990): \u2015Government Domestic Debt and the Risk of Default: A Political-Economic Model of the Strategic Role of Debt\u2016, published in Capital Markets and Debt Management, R. Dornbusch and M. Draghi, eds., Cambridge, MA, MIT Press", "Alesina and Tabellini (1989): \u2015External Debt, Capital Flight, and Political Risk\u2016, Working Paper, 1989, forthcoming Journal of International Economics", "Arellano, C. (2008). \u2015Default Risk and Income Fluctuations in Emerging Economies\u2016.American Economic Review, 98(3), 690- 712.", "African Development Bank (ADB). 2020a. African Economic Outlook 2020 Abidjan: African Development Bank. https://www.afdb.org/en/documents/african-economic-outlook-2020.", "African Development Bank (ADB). 2020 b. African Economic Outlook 2020 \u2014 Abidjan Supplement: African Development Bank. https://www.afdb.org/en/documents/african-economic-outlook-2020-supplement.", "African development bank. 2018. Debt Vulnerabilities in Africa, An Information Note for the Board. Abidjan: African Development Bank."]}

In this article we have carried out a study on the level of debt sustainability of Senegal using an implementation of 'stress-test' within the framework of the analysis of the sustainability of the debt (DSA). Empirically, we performed a simulation on three macroeconomic scenarios using the Vector Auto Regressive (VAR) model. From the reference scenarios, we carried out a stress test by simulating an increase in the interest rate of the debt by 2%, an increase in the dollar exchange rate by 30%, and finally an increase in the annual maturity up to at 15%. The results of the stress test showed that Senegal's debt is at a high level of risk, but not in debt distress. Senegal has no payment difficulties. This allows us to say that Senegal's debt is sustainable. This result shows that efforts have been made in the macroeconomic framework imposed by the IMF at the level of the variables of the debt sustainability framework (DSF), specifically the balance of payments, the public sector, debt and GDP

Keywords

: Debt, DSF,, Solvency, VAR, Stress test,, Liquidity,Risk,

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This indicator reflects the "current" impact/attention (the "hype") of an article in the research community at large, based on the underlying citation network.
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