European Parliament Library

Safe Debt and Uncertainty in Emerging Markets :, An Application to South Africa, Magnus Saxegaard

Abstract
This paper develops a methodology for estimating a safe public debt level that would allow countries to remain below a maximum sustainable debt limit, taking into account the impact of uncertainty. Our analysis implies that fiscal policy should target a debt level well below the debt ceiling to allow space to absorb shocks that are likely to hit the economy. To illustrate our findings we apply the methodology to estimate a safe debt level for South Africa. Our results suggest that South Africa’s debt ceiling is around 60 percent of GDP, although uncertainty is high. Simulations suggest targeting a debt-to-GDP ratio of 40 percent of GDP would allow South Africa to remain below this debt ceiling over the medium-term with a high degree of confidence
Table Of Contents
Cover; Table of Contents; I. Introduction; II. Debt Sustainability and Debt Tolerance; Figures; 1. Rising Government Deficits and Debt; III. Estimating debt ceilings and debt benchmarks; Tables; 1. Examples of Debt Ceilings; IV. An application to South Africa; 2. Government Debt to GDP Ratio; 3. Deteriorating Public Debt Levels Relative to Peer Countries; A. A Debt Ceiling for South Africa; Boxes; 1. Data Coverage; 4. Sustainable Debt Ceiling; 5. Institutional Investor Rating; 2. Debt Intolerance and Debt; 6. Institutional Investor Rating and Government Debt
Language
eng
Literary Form
non fiction
Note
Description based upon print version of record
Physical Description
1 online resource (28 p.)
Specific Material Designation
remote
Form Of Item
online
Isbn
9781498329224

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