@article{Quattri:126879,
      recid = {126879},
      author = {Quattri, Maria A. and Fosu, Augustin Kwasi},
      title = {ON THE IMPACT OF EXTERNAL DEBT AND AID ON PUBLIC  EXPENDITURE ALLOCATION IN SUB-SAHARAN AFRICA AFTER THE  LAUNCH OF THE HIPC INITIATIVE},
      address = {2012},
      number = {1007-2016-79407},
      pages = {32},
      year = {2012},
      abstract = {In the wake of the current financial and economic crises,  the economies of Sub-Saharan Africa (SSA) find themselves  squeezed between likely reductions in Official Development  Assistance (ODA) and the pressing challenge to eradicate  poverty. Public expenditure allocation to the social sector  and to public investment is constrained by the need to  pursue fiscal discipline, in order to avert debt distress.  Within a framework of public expenditure choice (based on  Fosu, 2007, 2008, 2010), the paper investigates the impact  of the external debt-servicing constraint and external aid  on government expenditure allocation in SSA countries after  the launch of the HIPC initiative. Three-year panel over  1995-2009 for 40 low- and low-middle income SSA economies,  of which 29 are HIPC, is used for the analysis. The  findings suggest that the debt effect, while substantially  lower than existing estimates for the pre-HIPC period,  remains negative for the social sector, with education  expenditure suffering the most from higher actual or  predicted constraint-consistent debt servicing. ODA,  particularly multilateral aid, has a significant positive  effect on public investment. Moreover, recent relatively  low levels of debt seem temporary and low-income countries  are likely to contract additional debt to fill their  funding gaps. This calls for appropriate measures, to be  undertaken in order to prevent the deleterious effects of  debt, especially on the social sector. The additional  finding that government effectiveness favors public  investment and spending in the social sector suggests that  increased attention on governance is called for.},
      url = {http://ageconsearch.umn.edu/record/126879},
      doi = {https://doi.org/10.22004/ag.econ.126879},
}