The Impact of External Debts on
Economic Growth: An Empirical Assessment of the Sudan: 1978 – 2001
Mutasim
Ahmed Abdelmawla Mohamed
Abstract:
This
paper investigates, from an empirical point of view, the impact of Sudan’s
external indebtedness on economic growth over the period (1978-2001). In
addition to that, the growth rate of real export earnings is included in the
empirical model to capture the impact of export promotion strategy in inducing
economic growth, while inflation rate is incorporated as a macroeconomic policy
variable. The results of the study reveal the existence of debt overhang problem
in Sudan, i.e. external debts exceed the country’s repayment ability. The
study concluded that external debt and inflation deter economic growth, while
export earnings have positive impacts. Thus, the findings of this study support
the need of Sudan to be considered for comprehensive debt relief measures. The
study recommends the adoption of export- led growth strategy besides improving
infrastructure. Furthermore, encouraging domestic saving and realizing peace in
a united Sudan will help restore debt sustainability.
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