The Impact of External Indebtednesson Poverty in Low-Income Countries

By Kadima D. Kalonji, Boileau Loko, Raj Nallari, Montfort Mlachila

March 1, 2003

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Kadima D. Kalonji, Boileau Loko, Raj Nallari, and Montfort Mlachila. The Impact of External Indebtednesson Poverty in Low-Income Countries, (USA: International Monetary Fund, 2003) accessed November 8, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper explores the relationship between external debt and poverty. A number of observers have argued that high external indebtedness is a major cause of poverty. Using the first-differenced general method of moments (GMM) estimator, the paper models the impact of external debt on poverty, measured by life expectancy, infant mortality, and gross primary enrollment rates, while duly taking into account the impact of external debt on income. The paper thus endeavors to bring together the literature that links external debt with income growth and poverty. The main conclusion is that once the effect of income on poverty has been taken into account, external indebtedness indicators have a limited but important impact on poverty.

Subject: Debt burden, Debt service, External debt, Health, Poverty

Keywords: Crowding out, Crowding-out effect, Debt burden, Debt indicator, Debt service, External Debt, GDP, Growth, Laffer debt curve, Poverty, Poverty indicator, Poverty-growth nexus, Real purchasing power, Sub-Saharan Africa, WP

Publication Details

Pages:

26
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2003/061
Stock No:

WPIEA0612003
ISBN:

9781451848199
ISSN:

1018-5941

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