Post-initiative heavily indebted poor countries (HIPC) public debt sustainability: Empirical evidence from Togo

Fousséni NAPO
Université de Lomé, Togo
Faculté des Sciences Économiques et de Gestion, Département de l’Économie

Koffi Biova ESSIOMLE
Administrateur des Finances au ministère du commerce, de l’industrie et de la consommation locale du Togo

Abstract: The objective of this paper is to analyze the sustainability of Togo’s public debt in the long term after the Heavily Indebted Poor countries (HIPC) initiative. The study period covers years from 1994 to 2019. Based on stationarity and cointegration tests, the results show that the Togolese government’s debt is not very sustainable in the long term. Indeed, the persistence of the budget deficit due to insufficient internal resources to meet the increase in budgetary expenditure, particularly investment expenditure, has forced the Togolese government to resort to borrowing, leading to an increase in debt levels in recent years. In view of these results, budgetary rigor is more than necessary through the contrac- tion of budgetary expenditure, but above all, the progressive taxation of the informal sector and increased mobilization of taxes on property.

Keywords: sustainability, public debt, budget deficit, stationarity, cointegration.

JEL classification : H62, H63, H68.